What is going on in China?

This short segment gives a pretty good background to what is happening on the Yangstse River.

If you think this is biased just try the mainland CGTN!

Behind the Dam 

Could you be impacted if the Three Gorges Dam in China collapsed? 

As natural and man-made disasters crop up more and more through China, the longevity of the Three Gorges Dam is receiving more scrutiny. 

The dam itself appears to have been a vanity project, all for one man’s financial gain. 

With so much money involved, American investments included, if disaster were to strike, how much of that would wash away? 

Join Zooming In’s Simone Gao on this episode of the China Angle to look at the 
man behind the dam

Urgent: China dam disaster in Enshi City, Hubei Province - July 17, 2020

I was beginning to think that Epoch Times is propaganda until I went back to check on the Chinese network, CGTN.

A year ago if was an outward-looking channel with interesting interviews etc., but it has now turned into a propaganda outlet worthy of Chairman Mao

This would be typical of their fare.

Another fairly biased report from India which is in a propaganda war with China.It makes connections that may not be there but otherwise is worth looking at.

Bank Run crisis makes China put severe withdrawal limits on its 

frightened citizens



This article, cited in the video, appeared in the South China Morning Post in June.  When I looked it was no longer there and I had to put in the full title verbatim into the search engine to find it.

Obviously, we are not supposed to know.

China’s banking system 

begins to crack at its grass 

roots as two bank runs take 

place within a week

• Local governments and police in both Hebei and Shanxi provinces were forced to intervene after rumours concerning Baoding Bank and Yangquan Commercial Bank
• China is hoping to rely on its small lenders amid the fallout from the coronavirus to provide funds to small factories and farmers
  
  
  

  

  
  

https://www.sammyboy.com/threads/china-banking-system-collapsing-2-bank-runs-in-1-week-bankrupt.288057/?fbclid=IwAR2J1LqU0OqTW66grUfXW5GupiN_hlpqb2A4Yv_MUcj4eZ1ZYQkVIFZm3z4

Amanda Lee in Beijing

Published: 8:15pm, 23 Jun, 2020


China’s US$40 trillion banking system is seeing growing signs of trouble at its grass roots with bank runs happening at two small local lenders last week, a sign that a mountain of debt and an unprecedented economic contraction has started to take a toll.

Local governments and police in both Baoding city in Hebei province and Yangquan, a coal mine town in Shanxi province, last week pleaded with customers not to withdraw cash from local banks despite various unsubstantiated rumours.

On Saturday, the city of Baoding said on its official WeChat account that Baoding Bank was operating normally and people “should not believe in or spread rumours … and should jointly be safeguarding good financial and social order” after a group of depositors rushed to withdraw money from the bank.
Local police issued a statement saying it had arrested two individuals for spreading rumours that led to “panic among the public”.

The government and police in Yangquan were forced to issue a statement after local depositors rushed to Yangquan Commercial Bank. Photo: Handout
Three days earlier, the government and police in Yangquan were forced to issue a similar statement after local depositors rushed to Yangquan Commercial Bank.


According to a local government notice on Wednesday, the local government pleaded the public not to withdraw cash from the bank in groups and “be watchful of risks of holding a lot of cash”.


Local branches of China’s central bank and the banking regulator also issued statements seeking to assure the public that their savings at the banks were safe.


Phone calls made to both banks went unanswered on Tuesday.


Bank runs are not necessary for most savers as bank deposits in China are guaranteed up to 500,000 yuan (US$70,000) per bank, however, investment wealth management products and trust investment plans, which are popular among Chinese residents and are often sold via bank branches, are not protected.


The Bank of Gansu, which raised HK$6 billion (US$848,000) through an initial public offering in Hong Kong in January 2018, was hit by a bank run in April, while Yingkou Coastal Bank in the rust-belt province of Liaoning received a large volume of over-the-counter requests to withdraw cash in November.

And while bank runs are often calmed quickly after intervention by the local governments, they provide reminders of the troubled balance sheets of
small Chinese banks amid souring loans and darkening growth prospects which have been exacerbated by the coronavirus.

