{"id":3012,"date":"2011-01-21T05:15:54","date_gmt":"2011-01-21T12:15:54","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=3012"},"modified":"2018-09-21T02:08:24","modified_gmt":"2018-09-21T06:08:24","slug":"more-evidence-of-chinese-bubble","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2011\/01\/21\/more-evidence-of-chinese-bubble\/","title":{"rendered":"More evidence of Chinese bubble"},"content":{"rendered":"<p><span style=\"font-size: 16px;\">Yesterday Stratfor, alias Strategic Forecasting, Inc., <a href=\"http:\/\/www.stratfor.com\/analysis\/20110120-china-tries-curb-balance-sheet-lending\" target=\"_blank\" rel=\"noopener\">announced<\/a> that its sources, combined with its own internal analysis, provided evidence for a new money supply tightening policy from the Chinese government.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">To stave off the effects of the global recession the Chinese government pumped billions of dollars into its economy.\u00a0 This policy succeeded in providing very cheap, practically free, money to investors and speculators in China.\u00a0 Any person or business with a screwball idea could get a loan.\u00a0 Certainly economic stimulus followed and the recession was held at bay.\u00a0 But now what?<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">Starting last year the Chinese realized that they had created an out of control monster that began to look like (not surprisingly) an asset bubble.\u00a0 Pop!\u00a0 Therefore the government of China implemented a severe cut back in the total amount of money that could be lent to the public by the state-owned banking sector.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">Unfortunately for the Chinese government, it didn&#8217;t take too long for banks to begin making off balance sheet loans.\u00a0 Off balance sheet simply means that the loans were not accounted for by the banks in their official financial statements.\u00a0 Consequently, they pumped even more money into the overheated economy.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">Now Stratfor is reporting that the banks in China must bring all of their off balance sheet loans back onto their financial statements by the end of 2011 (or 2012 depending on which source is correct).<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">My point is that this is clearly further evidence of the difficult the Chinese are going to have in gently letting the air out of their asset bubble.\u00a0 If they are unable to let the air out gently then ultimately the Chinese economy will continue to take these excess funds and continue to invest in un-profitable ideas and businesses.\u00a0 This is the opposite of the <em>real<\/em> economic growth I talk about so frequently on the blog.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Yesterday Stratfor, alias Strategic Forecasting, Inc., announced that its sources, combined with its own internal analysis, provided evidence for a new money supply tightening policy from the Chinese government. &nbsp; To stave off the effects of the global recession the Chinese government pumped billions of dollars into its economy.\u00a0 This policy succeeded in providing very [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-3012","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/3012","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=3012"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/3012\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=3012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=3012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=3012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}