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> 40 banks disappearing is really not much If the failures are small, previously common, and at a manageable rate that isn’t accelerating then this could be a
by nyokodo 2y ago
> 40 banks disappearing is really not much
If the failures are small, previously common, and at a manageable rate that isn’t accelerating then this could be a temporary blip. If the failures are larger, previously rare, and occurring at an accelerating rate then this could be the start of a Chinese banking collapse.
- hakfoo 2y agoHaving a bunch of institutions wind up at once sounds like the results of a stress test finally came back, so they now knew exactly who needed to have their plug pulled. This seems like it also differentiates the "financial economy" from the "real economy". The borrowers continue to pay the new owner, the depositors are made whole, and actual productive enterprises continue to tick on. The only ones punished were the investors who took a risk on bank management that wasn't doing an adequate job of managing risk. That feels like what SHOULD be happening. Endless bailouts have distorted the risk mindset of banks, and letting them fail should help restore discipline.
- londons_explore 2y ago> start of a Chinese banking collapse. I don't really see how this is possible. If the government didn't want a collapse to happen, they can always print more RMB and loan it to the struggling banks on 'pay it back in 100 years' type terms and kick the can down the road till it isn't a problem anymore.