Posted on 01/30/2013 1:33:08 PM PST by Kaslin
The Chinese banking system is insolvent. Of course, the entire global banking system is insolvent, but today's spotlight is on China. Please consider China averts local government defaults.
Chinese banks have rolled over at least three-quarters of all loans to local governments that were due to mature by the end of 2012, an indication of the immense challenge facing China in working down its debt load.
Local governments borrowed heavily from banks to fuel China’s stimulus programme during the global financial crisis and are now struggling to generate the revenue to pay them back, a shortfall that could cast a shadow over Chinese economic growth.
Banks extended at least Rmb 3tn ($482bn) – and perhaps more – of the roughly Rmb 4tn in loans plus interest that local governments were to have paid them by the end of last year, according to Financial Times calculations based on official data.Extend-and-Pretend Chinese Style
Since details on refinancing and interest rates are lacking, the reported $482 billion is undoubtedly on the low side.
The key point is that massive rollovers were needed to stave off defaults.
“That’s a correct observation and explanation,” said Stanley Li, a banking analyst with Mirae Asset Securities. “Based on the payback period for the infrastructure projects [started by local governments], it will take more than 10 years to pay these loans back.”
Ten years? How about never? Many of these projects were never economically viable, especially the housing and land schemes.
I guess The one wants us to become more like china.....
Massive loans to finance infrastructure and create jobs........hmmmmm....where have I heard that before?.......
I guess that when you can threaten to kill the banksters and their families for failure to comply it's easier to get your roll over.
Sounds to me like China is becoming more like us.
China is sitting on the grandaddy of all real estate bubbles.The government directly and indirectly committed hundreds of billions of dollars to build entire cities of apartments, retail and office space. They sit empty and are depreciating before they are even occupied. There has been no return on the capital.Real estate in urban areas,upon which huge private loans and mortgages are secured, are very overvalued.Capital has been squandered. If that bubble bursts, their economy will tailspin. It could lead to political, social instability, famine and possibly war.
China and Japan are the real powder keg. Japan is now launching the beginnings of a full-blown currency war (out of desperation, more than anything else), while China is exactly as you state. Ordinarily, I don’t buy any “x will start a war” kind of theories, but it wouldn’t shock me at all to find those two at war by year’s end.
I’m wondering about the part India will play. They’ve been preparing.
“but it wouldn’t shock me at all to find those two at war by year’s end.”
You forgot to add us, the US, to that war.
You forgot to add us, the US, to that war.
The Chinese keep claiming broad sea areas, including the water columns, a concept that would close a lot of narrow waterways and choke off sea lanes of commerce in many areas of the world, if the Chinese claims are honored or enforced successfully.
The ChiComm apes can’t anneal a bolt. Based on that, why would anyone think that the commie apes can count money?
The entire ChiComm ape financial system has been in a total state of collapse since 2010. The ChiComms lost their private equity yuan funds back in August, 2012.
Blub! Blub!
and we are all becoming Greece....sigh
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