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> In China, banking is basically partially privatized central planning. Isn't the US Federal Reserve an organisation made up of and governed by the private sec

> In China, banking is basically partially privatized central planning. Isn't the US Federal Reserve an organisation made up of and governed by the private sector (banks).

Gibbon1 11y ago
Difference is in China the central bank is wholly under the thumb of the communist party. Also: When you read the word 'Ponzi' in the context of macro-economics, as opposed to criminal prosecution, you should stop reading right then an there because the author is spouting drivel.
- markdown 11y ago
  > Difference is in China the central bank is wholly under the thumb of the communist party. Is that supposed to be worse? Is it better if it were under the thumb of a handful of powerful private banking corporations whose primary goal is the pursuit of profit? At least within the communist party you might find an idealist or two who cares about the role of the banking system in raising the standard of living of the poor.
  - Gibbon1 11y ago
    It's better, what we've seen with the politically independent central banks in the US and Europe is policies during the crisis to protect the banking systems balance sheets at the expense of the real economy. That's pretty much backwards, since a banks balance sheets can be easily fudged as needed and there is no physical limits in play. Vs the real economy where you can do real damage. My gut feeling is you can compare the United States 1929-1935 with China 2009 to 2015 and here we are. Notable China has managed to totally avoid a depression via the very policies bloomberg article rails against. They'll be sorry!!! Real soon now the chickens will come home to roost. And it'll be curtains for China!!! After six years of this, spare me please.
- rsync 11y ago
  "Also: When you read the word 'Ponzi' in the context of macro-economics, as opposed to criminal prosecution, you should stop reading right then an there because the author is spouting drivel." You know ... metaphor is a fairly powerful and useful tool ... I feel like maybe, it might be possible for someone, somewhere, to usefully and accurately draw a comparison between a macro-econ concept and a ponzi scheme ... Call me crazy...
  - Zigurd 11y ago
    I have to agree that calling it a Ponzi scheme is inaccurate and tendentious. China lacks transparency, and that's why they can get into a bad loan situation that US companies and banks can't. But it isn't a Ponzi scheme. Also, $1.2 trillion Yuan is about $200billion. N.B. the headline uses a dollar sign but the article denominates that number in Yuan.
    - ScottBurson 11y ago
      No, it says right in the second paragraph: 7.6 trillion yuan ($1.2 trillion) as being the amount of new debt forecast to have been issued in 2015. Later on it gives 1.2 trillion yuan as the amount of bad debt -- loans that are already non-performing.
      - Gibbon1 11y ago
        I keep thinking that Bloomberg is trying to scare the readers with big numbers. 1.2 Trillion Yuan is about $188 billion. China's population is about 1.35 billion, China GDP is about $9.25 trillion. So non-performing loans are $188b/9240b = 0.0203 or 2% of GDP. This isn't anything the Central Banks can't deal with. The article is drivel.
- ysilver 11y ago
  >> Also: When you read the word 'Ponzi' in the context of macro-economics, as opposed to criminal prosecution, you should stop reading right then an there because the author is spouting drivel. Ponzi borrowing is actually a concept in macro-economics, first explained by the economist Hyman Minsky. From Wikipedia: The "Ponzi borrower" (named for Charles Ponzi, see also Ponzi scheme) borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments; Ponzi borrowing could be restated in terms of borrowing when your model does not take into account the possibility of asset stagnation/depreciation. This phenomenon became a popular topic in 2008, because the housing market had began behaving as though returns on real estate never dropped below 0.
conistonwater 11y ago
> Isn't the US Federal Reserve an organisation made up of and governed by the private sector (banks). In short, no: http://www.federalreserve.gov/faqs/about_14986.htm http://www.federalreserve.gov/faqs/about_14986.htm
- markdown 11y ago
  Not exactly an unbiased source there. http://www.factcheck.org/2008/03/federal-reserve-bank-ownership/ http://www.factcheck.org/2008/03/federal-reserve-bank-owners... The stockholders of the US Fed Reserve are private banks. The majority of the board of governors are appointed by the president of the United States. He of course appoints the leading experts in the field... the bosses of those very same private banks. The Fed exists because Congress created it, but it doesn’t enact policy measures with any Congressional or Presidential approval.

