Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

[touchring]

If the bubble can't deflate softly, you apply draconian measures. The CCP never fails in its policy making.


China Freezes
Lending to Curb
Investing Frenzy
By JAMES T. AREDDY
November 19, 2007; Page A1

SHANGHAI -- Chinese authorities are slamming the brakes on bank lending, in their latest attempt to curb the runaway investment threatening to overheat what is soon to be the world's third-largest economy.

In recent weeks, regulators have quietly ordered China's commercial banks to freeze lending through the end of the year, according to bankers in several cities. The bankers say that to comply, they are canceling loans and credit lines with businesses and individuals.

http://online.wsj.com/article/SB1195...googlenews_wsj

[metalman]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

A warning to real estate punter wannabes.

China Freezes
Lending to Curb
Investing Frenzy
By JAMES T. AREDDY
November 19, 2007; Page A1

SHANGHAI -- Chinese authorities are slamming the brakes on bank lending, in their latest attempt to curb the runaway investment threatening to overheat what is soon to be the world's third-largest economy.

In recent weeks, regulators have quietly ordered China's commercial banks to freeze lending through the end of the year, according to bankers in several cities. The bankers say that to comply, they are canceling loans and credit lines with businesses and individuals.

http://online.wsj.com/article/SB1195...googlenews_wsj

just read that in the print issue of the wsj. can't help wondering... are they going to learn all over again the lesson the japanese learned in 1990 and the fed in 1994? once you let the bubble geenie out of the bottle...

[touchring]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

This is a desperate measure, they tried everything, including 40% money down, doesn't work - people drive in with a truck load of cash.

just read that in the print issue of the wsj. can't help wondering... are they going to learn all over again the lesson the japanese learned in 1990 and the fed in 1994? once you let the bubble geenie out of the bottle...

[GRG55]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

just read that in the print issue of the wsj. can't help wondering... are they going to learn all over again the lesson the japanese learned in 1990 and the fed in 1994? once you let the bubble geenie out of the bottle...

Seems they may have learned FROM those prior episodes in Japan and USA. Evidently they don't have Greenspan consulting to them, or he would have told them that bubbles are invisible (at least until they pop) and they should be out there talking about the "new productivity miracle" or something, instead of raising interest rates and curbing credit.

Wow these Chinese sure have a long way to go before they get a "modern" financial system like the USA, eh. No wonder Hank makes so many trips over there. They have so much yet to learn from him...:p

[FRED]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

Seems they may have learned FROM those prior episodes in Japan and USA. Evidently they don't have Greenspan consulting to them, or he would have told them that bubbles are invisible (at least until they pop) and they should be out there talking about the "new productivity miracle" or something, instead of raising interest rates and curbing credit.

Wow these Chinese sure have a long way to go before they get a "modern" financial system like the USA, eh. No wonder Hank makes so many trips over there. They have so much yet to learn from him...:p

The Bubble Cycle is Replacing the Business Cycle - Janszen (March 13, 2005)

Let's put to rest the myth that the Fed is blind to asset bubbles and never intentionally acts to prick them. The truth can be obtained by anyone with an internet browser and a few hours on their hands to read the voluminous Fed Open Market Committee (FOMC) meeting minutes. In the FOMC meeting minutes from March 22, 1994 (pdf), Greenspan says (my emphasis in italics):

"When we moved on February 4th, I think our expectation was that we would prick the bubble in the equity markets. What in fact occurred is that, as evidence of the dramatic shift in the economic outlook began to emerge after we moved and long-term rates began to move up, we were also clearly getting a major upward increase in expectations of corporate earnings. While the stock market went down after our actions on February 4th, it has gone down really quite marginally on net over this period. So what has occurred is that while this capital gains bubble in all financial assets had to come down, instead of the decline being concentrated in the stock area, it shifted over into the bond area. But the effects are the same. These are major capital losses, which have required very dramatic changes in the actions and activities on the part of individuals and institutions."

