Eurodollar University This Is What a Banking Crisis Looks Like
Jun 17, 2025
Explore the fallout from China's failed stimulus efforts and its deepening credit crisis. The discussion highlights the banking sector's struggles amid economic stagnation and ineffective government policies. Dive into the challenges of lending rates plummeting and the impact on the real estate market. The precarious situation in Hong Kong adds another layer of complexity. Ultimately, the analysis critiques how these failures hinder real economic growth, providing a critical look at the global financial landscape.
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Government Borrowing Masks Weak Lending
- Despite government borrowing increasing, loan growth to the real economy stagnates or shrinks.
- Banks avoid lending due to economic uncertainty, limiting credit flow in China's economy.
Hong Kong's Monetary Crisis Example
- Hong Kong's monetary system struggles due to property developer New World's financial troubles.
- Banks hoard liquidity amid uncertainty, causing unusually low short-term Hong Kong dollar rates.
Zombie Companies Prop Up Jobs
- China supports loss-making 'zombie' companies to avoid mass unemployment and social unrest.
- This distorts the economy and deflation risks persist from excess production and tariffs.