China watchers take a look at this. January, 31- fund default ?

www.forbes.com...

On Friday, Chinese state media reported that China Credit Trust Co. warned investors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.

The Industrial and Commercial Bank of China sold the China Credit Trust product to its customers in inland Shanxi province. This bank, the world’s largest by assets, on Thursday suggested it will not compensate investors, stating in a phone interview with Reuters that “a situation completely does not exist in which ICBC will assume the main responsibility.”

Now even communist banks can fail !! hahahah with the user interest rates I am not surprised one bit

There has never been a default—other than one of timing—of a WMP, so the Credit Equals Gold product could be the first. If it is, it will edge out the WMP that invested in loans to Liansheng Resources Group, another Shanxi coal miner. Jilin Trust packaged Liansheng’s loans into a wealth management product sold by China Construction Bank , the country’s second-largest lender by assets, to its customers. Liansheng is in bankruptcy, and it looks like the WMP holders will not be repaid in full.

That’s correct, but that is also why China is now heading to catastrophic failure. Because Chinese leaders have the power to prevent corrections, they do so. Because they do so, the underlying imbalances become larger. Because the underlying imbalances become larger, the inevitable corrections are severe. Downturns, which Beijing hates, are essential, allowing adjustments to be made while they are still relatively minor. The last year-on-year contraction in China’s gross domestic product, according to the official National Bureau of Statistics, occurred in 1976, the year Mao Zedong died

Even if Beijing makes sure there is no default on January 31, we should not feel relief. Just as Zhenfu followed Liansheng, there will be another WMP borrower on the edge of disaster after Zhenfu. And there are many Lianshengs and Zhenfus out there. There may have been 11 trillion yuan in WMPs at the end of last year.

Not everything is all peaches a cream with the Middle Kingdom's monetary system... Maybe more saber rattling to take the locals minds off of the situation? Who knows?

Maybe China needs a good old fashioned war. Those allways correct a struggling economy. At least that seems to be the way the west does things.

Interesting. And this is the first day of the year of the horse.

1 And I saw when the Lamb opened one of the seals, and I heard , as it were the noise of thunder, one of the four beasts saying , Come and see . 2 And I saw , and behold a white horse: and he that sat on him had a bow; and a crown was given unto him: and he went forth conquering , and to conquer . Revelations 6:1-2

Will the Chinese turn to conquering others in order to keep their coffers full?

I don't think the white horse is coming from China, but it is interesting coincidence.

reply to post by 727Sky


Saw this earlier and it's interesting but not (I think) lethal to China's economy. Doesn't that sound like famous last words?

Political or economic consideration:

Ultimately, given the government’s strong grip on financial institutions, default may be a political decision as much as an economic decision. From that perspective, CEQ1 would be a good candidate for default. The minimum investment in CEQ1 is CNY3mn, much more than the typical amount required for other trust investment and 75 times of per capita GDP in China. If defaults were to be used to send a warning signal to shadow banking investors, this group of rich investors may have been a good target because the government does not need to worry too much of them demonstrating in front of government offices. ZeroHedge..

Basically I think they're suggesting that China may just let the rich speculators take the hit. Still as we've seen in the EU contagion risks are always possible.

reply to post by 727Sky


Man I LOVE your avatar!! Cats are so awesome! Back on topic, maybe that's why they're doing all the saber rattling as of recent?

www.activistpost.com...

Coast to Coast had a financial bubble expert 1/21/2014 and he said the Chinese bubble is the biggest bubble he has ever seen in studying all the financial bubbles of the last 400 years. Wow that's allot of bubbles!! His interview was rather foamy to say the least! Then I came across this article...

China:

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire U.S. commercial banking system in five years," she said.
The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. "This is beyond anything we have ever seen before in a large economy. We don't know how this will play out. The next six months will be crucial," she said

The Bubble Guy (Harry Dent?) was not big on buying homes nor gold or silver.. His prediction was the U.S. stock market would peak around 17,000 then crash down below 6000 (something I have heard before). The bottom will be reached and will not start back up in a meaningful way until 2019; how is that for doom porn!.. If you get a chance find the broadcast on youtube if interested... 2014 -2016 will be the time frame for the crash according Harry the Bubble guy...

reply to post by 727Sky


It makes sense that there will be a massive, global reset after years of every government and the banking industries cooking the collective books. It isn't so much 'doom porn' as it is common sense.

What is really disheartening is when this happens your average Joe will be left with a 401k Quarterly report that won't be worth the postage it took to mail it and there is literally nothing to stop it from happening.

Revolt and the markets nosedive.
Remain apathetic and eventually the markets nosedive.

What remains constant is that in the end you, I and the rest of your average Joes get screwed.

reply to post by 727Sky


Things aren't all Peaches-n-Cream here either, yet that hasn't stopped the Dow from flirting with 16,500. Why there is any investor confidence at the moment just blows my mind. Runaway spending, abject gridlock in DC, the ACA debacle that will play out in coming weeks and months (tax season=ACA taxex/fees/WTFever they call them), the credit downgrade, job report numbers that are questionable at best, the unemployment benefits and SNAP benefits booming growth....

I'm barely scratching the surface of our own fiscal calamities, yet all this and more must be ignored if one wants to claim that our own economy is happily chugging along.