RE: China's wealthy bypass the banks
Fascinating. And typical of the unusual Chinese seesaw that has occurred throuout the aeons between hyper-strict centralized control and something approaching a lite version of anarchy. There's no good mapping of this into Western ideas of fascism, marxism, and economics. Interesting too that there's a ganster base in Wenzhou. This is precisely where the young Chiang Kai Shek consolidated his power early on as a local gangster/warlord. -TD From: R.A. Hettinga [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: China's wealthy bypass the banks Date: Tue, 9 Nov 2004 16:10:52 -0500 http://www.iht.com/bin/print_ipub.php?file=/articles/2004/11/09/business/yuan.html China's wealthy bypass the banks By Keith Bradsher The New York Times Wednesday, November 10, 2004 WENZHOU, China The Wenzhou stir-fry is not a dish you eat. But it is giving indigestion to Chinese regulators and could prove troublesome to many investors worldwide, from New York money managers, Pennsylvania steelworkers and Midwestern farmers to Australian miners. Here in this freewheeling city at the forefront of capitalism in China, the dish is prepared when a group of wealthy friends pool millions of dollars' worth of Chinese yuan and put them into a hot investment like Shanghai real estate, where they are stirred and flipped for a hefty profit. The friends often lend each other large amounts on the strength of a handshake and a handwritten IOU. Both sides then go to an automated teller machine or bank branch to transfer the money, which is then withdrawn from the bank. Or sometimes they do it the old-fashioned way: exchanging burlap sacks stuffed with cash. The worry for Chinese regulators is that everyone in China will start cooking the Wenzhou stir-fry and do it outside the banking system. In the last few months, borrowing and lending across the rest of China is looking more and more like what is taking place in Wenzhou. The growth of this shadow banking system poses a stiff challenge to China's state-owned banks, already burdened with bad debt, and makes it harder for the nation's leaders to steer a fast-growing economy. The problem starts with China's low interest rates. More and more families with savings have been snubbing 2 percent interest on bank deposits for the double-digit returns from lending large amounts on their own. They lend to real estate speculators or to small businesses without the political connections to obtain loans from the banks. Not only is the informal lending rate higher, but the income from that lending, because it is semilegal at best, is not taxed. For fear of shame, ostracism and the occasional threat from thugs, borrowers are more likely to pay back these loans than those from the big banks. Tao Dong, chief China economist at Credit Suisse First Boston, calculates that Chinese citizens withdrew $12 billion to $17 billion from their bank deposits in August and September. The outflow turned into a flood last month, reaching an estimated $120 billion, or more than 3 percent of all deposits at the country's financial institutions. If the bank withdrawals are not stemmed in the months ahead, Tao warned, this potentially could be a huge risk for financial stability and even social stability. And with China now accounting for more than a quarter of the world's steel production and nearly a fifth of soybean production, as well as some of the largest initial public offerings of stock, any shaking of financial confidence here could ripple quickly through markets in the United States and elsewhere. For instance, if the steel girders now being lifted into place by hundreds of tower cranes in big cities across China are no longer needed, that would produce a worldwide glut of steel and push down prices. On Oct. 28, when China's central bank raised interest rates for one-year loans and deposits by a little more than a quarter of a percentage point, it cited a need to keep money in the banking system. Higher official rates should reduce external cycling of credit funds, the bank said in a statement. Eswar Prasad, the chief of the China division of the International Monetary Fund, expressed concern about bank withdrawals in a speech in Hong Kong three days before the central bank acted. The main Chinese banks have fairly substantial reserves, but they need those reserves to cover huge write-offs of bad debts some day. The hub of informal lending in China is here in Wenzhou, 370 kilometers, or 230 miles, south of Shanghai. Some of China's first experiments with the free market began here in the late 1970s, and the result has been a flourishing economy together with sometimes questionable business dealings. Depending on how raw they like their capitalism, people elsewhere in China describe Wenzhou as either a center of financial innovation or a den of loan sharks. But increasingly, Wenzhou is also a microcosm of the kind of large-scale yet informal financial dealings now going on across the
China's wealthy bypass the banks
