The big squeeze: Top 10 things China must stop doing in order to reform its banking system and real estate markets
We’ve all seen where the actions of banking systems of developed nations such as the United States can lead — straight into 2008’s global financial crisis.
In June, a spike in the interbank lending rate in China sent global markets reeling, signalling Chinese banks did not want to lend to each other. This reminds me of early 2007, when the first default in the United States came from Bear Stearns defaulting on two CMBS funds. The follow-on was the demise of Lehman Bros, and of course the start of the whole mess. Contributing to the global financial crisis was the use of credit default swaps that banks and insurance firms such as AIG had issued in the magnitude of “trillions” of dollars as everyone sought false comfort from these under-capitalised lenders.
The recent actions of the People’s Bank of China (