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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: t4texas who wrote (41356)4/4/2005 3:45:11 PM
From: jim_p  Read Replies (2) of 206118
 
"This latest boom was driven by a credit binge. Responding to the massive non-performing loans accumulated by Chinese banks in the 1990s, the government ordered they reduce their NPL ratios - bad loans as a proportion of total loans. The move was universally applauded. With hindsight, however, the focus on NPL ratios was a terrible mistake. That is because China's banks are technically insolvent but enjoy high liquidity. To cut NPL ratios, they merely increased the denominator of the ratios: their loans. Lending rose rapidly, driving growth as a side-effect as NPL ratios fell from 28 per cent in 2002 to 13.2 per cent at the end of 2004."

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