George Soros has not lost his touch nor the ability to spot a weakness in a country’s financial market. Where can we get a better example of a country which would try to handle problems in a sublime manner than China. Soros wrote on Jan. 2 in Project Syndicate that while there are “eerie resemblances” with financial conditions before the U.S. crash, China’s government controls the banks and has given precedence to protecting growth over structural reforms recommended by the central bank. The contradiction in China’s policies is that “restarting the furnaces also reignites exponential debt growth, which can’t be sustained for much longer than a couple of years,” he wrote.
Industrial & Commercial Bank of China Ltd., the world’s most profitable bank, is rejecting requests to compensate holders of the financing, which was structured by China Credit Trust Co. to raise funds for a coal miner. New York-based Moody’s Investors Service says it is typical of financial products that have kept debt off banks’balance sheets. The borrower, Shanxi Zhenfu Energy Group, collapsed in 2012 after leading shareholder Wang Pingyan was arrested for illegal deposit-taking. Payment on the three-year, so-called Credit Equals Gold No. 1 product is due Jan. 31.
China is moving in the direction of the U.S. subprime crisis. But the system is at least a few years away from eruption. China can deal with this credit explosion cleverly if it wants to by raising interest rates steadily to defuse the bomb.”
Industrial & Commercial Bank of China Ltd., the world’s most profitable bank, is rejecting requests to compensate holders of the financing, which was structured by China Credit Trust Co. to raise funds for a coal miner. New York-based Moody’s Investors Service says it is typical of financial products that have kept debt off banks’balance sheets. The borrower, Shanxi Zhenfu Energy Group, collapsed in 2012 after leading shareholder Wang Pingyan was arrested for illegal deposit-taking. Payment on the three-year, so-called Credit Equals Gold No. 1 product is due Jan. 31.
China is moving in the direction of the U.S. subprime crisis. But the system is at least a few years away from eruption. China can deal with this credit explosion cleverly if it wants to by raising interest rates steadily to defuse the bomb.”