To: russwinter who wrote (2575 ) 11/25/2003 11:30:00 AM From: TobagoJack Read Replies (2) | Respond to Hello Russ, <<China to inject more cash into debt-laden state banks >> ... on this I may have been ahead of the curve by 27 months. My read is all is in accordance with plan, going OK :0)Message 16172978 Just as an example, it has been much reported that China’s banks will blowup due to all the bad debt. What the reporters fail to analyze is that the nature of banking in China over the past 50 years was actually a money moving function of the state, with the state owning both the borrowers and the banks, and the population’s deposits are guaranteed by the state and all the population worked for the state essentially for free. This is what happens in a poor communist economy.In the upcoming bank IPOs, the bad debt will be absorbed by the state , funded by the sale of state-owned enterprises that had, in many cases, been the bad debt borrowers. The cleanup is mostly an accounting entry, backed up by privatization. Given the low debt level of the state, no serious private source bridge loans will be required for the IPO or conversion. The banks are nearly ready .
