But I think China is setting up for a very similar fall to the US - in fact it might be striking in parallels - bad financial controls (if you think our banks are bad...), an out of control real estate market driven by massive liquidity, and striking inflation hitting the middle and lower classes. We shall see how it turns out, but it's starting to all sound very familiar.
Today in Bloomberg we have this classic headline 'China Discovers $119 Billion Banking Irregularities'. Folks, I've had people argue with me, how everything is so perfect in China - I don't understand the story. Trust me, greed is a universal human trait (this I understand clearly) and the financial controls (from all I've read from sources in multiple countries) are poor. So it is hard to trust any numbers coming from this country. But again, they are taking a very very very similar path to the US. Just more evidence. $119 Billion would make even US banks blush - thats a huge sum. More fallout as we go through this year, I am sure. In the rush to accelerate all facets of growth small things like say, product safety or financial controls get left behind. Cockroaches... everywhere.
- China discovered 860 billion yuan ($119 billion) in banking ``irregularities'' last year, almost triple the profits by Industrial & Commercial Bank of China Ltd. and other ``major'' Chinese commercial banks, the regulator said.
- ``We must strengthen our regulatory capacity and nip these risks in the bud,'' Liu Mingkang, chairman of the China Banking Regulatory Commission, said at the watchdog's annual planning meeting, according to a statement posted on its Web site today.
- China's ``major'' commercial banks posted combined profits of 299 billion yuan in 2007, the statement said, without providing a year-earlier figure. A July 5 report said the banks earned an aggregate pretax profit of 240.9 billion yuan in 2006. Assets at Chinese banks totaled 52.6 trillion yuan at the end of last year, today's release said.
2 comments:
"Trust me, greed is a universal human trait "
Sometimes your thinking is so damn close to mine its uncanny.....Humans IMHO are innatley greedy. Its nothing new...cavemen wanted something they're neighbors had....and so on. The human race will never be satisfied, and is probably its own worst enemy.
Yep, that is why "sensible regulation" is a necessity no matter what the GOP thinks. I am a small govt guy but this is one thing govt should be doing. People left unchecked will wreck havoc. We had an IPO in China for that coal company I posted about, it went up 90% and the CEO was disappointed. Classic example. Another are all these solar companies ramping up in China, no matter what the cost. They see their peers getting rich by listing on US exchanges and all they need to do is ramp up, get a public listing and they can be rich overnight due to American investors who believe every solar company is going to be the next Intel. So greed drives that behavior. With the Shanghai stock market up 100%s dont you think the people there are thinking the same as US people in the late 90s... all I need is to get an idea, list on the exchange and I will be rich beyond my dreams. Humans are humans the world over.
This is why I am not to worried about the Earth surviving humans damage to it. In the end the Earth will still be around - somehow I think humans will find a way to exterminate themselves. And the Earth will keep ticking, probably a far better place after this takes effect ;)
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