China's view on the US financial crisis
-
US lending was 'ridiculous'TIANJIN - US LENDING standards before the global credit crisis were 'ridiculous' and the world can learn from China's more cautious system as it considers financial reforms, the top Chinese bank regulator said on Saturday.
Beijing curbed mortgage lending in 2003 and 2006 to keep debt manageable amid a real estate boom, while American regulators responded to a similar situation by letting credit grow, said Mr Liu Mingkang, chairman of the Chinese Banking Regulatory Commission.
'When US regulators were reducing the down payment to zero, or they created so-called 'reverse mortgages,' we thought that was ridiculous,' Mr Liu said at a World Economic Forum conference in the eastern Chinese city of Tianjin.
He said debt in the United States and elsewhere rose to 'dangerous and indefensible' levels.
Mr Liu's comments were unusually pointed criticism of US financial regulation for a Chinese official. They added to suggestions by countries that are under US pressure to liberalise their financial markets that Washington's model might not be ideal.
China has based its reforms on the US system but has moved gradually. It has kept its financial markets isolated from global capital flows, prompting complaints by its trading partners.
As China made changes, 'a lot of the time, we learned that what we had learned from our teacher the day before was wrong,' Mr Liu said, referring to the US.
China's state-owned banks have avoided the turmoil roiling Western markets. Chinese banks hold bonds from failed Wall Street house Lehman Brothers, but they are a tiny fraction of their vast assets.
Mr Liu compared Washington's proposed US$700 billion (S$999 billion) plan to revive credit markets to fast food and said the world needed to look at longer-term solutions.
'Fast food is convenient. This US$700 billion package must ease the concerns and build up confidence. But if you only take this, it doesn't agree with your stomach. You should think about Chinese slow cooking and slow food,' he said.
Mr Liu called for governments to create international standards and regulatory systems for globalised financial markets. He said Beijing has signed information-exchange agreements on financial regulation with 32 other countries since the turmoil began.
Mr Liu pointed to China's experience with real estate and the collapse of a stock market boom.
As stock prices in China soared, banks were ordered to make sure customers were not using loans or credit cards to finance speculation. As a result, Mr Liu said banks have suffered no rise in loan defaults even though stock prices have plummeted 63 per cent since the October 2007 peak.
'We Chinese can share our own experiences with all the market practitioners,' Mr Liu said. 'Maybe our experience cannot be applicable to developed markets fully. But still, I think it might be useful and helpful to those in emerging markets.'
Chinese and foreign business-people at the World Economic Forum, the Chinese leg of the forum based in Davos, Switzerland, said the credit crisis is likely to increase the influence of China and other emerging economies in the world financial system, though Wall Street will retain its leading role.
'I believe this kind of regional financial strength will play a bigger and more important role,' said Mr Jiang Jianqing, chairman of state-owned Industrial & Commercial Bank of China, the world's biggest commercial lender by market capitalisation.
'Right now the market is very unitary,' with US bonds dominating global holdings, Mr Jiang said. 'This kind of a unitary, overcentralised market is something we need to change.' Still, he said, Wall Street's 'dominance will continue.'
The European Union trade commissioner, Mr Peter Mandelson, defended the global capital markets structure, warning that drastic change might hurt prosperity.
'The capital market system, fundamentally, is not flawed,' Mr Mandelson said. 'We are not looking for some alternative, and I hope that people in the emerging markets, in China for example, are not looking for an alternative to properly functioning capital markets.'
The crisis is likely to reduce resistance in the West to investments by government funds as companies urgently seek capital, said Mr Thomas Enders, CEO of the European aircraft producer Airbus Industrie.
Critics have questioned the possible political motives of state-run funds and an EU official warned last year they might face restrictions if they fail to disclose more information about their goals and tactics.
'I would dare to predict that, yes, one of the big changes we will see is greater acceptance of sovereign wealth funds,' Mr Enders said. -- AP
-
wa now china... horse behind cannon
-
yaya... communism better... bullshit. what's the world's view on china's tainted food crisis?
-
actually, there should be some balance in the system
too much free market can get out of hand, so maybe 80-20 ratio will work better
-
Originally posted by skythewood:
actually, there should be some balance in the system
too much free market can get out of hand, so maybe 80-20 ratio will work better
so singapore system rox?
-
how is singapore's system?
-
every system is ok until something goes wrong...
-
total communism is not ok, proven
now we want to see if total free market is ok.
-
i think in order to force the western government to rethink their stand on western capitalism, is for the soveriegn wealth funds to stay clear of this crisis, and wait for the entire financial system to come tumbling down, with all the financial instution going bankrupt. to make a point that their system is fundmentally flawed.
after their financial institutions are utterly destroyed, then the sovereign wealth funds step in and acquire the bankrupt firms on the cheap, taking over all the US assets.
subjugate the americans to be 2nd class citizens in their own country. they had been for too long pulling their weight all over the entire world, and its time to reverse the trend.
the US financial system cannot cope from the magnitude of their financial storm. we are seeing cases of B bailing out A, followed by liquidity issues coming from B, requiring bailing out from C, then followed by D bailing out C and E. etc. the whole system is collapsing like a pack of cards.
and since the US dollar is about to be useless anyway, if the US economy crashes, may as well use their worthless currency to acquire their equally worthless institutions.
-
Watch when the US govt wanted 700Bill bail out it was the system of voting that shut it down and cause them to rethink the entire bail out. I called that the system is working.
PAP wanted million dollars salary not a single voice or system works to stop them.
As for the current crisis look at it this way: --- Market Correction to throw out the following folks..
1) you have global speculators -- Burn them.
2) You have investment bankers globally who graduated from top notch university who know nuts about what they are doing. -- Burn them
3) Greedy people - Burn Them
4) millionaire who got rich in Wall STreet Burn them.
5) Self declared High income earners have to reduce their salary.
-
They made good points.
-
U.S. are indeed in a lot of shit.
their democracy is too extreme.
-
Originally posted by Arapahoe:
Watch when the US govt wanted 700Bill bail out it was the system of voting that shut it down and cause them to rethink the entire bail out. I called that the system is working.
PAP wanted million dollars salary not a single voice or system works to stop them.
As for the current crisis look at it this way: --- Market Correction to throw out the following folks..
1) you have global speculators -- Burn them.
2) You have investment bankers globally who graduated from top notch university who know nuts about what they are doing. -- Burn them
3) Greedy people - Burn Them
4) millionaire who got rich in Wall STreet Burn them.
5) Self declared High income earners have to reduce their salary.
aahh, the ministers increase salary is voted in by the MPs, much like US vote out their bail out plan by their senate.
Same system, just diff parliament make up
-
Originally posted by skythewood:
aahh, the ministers increase salary is voted in by the MPs, much like US vote out their bail out plan by their senate.
Same system, just diff parliament make up
sorry the US is not a parlimentary system. The house does not vote base on partyline. The house vote base on voters response. This ensure the weakerest link are heard. That is precisely why when the PAP wanted huge salary there was not a system that could stop them.If you notice carefully suddenly all the media are interviewing all those millionaire but it is precisly these folks are the one that speculate they have the most to loose. Not those guys who are too busy working overtime taking 2 jobs to pay bills......see where this is coming from?
I was watching Vanguard CEO who made the most reasonable statement, all he sees right now are those sepculators who are loosing the most. Who needed a bail out.
I see all the weathy PRC coming to the US and scoop up property like nobody business. Use their friends to verify their income declaration with the bank or buddy buddy.
i encounter singaporean came over here and buy property too....
In the 80s the Japanese got burn....heeee now is the weathy PRC. You can be a property developer in the US but never a speculators.......see the dif......