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Read more about the article China Lets Banks Roll Over Loans Backed by Pledges of Shares

China Lets Banks Roll Over Loans Backed by Pledges of Shares

"China will let banks roll over loans backed by shares and adjust their collateral requirements as the government tries to limit pressure for investors to sell stock and contain risks to the financial system from a market rout. The China Banking Regulatory Commission also wants lenders to support firms’ share buybacks by offering collateralized loans, the agency said in a statement on Thursday. One of the side-effects of the share market’s collapse from a June 12 peak was to diminish the value of shares pledged as collateral for loans from banks and brokerages. In China, a borrower pledging blue-chip shares can usually get a loan of as much as 50 percent of their value." Continue reading →

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China bans major shareholders from selling for next six months

"China’s securities regulator took the drastic step of banning shareholders with stakes of more than 5% from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets. The China Securities Regulatory Commission (CSRC) said on its website late on Wednesday that it would deal severely with any shareholders who violated the rule. The prohibition is also seen applying to foreign investors who hold stakes in Shanghai- or Shenzhen-listed companies, although most of their holdings are below 5%. More than 500 China-listed companies announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday." Continue reading →

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Central Bank Lies & Consequences

"We now have two examples in three years of a major central bank simply walking away from its supposedly most fundamental obligation. The lies upon which fractional reserve banking exists are beginning to catch up to it. Citizens everywhere in the Eurozone now have good reason to wonder if their banks will be next. After Cyprus and Greece, why should anyone believe anything the ECB says? If the ECB is willing to shut banks in a crisis, what assurance do we have that the Bank of England, Federal Reserve or the Bank of Japan won't do the same? Answer: None. Today's highly leveraged banks can fail very fast, stretching the capacity of even the strongest central banks." Continue reading →

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Living with Venezuela’s high inflation

"As the world watches the Greek debt crisis unfold, the economy of a country in another corner of the planet is also struggling, and some experts are even trying to draw similarities. Venezuela has the world's highest inflation, leaving many facing shortages and soaring prices. While the government of president Nicolas Maduro says this is the result of an 'economic war by capitalists and the United States against the country's socialist revolution', critics say the high inflation rate is simply showing the government's economic incompetence. The BBC's Daniel Pardo explains how inflation affects what Venezuelans buy every day, like the popular snack called Arepa." Continue reading →

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Loads of Debt: A Global Ailment With Few Cures

"As central banks like the Federal Reserve and the European Central Bank have printed trillions of dollars and euros, markets in stocks and bonds, as well as other types of assets, have responded optimistically, sometimes reaching highs that were unthinkable seven years ago in the depths of the financial crisis. Central banks can make debt less expensive by pushing down interest rates. Crucially, though, they cannot slash debt levels to bring much quicker relief to borrowers. In fact, lower interest rates can persuade some borrowers to take on more debt. Many countries are now in a position where their governments and companies live in fear of an increase in interest rates." Continue reading →

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China Bans Margin Calls; Limits Pension Funds To Buying Stocks Only

"What do you do when two policy rate cuts, $19 billion in committed support from a hastily contrived broker consortium, and a promise of central bank funding for the expansion of margin lending all fail to quell extreme volatility in a collapsing equity market? Well, you can simply ban selling, which is apparently the next step for China. According to Caijing, the country's national social security fund is now forbidden from selling (but is welcome to buy). The pension selling ban comes just days after China moved to curtail margin calls in a similary ridiculous attempt to stop the bleeding by simply making selling against the rules." Continue reading →

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China’s brokers pledge to buy stocks to prop shaky markets

"China’s top securities brokerages said on Saturday that they would collectively buy at least 120 billion yuan ($19.3 billion) of shares in a bid to stabilize the country’s stock markets after a slump of nearly 30% since mid-June. The pledge follows near-daily official policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, that have so far failed to arrest the sell-off, which some market watchers fear could turn into a full-blown crash. While brokerages were likely to focus on stronger, blue-chip companies, Hao said there would be little interest in saving small and wildly overvalued 'growth' firms. Such companies are favored by ordinary investors." Continue reading →

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MSCI backs itself into corner on China share inclusion into global index

"MSCI’s decision to defer including Chinese shares in its emerging market benchmark share indexes for a second time may have trapped the index provider into making promises it can’t keep, both to Beijing and to its investor constituents. MSCI’s clients want Beijing to open its capital accounts so they can reliably move their money in and out of China’s markets, but the economy is facing its slowest growth in decades, which has led to capital flowing out of the country. For China, inclusion in the index could over time bring an estimated $400-billion into its stock markets and would help in its drive to internationalize the yuan currency." Continue reading →

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Bitcoin Payment Service Helps Greek Businesses Avoid Capital Controls

"With the banking system locked down, capital controls prevent Greek citizens from accessing cash and this disrupts the economy. The Irish company Spartan Route has come to the rescue of Greek businesses with an innovative service proposal: They will invoice their Greek clients’ foreign customers in euro, collect the payment, and send bitcoin back to Greece. Their proposal to Greek businesses is simple and crystal clear: 1. Invoice Spartan Route for your exports, 2. Deliver your goods as normal to your customer through your current supply chains; 3. Spartan Route pays you with bitcoin; 4. Spartan Route invoices your customer for euro." Continue reading →

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Greek bank official dismisses ‘haircut’ report as “baseless”

"Greek leaders have repeatedly dismissed the possibility they will have to 'bail-in' depositors to prevent the collapse of the banking system. But citing bankers and businesspeople with knowledge of the measures, the Financial Times reported: 'The plans, which call for a 'haircut' of at least 30 percent on deposits above 8,000 euros, sketch out an increasingly likely scenario for at least one bank.' The report quoted a source as saying: 'It (the haircut) would take place in the context of an overall restructuring of the bank sector once Greece is back in a bailout programme.' The head of Greece's Bank Association dismissed the report as 'completely baseless'." Continue reading →

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