http://www.iht.com/bin/print_ipub.php?file=/articles/2004/11/09/business/yuan.html China's wealthy bypass the banks By Keith Bradsher The New York Times Wednesday, November 10, 2004 WENZHOU, China The Wenzhou stir-fry is not a dish you eat. But it is giving indigestion to Chinese regulators and could prove troublesome to many investors worldwide, from New York money managers, Pennsylvania steelworkers and Midwestern farmers to Australian miners. Here in this freewheeling city at the forefront of capitalism in China, the dish is prepared when a group of wealthy friends pool millions of dollars' worth of Chinese yuan and put them into a hot investment like Shanghai real estate, where they are stirred and flipped for a hefty profit. The friends often lend each other large amounts on the strength of a handshake and a handwritten IOU. Both sides then go to an automated teller machine or bank branch to transfer the money, which is then withdrawn from the bank. Or sometimes they do it the old-fashioned way: exchanging burlap sacks stuffed with cash. The worry for Chinese regulators is that everyone in China will start cooking the Wenzhou stir-fry and do it outside the banking system. In the last few months, borrowing and lending across the rest of China is looking more and more like what is taking place in Wenzhou. The growth of this shadow banking system poses a stiff challenge to China's state-owned banks, already burdened with bad debt, and makes it harder for the nation's leaders to steer a fast-growing economy. The problem starts with China's low interest rates. More and more families with savings have been snubbing 2 percent interest on bank deposits for the double-digit returns from lending large amounts on their own. They lend to real estate speculators or to small businesses without the political connections to obtain loans from the banks. Not only is the informal lending rate higher, but the income from that lending, because it is semilegal at best, is not taxed. For fear of shame, ostracism and the occasional threat from thugs, borrowers are more likely to pay back these loans than those from the big banks. Tao Dong, chief China economist at Credit Suisse First Boston, calculates that Chinese citizens withdrew $12 billion to $17 billion from their bank deposits in August and September. The outflow turned into a flood last month, reaching an estimated $120 billion, or more than 3 percent of all deposits at the country's financial institutions. If the bank withdrawals are not stemmed in the months ahead, Tao warned, this potentially could be a huge risk for financial stability and even social stability. And with China now accounting for more than a quarter of the world's steel production and nearly a fifth of soybean production, as well as some of the largest initial public offerings of stock, any shaking of financial confidence here could ripple quickly through markets in the United States and elsewhere. For instance, if the steel girders now being lifted into place by hundreds of tower cranes in big cities across China are no longer needed, that would produce a worldwide glut of steel and push down prices. On Oct. 28, when China's central bank raised interest rates for one-year loans and deposits by a little more than a quarter of a percentage point, it cited a need to keep money in the banking system. Higher official rates should reduce external cycling of credit funds, the bank said in a statement. Eswar Prasad, the chief of the China division of the International Monetary Fund, expressed concern about bank withdrawals in a speech in Hong Kong three days before the central bank acted. The main Chinese banks have fairly substantial reserves, but they need those reserves to cover huge write-offs of bad debts some day. The hub of informal lending in China is here in Wenzhou, 370 kilometers, or 230 miles, south of Shanghai. Some of China's first experiments with the free market began here in the late 1970s, and the result has been a flourishing economy together with sometimes questionable business dealings. Depending on how raw they like their capitalism, people elsewhere in China describe Wenzhou as either a center of financial innovation or a den of loan sharks. But increasingly, Wenzhou is also a microcosm of the kind of large-scale yet informal financial dealings now going on across the country. The withdrawals by depositors and the informal money lending has spread so swiftly here that it is only in Wenzhou that the Chinese central bank releases monthly statistics on average rates for direct loans between individuals or companies. The rate hovered at 1 percent a month for years until April, when the authorities began limiting the volume of bank loans. Borrowers default on nearly half the loans issued by the state-owned banks, but seldom do so here on money that is usually borrowed from relatives, neighbors or people in the same industry. Residents
Re: Faith in democracy, not government
On Tue, 9 Nov 2004, R.A. Hettinga wrote: At 7:11 PM -0800 11/8/04, Chuck Wolber wrote: cet is an HTMl element Wrong again. Mere hyperlatinate British public school affectation, = et, and, um, all that... Strange, you called that a rudimentary part of modern culture. Are you aware of any territories outside of that which the queen et. al. has jurisdiction? Yes, and, apparently, by your inability to parse something that is a rudimentary part of modern culture, you generated it. Or perhaps it's your lack of command of the modern QWERTY keyboard... Nope. See above, and, again, thank you for playing. Bad form. Rude and dismissive. Tsk tsk. I guess it's a good way of redirecting the argument when you're getting desperate though... -Chuck -- http://www.quantumlinux.com Quantum Linux Laboratories, LLC. ACCELERATING Business with Open Technology The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit. - FDR
Re: Declaration of Expulsion: A Modest Proposal
Roy M. Silvernail wrote: On Wed, 2004-11-03 at 23:30 -0500, R.A. Hettinga wrote: http://www.humaneventsonline.com/article.php?print=yesid=5652 Declaration of Expulsion: A Modest Proposal It's Time to Reconfigure the United States Chuckle-worthy, if not outright funny. Interestingly, I could see a liberal making exactly the same case, but without the ad hominem attacks. You mean like http://www.fuckthesouth.com/ ? Funnier, more factual, and a damn sight more ad hominem.
