Posted on 01/26/2014 2:56:28 PM PST by Errant
The People’s Bank of China , the central bank, has just ordered commercial banks to halt cash transfers.
---Clip---
In short, there will be a three-day suspension of domestic renminbi transfers. There will also be a suspension, spanning nine calendar days, of conversions of renminbi to foreign currency.
The specific reason given—“system maintenance” at the central bank—is preposterous. It is not credible that during the highest usage period in the year—the weeklong Lunar New Year holiday beginning January 31—the central bank would schedule an upgrade and shut down cash transfers.
A better explanation is that the country’s banking system is running dry. Yes, there is an increased need for money in the run-up to and during the Lunar New Year holiday, but that is only a small factor. After all, central bank officials knew this spike in demand was coming—it occurs every year at this time—and a core function of central banks is to manage seasonal liquidity fluctuations. Moreover, the holiday has not started yet, and the PBOC, as that institution is known, could have added more liquidity to meet cash needs.
(Excerpt) Read more at forbes.com ...
As I have held for several years now, the only safe place for savings are cash, in your “hot little hands”, in some variety of lock box in your home.
The bottom line is that something, somehow, will disrupt the electronic transfer system, so only physical cash will retain the ability of transaction. And just by itself, right now, it is 95% deflated. So a nickel could be worth a dollar instantly.
The big banks are leveraged up again and mostly in EM assets. For instance look at Philippine stocks and land prices the last few years, no way they reflect the real economy there. And that is only one tiny country in terms of economic weight.
According to terroristic propaganda in opinions, China has collapsed nearly every day since 2007. Meanwhile, the real behaviors of U.S. markets on Friday inspired horror in investors for Monday. Those were reactions to all of the talk for months of a U.S. Fed tightening up that never happened. And also meanwhile, several U.S. trading partners—”partners”
that we have huge trade imbalances and balance of payments deficits with—have acted, signaling currency wars against us. Unnaturally high dollar in the global debacle means fewer jobs and eventually, no jobs. There’s also the big propane ripoff.
Look behind the curtain at a possible run on selling U.S. bonds.
And so it begins.
The news that we’re seeing reactions to.
http://blogs.wsj.com/moneybeat/2014/01/24/will-fed-pause-on-jittery-financial-markets/?mod=WSJ_hpp_sections_markets
Will Fed Pause on Jittery Financial Markets?
Wall Street Journal
By Cynthia Lin
Jan 24, 2014
“If tensions across financial markets intensify, could it throw a wrench in the Fed’s tapering plan?”
Gov required bankers to make subprime loans to people of color that were discriminated against in the past by red lining. Fed had a good case during Clinton admin. Black guy with same income, credit history and assets were denied loans. If charge is untrue, bankers should have taken the case to court, but they did not. Clinton advocated subprime loans as a solution, but problem with subprime is it is financially unsound and high risk. Dems screwed up the system by trying to bend rules on lending to make up for past social injustice. Pres Clinton offer to mitigate bankers mortgage risks by offering Freddie Mac and Fannie Mae buy all the mortgage notes after the banks held the notes for six months. Here is where the bankers are guilty of economic sabotage. Freddie Mac and Fannie Mae did not carefully review the mortgage notes they brought from the mortgage bankers. When the mortgage bankers discovered this gov oversight, they decided to earn as much points and fees from loans they originate in the six month period and they did this by waiving conventional safeguards and encouraging borrowers to borrow more then they can afford by making up borrowers credit history, income and asset data. Larger the loans, larger the fees and points, aned in six months dump it on the gov (and you the taxpayer). In essence bankers encouraged liar loans. Here is the difference between liar loans and subprime loans. Subprime loans are marked so the investor knows it is high risk if they chose to buy the note at discount. Liar loans are packaged as good AAA rated conventional loans when they were actually junk financial investments. These toxic assets played a major role in imploding the US as well as the world financial system. We are lucky the world has not held the US responsible for the mess. Fed gov is responsible for the unsound subprime loans but lying bankers were responsible for the more damaging liar loans. Too many freepers have too much faith and trust in capitalists. Who sold military technology to China - Lora (corporate capitalists), who loves Obamacare - five major Healthcare Management and Insurance companies who even made sure they get a bailout clause wrote a law forcing Americans to buy their products (looks like corporate capitalists to me), US has real unemployment of 17 to 23 percent, guess who is advocating legalizing illegal immigrants and more H-1B workers (countries normally cut down immigration during recessions) - Chamber of Commerce (corporate capitalists), who advocate unconditional raising of US debt limit - Wall Street bankers (corporate capitalists). I think by now you get my point. Big gov and big business is the enemy of America.
