The Shanwei Shootings and China's Situation
The Shanwei Shootings and China's Situation
By George Friedman
...
China is a mass of dispossessed farmers, urban workers forced into unemployment by the failure of state-owned enterprises, and party officials who are urgently working to cash in on their position. It is a country where the banking system has been saved from collapse by spinning off bad debts -- at least $600 billion worth, or nearly half the GDP of China -- into holding companies. This maneuver cleaned up the banks' books and allowed Western banks to purchase shares in them, shoring them up. But it also left a huge amount of debt that is owed internally to people who will never see the funds. Imagine the U.S. savings-and-loan scandal growing to a size that was nearly half of the national GDP. As it happened, in the United States the federal government swallowed a great deal of the S&L bad loans -- but in China, these bad loans would just about wipe out the country's currency reserves, assuming that the numbers provided by the government are valid.
...
[my italics]
By George Friedman
...
China is a mass of dispossessed farmers, urban workers forced into unemployment by the failure of state-owned enterprises, and party officials who are urgently working to cash in on their position. It is a country where the banking system has been saved from collapse by spinning off bad debts -- at least $600 billion worth, or nearly half the GDP of China -- into holding companies. This maneuver cleaned up the banks' books and allowed Western banks to purchase shares in them, shoring them up. But it also left a huge amount of debt that is owed internally to people who will never see the funds. Imagine the U.S. savings-and-loan scandal growing to a size that was nearly half of the national GDP. As it happened, in the United States the federal government swallowed a great deal of the S&L bad loans -- but in China, these bad loans would just about wipe out the country's currency reserves, assuming that the numbers provided by the government are valid.
...
[my italics]
posted by Patrick Henry at 19:12
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