Baoding Bank said in its financial statements that its non-performing loan ratio had increased steadily to 2.12 per cent at the end of 2019 from 2.09 per cent in 2018 and 1.84 per cent in 2017.


Yangquan Bank has not published its 2019 data, but its non-performing loan ratio had more than doubled to 2.57 per cent in 2018 from 1.03 per cent at the end of 2017.

The emergence of small lenders in China in the last decade is the result of the state-led growth model which in turn has promoted local governments’ debt-fuelled spending. However, many are now facing a mix of problems including rising non-performing loans, insufficient capital and poor governance.

According to figures released by the China Banking and Insurance Regulatory Commission, the average non-performing loans ratio at city commercial banks – a group that includes both Baoding Bank and Yangquan Commercial Bank – was 2.45 per cent as of the first quarter of 2020, about 1.7 times of the average of 1.41 per cent for big four state banks over the same period.


What we’ve seen is that in many occasions, in cities and counties, there are some consolidations in small lenders. Especially the very weak ones Steven Chan

But the real picture could be much worse after the central government last year took control of Baoshang Bank as the lender in Inner Mongolia, once a star performer, was unable to sustain operations and was recapitalised and reformed.

Last year, the central government was also forced to bail out the
Bank of Jinzhou and Hengfeng Bank.

“What we’ve seen is that in many occasions, in cities and counties, there are some consolidations in small lenders,” said Steven Chan, executive director of equity research at Haitong International. “Especially the very weak ones.”
For the Chinese financial authority under Vice-Premier Liu He, the bottom line is that problems at individual institutions will not evolve into “systemic risks”. The pressure to solve the problems of local institutions are often put on
local authorities,and Beijing is very discreet in directly bailing out local banks.

We expect the slowing of loan growth for regional banks to continue in the rest of 2020 as regulators act to resolve the most vulnerable regional banks Moody’s

The small banks’ woes come at a time when Beijing needs them the most as the Chinese authority is relying on small lenders, which often serve small businesses, to provide credit to factories and farms so that the so-called economic cells of the Chinese economy can survive the impact of the coronavirus.

China’s banking regulator is drafting a plan concerning recapitalisation of small lenders, although details have yet to be published. According to the 21st Century Business Herald, China is thinking of selling 200 billion yuan (US$28 billion) worth special bonds, usually used to fund infrastructure projects, to raise funds for the state owners of local banks.

“We expect the slowing of loan growth for regional banks to continue in the rest of 2020 as regulators act to resolve the most vulnerable regional banks,” said Moody’s in a report published last week, adding that city commercial banks’ lower profitability also makes it unlikely that they can replenish their capital by earnings alone.


Here are some other headlines

Alleged video from China: Uighurs 

blindfolded, shackled and herded on 

trains for concentration camps

Bank runs in Italy?

URGENT! BANK RUNS HAVE BEGUN IN ITALY!!!!! ATM's Being Emptied!

SuperStation95,

11 July, 2016

We have numerous reports of BANK RUNS taking place right now throughout Italy.  Reports of lines of people at ATM's are draining the automatic tellers of all cash.

This comes after weeks of speculation about the health of several Italian banks, including the oldest Bank Monte dei Paschi, which has been in business since the year 1472 - twenty years before Columbus discovered America!

Snce March of this year, SuperStation95 has been reporting the Italian banking system is a “leaning tower” heading toward collapse at literally any moment.  And as Italy’s banks begin to go down like dominoes, it is going to set off financial panic all over Europe unlike anything we have ever seen before. 

We even wrote about the troubles in Italy back in January, but since that time the crisis has escalated.  At this point, Italian banking stocks have declined a whopping 68 percent since the beginning of 2016, and when you look at some of the biggest Italian banks the numbers become even more frightening. 

