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| China-Japan-Koreas | |
| Ernst and Young on China: Never Mind! | |
| 2006-05-15 | |
 Ernst & Young, the accountancy firm, has withdrawn a controversial report on China's non-performing loans, saying its estimate of bad debts for the country's big four state banks "cannot be supported and Â… is factually erroneous..."Remainder at link, behind registration. I guess that settles that.
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| Posted by:Phil |
| #8 Ok, kids, how's this for an analogy: The Chicom banking system is like Yosemite Sam rowing a boat down the river. Suddenly the river goes down a waterfall. Sam's ok as long as he does not look over the side, and he keeps rowing. But he does know what is happening, and his belief in floating is shaken......so it is only a matter of time.....before gravity catches up. |
| Posted by: Alaska Paul 2006-05-15 22:35 |
| #7 More like, OK we retracted it, can we start the audit now? All Big |
| Posted by: Nimble Spemble 2006-05-15 18:47 |
| #6 "Okay, we took it back. Now would you please let go of my testicles?" |
| Posted by: Anonymoose 2006-05-15 18:38 |
| #5 I wonder who at Ernst & Young was paid how much to back pedal on this story. Worst of all, the facts of this matter are so well known that E&Y's recanting means less than zero. As always, sunlight is the best disinfectant and it is only a matter of time until a window is opened upon China's already tottering economic house-of-cards. It is nothing short of stunning to see a gigantic nation with eyes shut tight and fingers in its ears proclaiming that all is well as the very earth cracks open beneath them. |
| Posted by: Zenster 2006-05-15 16:06 |
| #4 Sure, never mind, forget all you saw, keep pouring your IRA money into the chinese economy. You can't yell fire in a crowded theater then say "never mind". |
| Posted by: Whineger Javing6236 2006-05-15 11:36 |
| #3 The discussion about non performing loans is somewhat difficult since we are approaching it from an entirely different perspective. We must recall that the Chinese economy is still centrally planned. The single largest industrial employer is the PLA. The banking system is dominated by four state-owned banks. The NPL's are backed in most cases by inflated real estate values. The other Asian economies that got into a similar problem were able to get out by allowing foreign investors to buy the NPL's at pennies on the dollar. China is not doing so. It's solution has been to create several governmentally owned entities and tranfer massive quantities to NPL to them. The banks obtain a pretty balance sheet and the NPL's get shoved under the carpet. First quarter growth for China was in excess of 10%. Banks loaned over half their prospective lending for the YEAR in the first quarter. Chinese banking policies are inflationary as hell. The only way they are avoiding collapse is by moving the debt from pocket to pocket. Eventually they will run out of pockets. Adam Smith doesn't give a rat's ass who sits on the Peacock Throne. If the Chinese want to trade with the world, they have to bow, sooner or later, to market forces. No economy can sustain an NPL rate of well over 50% and a growth rate of well over 10%. That goes especially for the Chinese. They are a net importer of commodities. In order to keep going in a world where they have driven commodity prices to record heights, they have to sell more. In the last two month, our trade deficits have shrunk, a clear warning sign that China may be in trouble. The Chinese Ponzi scheme is in big trouble. I have posited one of three things will create the coming Chinese collapse. Reduction in the supply of commodities. Reduction in the trade surplus with the United States. Internal population dislocation. Two of those three are at least temporarily happening. |
| Posted by: Chuck Simmins 2006-05-15 10:56 |
| #2 As long as China has a $200 billion yearly surplus from the USA alone, their banking system will have enough liquidity to absorb $1 trillion in bad loans. |
| Posted by: ed 2006-05-15 10:24 |
| #1 Wow! Talk about bowing under pressure. |
| Posted by: Chuck Simmins 2006-05-15 10:04 |