Ashcroft resigns, America is Safer, at least for the moment
With Ashcroft going, America's a bit safer, unless of course his successor is just as bad. One of the candidates for Ashcroft's successor is Bush's White House legal counsel Alberto Gonzales, who's been responsible for several memos suggesting that POWs from Afghanistan aren't protected by the Geneva Conventions and that torturing captives may be ok. So we may not be safer once he's in place. Another candidate is Larry Thompson, former deputy attorney general, who's currently the general counsel for Pepsico. He's black, which is for some reason still politically interesting, but he's also indicated that he likes working at Pepsico. NYT's latest rumors favor Gonzales. http://www.nytimes.com/aponline/national/AP-Bush-Cabinet.html?oref=login (Requires free login - use some fake email address if you don't have one.)
Re: Faith in democracy, not government
At 9:54 AM -0800 11/10/04, Chuck Wolber wrote: redirecting Ah. Yes. *That's* the word I was looking for... Plonk! There. That should stop the bandwidth leak... Cheers, RAH -- - R. A. Hettinga mailto: [EMAIL PROTECTED] The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA ... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience. -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
Re: This Memorable Day
James A. Donald wrote: So far the Pentagon has shattered the enemy while suffering casualties of about a thousand, which is roughly the same number of casualties as the British empire suffered doing regime change on the Zulu empire - an empire of a quarter of a million semi naked savages mostly armed with spears. Be fair. They had a trained and disciplined army. Most of whom would obey orders to the death. That's worth a hell of a lot in battle.
Re: China's wealthy bypass the banks
-- Tyler Durden wrote: Fascinating. And typical of the unusual Chinese seesaw that has occurred throuout the aeons between hyper-strict centralized control and something approaching a lite version of anarchy. There's no good mapping of this into Western ideas of fascism, marxism, and economics. Maps near enough. The Chinese concept of legalism is barely distinguishable from German concepts of communism and nazism. However Confucianism vs Daoism/Taoism is rather different from what you would get in the west. Confucianism is somewhat similar to what you would get if western cultural conservatives allied themselves with nazi/commies, in the way that the commies are prone to imagine conservatives have supposedly allied themselves with nazis. Taoism somewhat similar to what you would get if anarcho capitalists allied themselves with pagans and wiccans, in the way that conservatives are prone to imagine that they have, though in reality the pagans and wiccans line up with the greenies and nazis, for the most part. This is the result of a Chinese heritage of politicide and mass murder, whereas the west has a heritage of compromise and negotiation. So in the west, we have ordinary people forbidden from doing banking stuff, but a pile of loopholes in that law, and we do not have the death penalty for unauthorized banking, whereas in China, they do have the death penalty, and despite the death penalty, massive defiance of the law. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG NWin7CjdJuYCUBbj9jwfYAiCHobTuUO1Bw3DLogP 4Unpss2ukPbY+HeKKDTu441IpswCXzfXLuU2FCphs
Re: China's wealthy bypass the banks
Oh No Way overly simplistic. Also, you are comparing apples to bushels of wheat. However Confucianism vs Daoism/Taoism is rather different from what you would get in the west. Confucianism is somewhat similar to what you would get if western cultural conservatives allied themselves with nazi/commies, in the way that the commies are prone to imagine conservatives have supposedly allied themselves with nazis. Taoism somewhat similar to what you would get if anarcho capitalists allied themselves with pagans and wiccans... WOW! I'll skip the obvious comments and ask, In which centuries are you suggesting this applies? Now? If so, you are clearly NOT talking about mainland China. Please re-define the centuries/epochs during which you believe this to have been true, and then maybe I'll bother responding. -TD
Re: This Memorable Day
At 9:00 PM + 11/10/04, ken wrote: Be fair. They had a trained and disciplined army. Most of whom would obey orders to the death. That's worth a hell of a lot in battle. Yeah, but the zulus had the wrong end of, well, the stick. Take a look at, again, Hanson's Carnage and Culture for a nice discussion of the Zulus in particular, and exactly why 18 brits in a hastily constructed breastwork could hold off several thousand, killing most. Cheers, RAH -- -- - R. A. Hettinga mailto: [EMAIL PROTECTED] The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA ... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience. -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