Shares of Monte dei Paschi were down 4.7 percent, and they have now plummeted 86 percent since the start of the year.  Shares of Carige were down 38 percent, and they have now plunged a total of 88 percent since the start of the year.  This is what a financial crisis looks like, and just like we are seeing in South America, the problems in Italy appear to be significantly accelerating.

So what makes Italy so important?

Well, we all saw how difficult it was for the rest of Europe to come up with a plan to rescue Greece.  But Greece is relatively small – they only have the 44th largest economy in the world.

The Italian economy is far larger.  Italy has the 8th largest economy in the world, and their government debt to GDP ratio is currently sitting at about 132 percent.

There is no way that Europe has the resources or the ability to handle a full meltdown of the Italian financial system.  Unfortunately, that is precisely what is happening.  Italian banks are absolutely drowning in non-performing loans, and represents “the greatest threat to the world’s already burdened financial system."

As this "run" continues, Italian banks will fail and be closed.  Once they are closed, it will begin to take out big banks elsewhere in Europe, from whom the Italian Banks have borrowed.  That will spark bank runs in Europe, and some very  (VERY) large banks in Europe will fail.  Once that happens, it will hit Banks in the USA . . . . game over.

We encourage readers in the rest of the world to have CASH MONEY in their possession at home, in case banks are closed for a "bank holiday" which could last for WEEKS.   If the banks are closed, CREDIT and DEBIT CARDS WILL NOT WORK.  You have to have enough cash to survive . . . enough to buy FOOD and perhaps FUEL.  Never mind paying bills; this could end-up being "survival."  Folks without cash will starve.

 Earlier today in Rome:

 

 

TRIGGERED BY EUROGROUP ANNOUNCEMENT: NO ITALY BANK BAILOUT

Eurogroup head Jeroen Dijsselbloem earlier today said he was not "particularly" worried about Italian banks. More interesting was his insistence that “there have always been and will always be bankers that say ’we need more public money to recapitalize our banks.... and I will resist that very strongly because it is, again and again, hitting on the taxpayer." He then added that"the problems with the banks need to be sorted out in the banks and by banks.”

He sided further with Germany's Angel Merkel camp when he said that he finds the ease in which bankers ask for public funds to sort out problems is “very problematic.”

Dijsselbloem added that “there has to come an end to” bankers asking politicians to solve their problems.

His statement comes just a day after David Folkerts-Landau, the chief economist of Deutsche Bank,called for a €150 billion bailout for European banks, confirming that it is no longer just an "Italian" issue.

Dijsselbloem's further comments showed that he won't be easily swayed absent a market-wide panic and/or a steep slump in the economy.

“I think they’re talking constructively to try and find solutions within the European frameworks,” says Dijsselbloem before a meeting in Brussels Monday cited by Bloomberg. “Yes, there are issues of non-performing loans in the Italian banks, but that’s not a new issue. It needs to be dealt with. It will have to be dealt with gradually. There will be no big solutions.”

“It’s not an acute crisis. That also gives us some time to sort these things out. So as long as the authorities in Italy and the banking authorities are constructively talking, I think we should allow them the time to do that”

BRRD rules are “clear. They are, of course, also strict in the sense that they make very clear when there needs to be a bail-in and who needs to be bailed-in in what order. And within that framework a solution still can be found. I mean, you still have to deal with banks sometimes. And it’s still possible. But it has to be done within those rules."

 

Customers wait for access to ATM's

 

He wasn't the only one. Also today Austrian Finance Minister Hans Joerg Schelling says he has “no” sympathy for bending bank bail-in rules.  "Europe has few rules, but these rules must be adhered to. And we can’t discuss the rules every two years. If we give ourselves rules, we must apply them."

His punchline was one we first noted two weeks ago, when Renzi tried to scapegoat the Italian push for a bailout on Brexit: "What’s happening in Italy has nothing to do with Brexit. The non-performing loans under discussion for offloading into a bad bank have been around for many years and have nothing to do with Brexit. One shouldn’t use Brexit as an excuse for one’s own failures. I expect there to be a tough position” toward Italy.

