Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek Radio: Raghee Horner and Bix Weir, and Chris Waltzek
By: radio.GoldSeek.com

Technical Scoop - Weekend Update May 20
By: David Chapman

Train Crash Preview
By: John Mauldin

Gold frequently disappoints Jim Grant, but does he understand why?
By: Chris Powell

Are You Still Fearful of Cryptos?
By: Ryan Wilday

THE SHALE OIL PONZI SCHEME EXPLAINED: How Lousy Shale Economics Will Pull Down The U.S. Economy
By: Steve St. Angelo

Ira Epstein's Metals Video 5 18 2018
By: Ira Epstein

Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Roughly 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Silver Report
By: Ira Epstein

It’s not stagflation, but inflationary impoverishment
By: Alasdair Macleod

 
Search

GoldSeek Web

 
First bank runs in China reported today may signal the start of an old fashioned banking crisis


 -- Published: Tuesday, 25 March 2014 | Print  | Disqus 

By Peter Cooper

There have been runs on two small banks in China with depositors fighting to get through the doors to make withdrawals when they opened. Is this the first crack in the great wall of Chinese credit?

Reuters reported local news about queues outside the Sheyang Rural Commercial Bank in Yancheng yesterday and the Rural Commercial Bank of Huanghai faced similar rushes by depositors today after rumors of insolvency at Sheyang. Officials say it is impossible for a Chinese bank to go bankrupt.

Real estate crash

However, financial institutions have made large loans to private and state developers whose project lie abandoned and their loans cannot be repaid. Where are the banks to find the money to pay out to depositors who want to withdraw their money?

Observers said the situation highlights the urgency of plans to put in place a deposit insurance system to protect investors against bank insolvency, so the cast-iron banking system may not be as strong as it seems. Unregulated rural cooperatives are, nonetheless, admitted to be a weak and unregulated part of the credit system.

The obvious comparison is with the ‘too big to fail’ banks of the West which suddenly became insolvent in the subprime crisis of 2008. Is this the Chinese version of the Northern Rock bank run that hit the UK in 2008, another country whose assurances that bank runs were a thing of the past proved nonsense.

First default

This month China allowed its first ever commercial bond default at Chaori Solar Energy and a heavily indebted developer in Zhejiang province is at risk of defaulting on $565 million in loans, according to local media.

China watchers reckon this is a part of a controlled implosion of the credit system and will not be allowed to spiral out of control like Lehman Brothers in 2008. Well they would say that wouldn’t they?

Good intentions are one thing. Fulfilling them may be a different matter. Did the Federal Reserve not think it had events under control in 2008? Perhaps China will surprise us all. But bank runs are not a good sign. Is this why the Chinese bought more than 2,000 tonnes of gold last year?

http://www.arabianmoney.net/


| Digg This Article
 -- Published: Tuesday, 25 March 2014 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.