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China May Face ‘Massive’ Bank Bailouts After Stimulus Program

Posted By admin On March 14, 2010 @ 4:55 am In Money Watch | Comments Disabled

Bloomberg News [1]
Sunday, March 14, 2010

March 13 (Bloomberg) — China may be forced to bail out banks that made loans for local-government projects under the unprecedented stimulus program unleashed in 2008, according to Citigroup Inc. and Northwestern University’s Victor Shih.

In a “worst-case scenario,” the non-performing loans of local-government investment vehicles could climb to 2.4 trillion yuan ($350 billion) by 2011, Shen Minggao, Citigroup’s Hong Kong-based chief economist for greater China, said yesterday.

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China May Face ‘Massive’ Bank Bailouts After Stimulus Program  090310banner1 [2]

“The most likely case is that the Chinese government will engineer a massive financial bailout of the financial sector,” said Shih, a professor who spent months researching borrowing by about 8,000 local government entities.

Chinese officials pledged this week to limit the risks posed by the investment vehicles, which circumvent restrictions on local-government borrowing to channel money into stimulus projects. Yan Qingmin, head of the banking regulator’s Shanghai branch, said March 5 that China plans to nullify guarantees provided by local governments for some loans.

Full story here. [1]


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URLs in this post:

[1] Bloomberg News: http://www.bloomberg.com/apps/news?pid=20601087&sid=aIylss..voRM&pos=6

[2] Image: http://prisonplanet.tv/signup.html

[3] Chinese stimulus cash is inflating new stock market bubble, officials warn: http://www.prisonplanet.com/chinese-stimulus-cash-is-inflating-new-stock-market-bubble-officials-warn.html

[4] The Fed Does It Again: $80 Billion Secretive “Bank Subsidy” Program Uncovered, Providing Bank Loans At 0.01% Interest: http://www.prisonplanet.com/the-fed-does-it-again-80-billion-secretive-bank-subsidy-program-uncovered-providing-bank-loans-at-0-01-interest.html

[5] US demands China explain cyberattacks in face-to-face talks: http://www.prisonplanet.com/us-demands-china-explain-cyberattacks-in-face-to-face-talks.html

[6] Renowned Economist Warns Of Severe Depression Without “Massive New Stimulus”: http://www.prisonplanet.com/renowned-economist-warns-of-severe-depression-without-massive-new-stimulus.html

[7] Stimulus Swindle: Los Angeles Spent $70 Million in Stimulus Funds to Create 7.76 Jobs: http://www.prisonplanet.com/stimulus-swindle-los-angeles-spent-70-million-in-stimulus-funds-to-create-7-76-jobs.html

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