Needless to say this was the worst possible news for an Italian banking sector which many view as the next contagion hotspot, and which as the chart below shows continue to trade at crisis level.

And further coverage

And from the reliable Mish Shedlock

Italy’s Miserable Eurozone Experience: 20 More Years of Woe Coming

MishTalk,
12 July, 2016



The Euro was supposed to lift all boats. Italy was left behind, and will stay there for two more decades according to the IMF.

Please consider Italy ‘Facing 20 Years of Economic Woe’

The IMF has warned that Italy faces two decades of stagnant economic growth.

Its latest report on the country puts growth this year at under 1%, down from its previous 1.1% estimate, and forecasts growth in 2017 of about 1% – down from a 1.25% estimate.

The IMF says Italy will not reach pre-crisis levels until 2025, by which time its neighbours will have economies 20-25% above 2008 levels.

Italy is the third largest eurozone country.

It has 11% unemployment and a banking sector in crisis, with government debt second only to that of Greece.

Italy GDP 1961 to Present

Italy GDP Since Joining Eurozone

Charts from World Bank.

Italy has been in decline for a long time. The eurozone was supposed to help. It didn’t.

Decline and Fall of Italy

Italy vs. Eurozone

The Economist discusses The Italian Job.

Italy’s experience within the euro zone has been miserable. It has been in recession for five of the past eight years. Real (ie, adjusted for inflation) GDP per person is lower than in 1999. Sovereign debt has risen above 130% of GDP. Worse, Italy’s economy is woefully uncompetitive. Since 1998 productivity has fallen steadily. Labour costs, however, have not. Since Italy joined the euro, exports have ceased to be a driver of growth, which has consequently slowed. A slowdown is not something a country with such daunting debts can afford.

There is no shortage of explanations for Italy’s slump in productivity. Thanks to punitive regulation of labour and product markets, it is one of the most expensive places in the rich world to start a new business. Taxes and red tape strongly discourage productive firms from growing very large. Nearly 70% of Italian workers labour in firms with fewer than 50 employees, compared with about a third in America. The government taxes income from labour far more heavily than consumption, discouraging work (and encouraging evasion). Perhaps most worrying, the share of young Italian workers with a university degree is among the lowest in the rich world. At just under 10%, the share of highly educated Italians living abroad is also among the highest in the rich world.

The slowdown in productivity occurred just as Italy joined the single currency. Some economists see this as coincidental. The euro was born just as the global economy was undergoing a rapid bout of globalisation. Italy’s small firms did not scale up to capitalise on emerging-market demand, as Germany’s did. By the same token, its under-skilled population could not take advantage of the rising return to trade in professional services, as firms in America and Britain did.

Rather than waiting for productivity to rise, a quicker route to faster growth is to drive down wages. Indeed, Mr Renzi’s advisers suggest that the government may seek to impose a decentralised wage-setting process if negotiations between trade unions and industry do not yield one.

Yet even the benefits of wage restraint could be disappointing. Germany’s competitiveness drive occurred during an era of relatively strong global growth and relatively buoyant inflation, which made the suppression of real wages both less painful and less noticeable. Italy will enjoy no such help. Any growth scheme that rests on falling wages is unlikely to endear Italians to Mr Renzi. For his reforms to work, he will need time that voters are unlikely to grant him. Keeping Italy happy enough to stay in the euro zone will, in the short term, take much faster growth across the euro area as a whole, fostered by continued dovishness from the ECB and less finickiness from the European Commission.

If the euro area is to keep Italy on board, it will need to become a bit less austere and a bit more Italian.

Italy Roundup

• July 4: Merkel-Renzi Showdown: Italy Threatens to Defy Merkel, Brussels Over bank Bailouts
• July 4: ECB Triggers Another Bank Shares Selloff, Tells Monte dei Paschi to Shed More Assets
• July 6: “Italian Gov’t Collapse More Than Just a Possibility”
• July 10: Deutsche Bank Chief Economist: “Europe is Seriously Ill”, Banks Need €150 Billion Bailout

Mike “Mish” Shedlock