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CHINESE RMB CURRENCY TUMBLES – At 19-Month Lows As Bad Debts Hit 5 Year Highs
As we discussed previously, delinquent loans in China are a problem… and a growing one. It seems that news is finally starting to filter to a mainstream audience as Bloomberg reports that China’s biggest banks are poised to report the highest proportion of bad debts since 2009 after late payments on loans surged to a five-year high, indicating borrowers are struggling amid an economic slowdown.As S&P warns,”overdue loans are a leading indicator of asset-quality deterioration and show the rising liquidity constraints among borrowers… and the disturbing thing is the end is nowhere in sight.” CNY has pluned almost 150 pips to new 19-month lows on the news.
China bad debt at multi-year highs…
CNY is plunging in the news – back to its lowest against the USD in 19 months… How much bad debt can China withstand? We discussed previously… These numbers tell us that it does not appear that China can bear a very large increase in debt, and that the idea that the government can simply “bail out the financial sector” is erroneous, or at least, a stretch. China does not have the luxury of the United States, which can spend excessively because foreign countries continue to buy U.S. government debt (as the dollar is the world reserve currency). If the leadership attempts to spend down its large cache of dollar reserves, it will lose control of its currency, as a larger supply of U.S. dollars relative to the Chinese RMB would depreciate the currency unless sterilized.
“Under the premise of preventing systematic risks, allowing some default cases to happen naturally in compliance with market forces will… help rectify behaviours of product issuers and investors and benefit the healthy development of the wealth management market,” People’s Bank of China deputy governor Pan Gongsheng said at a forum in Shanghai.
Pan’s remarks echoed those by Premier Li Keqiang earlier this month after the country’s first-ever default on a domestic corporate bond sparked concerns that other firms could follow suit.
The U.S. State Department, to the Russian position on Ukraine, economic hinted to isolate Russia and the freezing of assets and blocking arms sales sanctions, however, the Americans burning is extinct in China. The country has said that if the U.S. does not change its position on Ukraine, may require payment of debts in gold to the United States, which would put a halt to the U.S. economy.
China acted as a formidable new ally Russia and openly siding with Vladimir Putin and his Ukrainian crisis management.
As it became known today, Chinese officials are willing to use the right of “veto” against any decision of the Security Council of the UN aimed at Russia.
Moreover, China masterfully cooled the “geopolitical ambitions” and U.S. demand to insinuate that may require payment of debt obligations in gold. The threat is sufficiently effective, taking into account the fact that the gold reserves of the United States do not cover debt obligations. china chinese rmb loan debt “bad debt” “credit rating” credit “credit check” payment bills borrow “payday loan” salary wages 2014 cny finance investment luxury u.s. “united states” usa america dollar usd reserve cash wealth control power freedom war ww3 “world war 3″ inflation “hyper inflation” economy future asset bank banking savings “bank account” “car loan” mortgage “real estate” bubble crash collapse crisis news media entertainment forex trading gold silver bitcoin bullion “gold cash wealth” jim rogers gerald celente alex jones infowars coast to coast am louis farrakhan speech rant david icke dollar collapse lindsey williams global reset
According to the Russian newspaper reported vesti.ru, several Chinese government leaders have held talks with Turkey, and have come to an agreement with the Isla