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(CNN)   China targets shadow bankers in credit squeeze. A financial bukkake as it were   (money.cnn.com) divider line 7
    More: Interesting, credit squeeze, chinese banks, sustainable growth, dwarf, shadow banking system, commercial banks, Capital Economics, bankers  
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485 clicks; posted to Business » on 25 Jun 2013 at 9:47 AM (42 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-06-25 10:03:27 AM
Anyone else go WTF China?!@?!  when reading this:
The shadow banking sector's exact reach is unknown, but the Fitch ratings agency estimates its size has reached roughly 60% of China's GDP.

Not sure about anyone else, but with this Snowden Hong Kong not answering their phone and now their central bank not keeping their hand on the wheel... China seems to ignore immediate crisis.
 
2013-06-25 10:37:21 AM
That's Japan, subby.
 
2013-06-25 10:39:13 AM

Tommy Moo: That's Japan, subby.


fine, you come up with a chinese term for something sexual being squeezed
 
2013-06-25 10:41:11 AM
ah damnit, I meant a creampie
 
2013-06-25 10:45:16 AM
And on the ECB, we have a guy who's name sounds like Ben-Wa Heart. There's probably a joke in here about things ending in tears, although I'm not sure if I'm referring to crying, what happens when you put too much stress on paper, or, well, crying again.
 
2013-06-26 01:25:52 AM

NostroZ: Anyone else go WTF China?!@?!  when reading this:
The shadow banking sector's exact reach is unknown, but the Fitch ratings agency estimates its size has reached roughly 60% of China's GDP.

Not sure about anyone else, but with this Snowden Hong Kong not answering their phone and now their central bank not keeping their hand on the wheel... China seems to ignore immediate crisis.


That's pretty low for a supposedly out-of-control sector; Iceland's reached multiples of their GDP before the crash. Also, it's a bad comparison anyway since it weighs a stock (of assets held by the sector) against a flow (yearly income of the economy). Not to mention that "shadow" banking often deals in derivatives, which the media tends to count by gross value instead of net: if you and I agree to an interest rate swap where I start paying your interest costs and you start paying mine*, articles written by people who don't actually know anything about finance will count that as having a value of my total payments to you plus your total payments to me, when the actual value is the difference between those two, perhaps many times less.

In short, while I don't think this is a totally insane thing for them to do, it's more about nipping a nascent problem in the bud rather than scaling back something that's gone totally out of control, and "60% of GDP" makes it sound much bigger than it really is in several ways.


*why would anyone do this? Suppose I have a fixed-rate debt and you have a floating rate debt of the same size. I think rates are going down below my current fixed rate, you have no idea what's happening and just want to remove the uncertainty. So, we agree to trade. You get a payment you can plan for no matter what, I get to see if I was right about rate movements.
 
2013-06-26 02:01:46 PM

Thats_right_ALL_the_tea: In short, while I don't think this is a totally insane thing for them to do, it's more about nipping a nascent problem in the bud rather than scaling back something that's gone totally out of control, and "60% of GDP" makes it sound much bigger than it really is in several ways.


*why would anyone do this? Suppose I have a fixed-rate debt and you have a floating rate debt of the same size. I think rates are going down below my current fixed rate, you have no idea what's happening and just want to remove the uncertainty. So, we agree to trade. You get a payment you can plan for no matter what, I get to see if I was right about rate movements.


Thank you for the break-down in misreporting by the media.

When I originally read the article it sounded as though Fitch rating estimated that the reach of the shadow banking sector is 60% of the entire countries annual GDP.   Essentially, saying that a bit more than half of the business in China is done under the table, between private parties, without government banking oversight.  This would be akin to the dark pools in Western finance where 'shadow exchanges' allow for hedge funds, mutual funds, and large scale investors to exchange shares in private without oversight or reporting.

On a separate note:  What kind of job would someone look for if they were interested in making these kind of interest-rate swap bets for a stable long term minded client / employer?
 
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