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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (109438)	12/31/2010 9:53:16 PM
From: russwinter	4 Recommendations Read Replies (1) \| Respond to of 110194

I don't want to get too caught up in semantics, so I will just mention a few specifics of what I am talking about. I agree that it is crony capitalism run amok, but it is also government policy or lack of. What follows is sloppy and dangerous "planning style government" and was described in the Symposium article: realclearmarkets.com An “anonymous senior Japanese official” (pg. 12) describes the local government’s role. So-called “loan platforms” were established as funding vehicles to obtain commercial loans. When Beijing mobilized a massive 4 trillion Yuan pump priming in 2008, it ordered local governments to bear one-third of the cost themselves, triggering a stampede. As of June this year, there are 8,221 platforms and their outstanding loan balance was 7.7 trillion Yuan, of which 20% to 25% are deemed “problematic” by the China Banking Regulatory Commission. Next on page 10, Nakamae describes the problem with borrowing rather than taxing projects of this scale: “The problem with regional governments using bank lending rather than tax revenues to finance public works projects is that those do not create a return on investment. Servicing the debt is all but impossible.” A recent example, is China trying to use confused ad hoc pick and choose price controls. This just leads to shortages and hoarding, and doesn't work. china-briefing.com I could (and do on my site) go on and on with this kind of bad outcome government command or giving orders policy (or whatever you wish to call it).