So..when does the US start to bailout Communist China?
Woudn’t read too much into this, yet...
There has been a flood lately of minor party functionaries skipping town with what one assumes is money skimmed from fraud and/or corruption. Could be the Chinese gov’t getting ready to round up a few people before they can skate. Or it could be they’re getting ready to introduce stricter capital controls.
Or it might be a liquidity crisis.
Too soon to say.
Yep, selling their U.S. bonds is another possibility, if they need the cash.
No, There Is No Stoppage Of Cash Transfers In China
Earlier today, Forbes managed to spook readers with a bombastic report that China's commercial banks had been instructed by the PBOC to halt cash transfers - something which would have dire implications on China's banking system ahead of its new year holiday, and send the banking system into a tailspin just as China is desperate to avoid all turbulence ahead of a potential shadow banking default.
Leaving aside the fact that one should typically rely on official PBOC advisories, posted quite clearly on its website (where one finds no mention of this notice), one could simply keep track of interbank liquidity indicators such as repo and SHIBOR, both of which dropped, indicating that liquidity actually improved.
Anyway, here is what really happened, as reported by China Compass. "Forbes columnist Gordon Chang claimed in a much-quoted item today that the Peoples Bank of China had instructed commercial banks to halt cash transfers. Chang's column, entitled “China Halts Bank Transfers,” specifically refers to Citibank's Chinese branches. The report is entirely misleading." Our advice - focus on the real "weakest links" in China's banking system, of which there are many and are backed by facts, not the least of which is the potential upcoming shadow banking default. Ignore groundless rumors and speculation.
More from China Compass:
According to Citibank China Customer Service, the bank is conducting a routine system upgrade over the first few days of the upcoming New Year bank holiday. System maintenance of this sort has occurred several times in the past. The PBOC has not—repeat not—asked Citibank to stop customers from wiring funds. Customers can still log on to their account to put in fund transfer requests at any time. The receiving bank (non-Citibank) will process the funds to be transferred on the next business day, as it always does. Because of the Lunar New Year break, the next business day is Friday Feb. 7. This is no different from the practice of banks throughout the world. Chang's understanding of Chinese culture evidently does not extend to the timing of bank holidays.
January 30, 2014 4PM is the afternoon of the Chinese New Year eve. Nobody will be around by 5PM as the Hong Kong stock exchange has a half-day trading day.
Getting curiouser and curiouser folks. Forbes still has the story up on their website at this time.
If it were nefarious they would not give advance warning.
If China has a liquidity problem, perhaps they may call the loans they have made to the USA.
It looks like the Cloward Piven strategy is coming to us soon! If we have an economic collapse the executive i.e. Obama, may rule by decree in the “interest of the nation.”
ps
You can be sure that Goldman Sachs will be okay.
Meanwhile, the real story regarding China, the one we broke and explained on the 16th, is only gathering steam, following an official statement from the S&P's Liao who said that there is "no legal ground for ICBC to take responsibility" adding that "a bailout could risk a shareholder lawsuit." He observed that Trust Equals Gold acts much like a bond, and a "default would raise funding costs", but is unlikely to trigger a liquidity shock for the entire system, and is "unlikely to undermine the whole banking system."
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.