Hey! Its not just the USA that has a crappy shadow banking system — China does too!

 

click for larger graphic
Chinese banking
Source: NYT

 

Category: Credit, Derivatives, Digital Media, Really, really bad calls

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4 Responses to “China’s Shadow Banking System”

  1. capitalistic says:

    Jim Chanos has been on this for 5 years.

  2. DeDude says:

    Even the Chinese banksters know how to get around rules, stick it to costumers and harvest their money without taking the risk. Predatory capitalism at its pinnacle.

  3. Frwip says:

    Those things look to me like CDOs, but with no expectation of liquidity, which may actually end up being a rather good thing, that is assuming, of course, that the investors in those “wealth management products” are not themselves highly leveraged.

    After all, what really killed in 2008 was not so much the fact that the CDOs were rotten but the notion a few months earlier that those rotten CDOs were as good as cash with added dividends goodness. Then, the tide went out and it turned out that naturism was a lot more popular on Wall Street than most people thought…

  4. Alex says:

    These look a lot like the good old SIVs to me. The problem with these is that it is an illusion the bank is not entangled in this structure. Yes, I know the bank insists non-performance by the trust is the depositor’s problem, but if the bank compromises the depositor’s liquidity with this nonsense, the bank will likely face a run on its primary deposits and either has to cover this garbage or face wide-spread illiquidity.

    It was stupid of the Chinese CFTC to have allowed these things to potentially compromise the stability of a bank’s deposit base. Guess who is going to have to back-stop this crap to keep the banks from folding? I hope the Chinese government is ready for that eventuality.