> In China, banking is basically partially privatized central planning. Isn't the US Federal Reserve an organisation made up of and governed by the private sector (banks).

Gibbon1 11y ago

Difference is in China the central bank is wholly under the thumb of the communist party. Also: When you read the word 'Ponzi' in the context of macro-economics, as opposed to criminal prosecution, you should stop reading right then an there because the author is spouting drivel.

markdown 11y ago
> Difference is in China the central bank is wholly under the thumb of the communist party. Is that supposed to be worse? Is it better if it were under the thumb of a handful of powerful private banking corporations whose primary goal is the pursuit of profit? At least within the communist party you might find an idealist or two who cares about the role of the banking system in raising the standard of living of the poor.
- Gibbon1 11y ago
  It's better, what we've seen with the politically independent central banks in the US and Europe is policies during the crisis to protect the banking systems balance sheets at the expense of the real economy. That's pretty much backwards, since a banks balance sheets can be easily fudged as needed and there is no physical limits in play. Vs the real economy where you can do real damage. My gut feeling is you can compare the United States 1929-1935 with China 2009 to 2015 and here we are. Notable China has managed to totally avoid a depression via the very policies bloomberg article rails against. They'll be sorry!!! Real soon now the chickens will come home to roost. And it'll be curtains for China!!! After six years of this, spare me please.
rsync 11y ago
"Also: When you read the word 'Ponzi' in the context of macro-economics, as opposed to criminal prosecution, you should stop reading right then an there because the author is spouting drivel." You know ... metaphor is a fairly powerful and useful tool ... I feel like maybe, it might be possible for someone, somewhere, to usefully and accurately draw a comparison between a macro-econ concept and a ponzi scheme ... Call me crazy...
- Zigurd 11y ago
  I have to agree that calling it a Ponzi scheme is inaccurate and tendentious. China lacks transparency, and that's why they can get into a bad loan situation that US companies and banks can't. But it isn't a Ponzi scheme. Also, $1.2 trillion Yuan is about $200billion. N.B. the headline uses a dollar sign but the article denominates that number in Yuan.
  - ScottBurson 11y ago
    No, it says right in the second paragraph: 7.6 trillion yuan ($1.2 trillion) as being the amount of new debt forecast to have been issued in 2015. Later on it gives 1.2 trillion yuan as the amount of bad debt -- loans that are already non-performing.
    - Gibbon1 11y ago
      I keep thinking that Bloomberg is trying to scare the readers with big numbers. 1.2 Trillion Yuan is about $188 billion. China's population is about 1.35 billion, China GDP is about $9.25 trillion. So non-performing loans are $188b/9240b = 0.0203 or 2% of GDP. This isn't anything the Central Banks can't deal with. The article is drivel.
ysilver 11y ago
>> Also: When you read the word 'Ponzi' in the context of macro-economics, as opposed to criminal prosecution, you should stop reading right then an there because the author is spouting drivel. Ponzi borrowing is actually a concept in macro-economics, first explained by the economist Hyman Minsky. From Wikipedia: The "Ponzi borrower" (named for Charles Ponzi, see also Ponzi scheme) borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments; Ponzi borrowing could be restated in terms of borrowing when your model does not take into account the possibility of asset stagnation/depreciation. This phenomenon became a popular topic in 2008, because the housing market had began behaving as though returns on real estate never dropped below 0.

conistonwater 11y ago

> Isn't the US Federal Reserve an organisation made up of and governed by the private sector (banks). In short, no: http://www.federalreserve.gov/faqs/about_14986.htm http://www.federalreserve.gov/faqs/about_14986.htm

markdown 11y ago
Not exactly an unbiased source there. http://www.factcheck.org/2008/03/federal-reserve-bank-ownership/ http://www.factcheck.org/2008/03/federal-reserve-bank-owners... The stockholders of the US Fed Reserve are private banks. The majority of the board of governors are appointed by the president of the United States. He of course appoints the leading experts in the field... the bosses of those very same private banks. The Fed exists because Congress created it, but it doesn’t enact policy measures with any Congressional or Presidential approval.