"So the question is, having very consciously and purposely tried to break the bubble and upset the markets in order to sort of break the cocoon of capital gains speculation, we are now in a position—having done that and in a sense succeeded perhaps more than we had intended—to try to restore some degree of confidence in the System."

[touchring]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

I think the Myammar street protests and people killed in fightings at gas stations were the last straws. The CCP is determined to cool inflation over the next 3 months. The "cohesion of the society" (CCP propaganda slogan) takes precedence over real estate punts (mostly by wealthy city people, party cadres, and other elites). And, should there be messy outcome, they still got 8 months to clean up the street.

If they are really serious, it might cool demand for commodities like iron and copper next year.

Seems they may have learned FROM those prior episodes in Japan and USA. Evidently they don't have Greenspan consulting to them, or he would have told them that bubbles are invisible (at least until they pop) and they should be out there talking about the "new productivity miracle" or something, instead of raising interest rates and curbing credit.

Wow these Chinese sure have a long way to go before they get a "modern" financial system like the USA, eh. No wonder Hank makes so many trips over there. They have so much yet to learn from him...:p

[Sapiens]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

If they are really serious, it might cool demand for commodities like iron and copper next year.

More than that... Once they kill the delusional euphoria of the speculators who knows where this may end.

[touchring]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

Darn. Will gold be affected? Should i sell my gold? :confused:

More than that... Once they kill the delusional euphoria of the speculators who knows where this may end.

[Sapiens]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

Darn. Will gold be affected? Should i sell my gold? :confused:

Touchring,

If they are running away from crashing equities, where do you think they will seek safety? And once they do seek safety, what happens when the positive feedback loop takes effect?

Sweet...

[Spartacus]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

didn't the Chinese have a higher historical, monetary and cultural affinity for Silver?

Touchring,

If they are running away from crashing equities, where do you think they will seek safety? And once they do seek safety, what happens when the positive feedback loop takes effect?

Sweet...

[Sapiens]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

didn't the Chinese have a higher historical, monetary and cultural affinity for Silver?

Why are you letting the cat out of the bag?

[c1ue]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

Folks,

While it is interesting to see China forcing commercial banks to stop lending, I'm still not convinced that the very large 'shadow banking' sector in China will also be reined in.

Between black market profits sneaking out of China and accounting gimmicks, I just don't see how closing down the 'official' bank lending will stop the problem. All that will happen is that the pace will slow somewhat - but the really crazy crap is mostly from the shadow banking side anyway.

[touchring]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

Folks,

While it is interesting to see China forcing commercial banks to stop lending, I'm still not convinced that the very large 'shadow banking' sector in China will also be reined in.

Between black market profits sneaking out of China and accounting gimmicks, I just don't see how closing down the 'official' bank lending will stop the problem. All that will happen is that the pace will slow somewhat - but the really crazy crap is mostly from the shadow banking side anyway.

I got information from a Chinese partner that it is now indeed more difficult to get a housing loan. More difficult - but not impossible.

Unconventional forms of credit can be very expensive.

http://www.chinadaily.com.cn/china/2...ent_794156.htm

Beijingers pawn apartments in pursuit of stock market profits

Pawnshops in Beijing offer loans worth 70 percent of the value of an apartment and charge a monthly interest rate of 3.2 percent.

[Sapiens]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

http://www.interfax.cn/displayarticl...-METALS-SILVER

Shanghai. November 22. INTERFAX-CHINA - Statistics released today by China's General Administration of Customs show that China imported 4.71 million kilograms of silver between January and October, up 64 percent from the same period last year

[touchring]

Re: Self-imposed credit crunch - China Freezes Lending to Curb Investing Frenzy

Maybe they are using it for this!



http://translate.google.com/translat...hl=en&ie=UTF-8


Meanwhile, more news on the "chinese credit crunch" fallout:

Shanghai home prices drop 5.87% last week

http://www.china.org.cn/english/business/232789.htm