China's Central Bank :ufdup:

[CouldntBeMeTho]

China Halts Bank Cash Transfers
Comment Now
Bank of China , the central bank, has just ordered commercial banks to halt cash transfers.

This notice, for instance, appears on the online portal for Citigroup's C -2.74%Citibank unit for its China customers:

Important Notice:

1. Due to the system maintenance of People’s Bank of China, Domestic RMB Fund Transfer through Citibank (China) Online and Citi Mobile will be delayed during January 30th 2014, 16:00pm to February 2nd 2014, 18:30pm. As to the fund availability at the receiving bank, it depends on the processing requirements and turnaround time of the receiving bank. We apologize for any inconvenience caused.

2. During Spring Festival, Foreign Currency Transfer Transaction through Citibank (China) Online and Citi Mobile will be temporally not available from January 30, 2014 18:00pm to February 7, 2014 09:00am. We apologize for any inconvenience caused.

If you have any enquiries, please reach us via our 24-hour banking hotline at 800-830-1880 or credit card hotline at 400-821-1880. If you are calling from other parts of the world, please reach us at 86-20-38801267 for banking services or 86-21-38969500 for credit card services.

In short, there will be a three-day suspension of domestic renminbi transfers.There will also be a suspension, spanning nine calendar days, of conversions of renminbi to foreign currency.

The specific reason given—“system maintenance” at the central bank—is preposterous.It is not credible that during the highest usage period in the year—the weeklong Lunar New Year holiday beginning January 31—the central bank would schedule an upgrade and shut down cash transfers.

A better explanation is that the country’s banking system is running dry.Yes, there is an increased need for money in the run-up to and during the Lunar New Year holiday, but that is only a small factor.After all, central bank officials knew this spike in demand was coming—it occurs every year at this time—and a core function of central banks is to manage seasonal liquidity fluctuations.Moreover, the holiday has not started yet, and the PBOC, as that institution is known, could have added more liquidity to meet cash needs.

So what’s really going on?This crunch follows similar incidents in June and December of last year.In June, for instance, the central bank used the excuseof a “system upgrade” to allow banks to shut down their ATMs and online banking platforms.As a result, they conserved cash and thereby avoided a nationwide meltdown.

So today’s “system maintenance” notice is a sign of a fundamental problem.Banks, in short, need cash to rollover ever-increasing amounts of nonperforming loans and wealth management products. This month, cash needs are even higher than normal because of the impending default of the Credit Equals Gold wealth product scheduled for January 31.Analysts are worried that the failure, if it occurs, will cause a China-wide panic.

Perhaps more important, the Federal Open Market Committee is holding its next meeting on January 28-29 so there could be an announcement on the 29th on the trimming of bond purchases.The suspension of FX transactions means that speculators will not be able to dump renminbi and buy dollars.Fed Chair Bernanke’s words on tapering, beginning in May of last year, shook emerging markets. A FOMC announcement this time could undermine China, especially because of the darkening perceptions about that country.

Pundits, pointing to the nation’s $3.82 trillion in foreign exchange reserves, are fond of saying that Beijing has enough money to weather any situation.Yet China does not have a foreign currency crisis.It has a domestic currency one where dollars, euros, pounds, and yen are not much use.

Banks are evidently scrambling for cash.They have, in the past, resorted to desperate maneuvers at the ends of calendar quarters to meet regulatory requirements.The current crunch is even more alarming because it cannot be occurring for quarter-end reasons.

Something is very wrong in China at the moment.Banks’ apparent need to conserve cash, coming just weeks after the last incident, looks ominous.

Follow me on Twitter @GordonGChang

http://www.forbes.com/sites/gordonchang/2014/01/26/china-halts-bank-cash-transfers-2/

 

[ill]

 

[SuikodenII]

@Tommy Knocks

 

[FaTaL]

are they filling up those empty cities yet?

 

[Domingo Halliburton]

holy shyt if this is true. Is this why the markets have been selling off?


jim chanos was right

 

[O.iatlhawksfan]

What does this mean for their economy in the short term?

 

[Sensitive Blake Griffin]

have central banks who are accountable to no one, brehs.

oh wait....

 

[无名的]

Just wait until China's real estate bubble bursts.

 

[ADevilYouKhow]

was only a matter of time

 

[Sinnerman]

yeah came in to say this^^^

Is this why wall street has been having a bad week?

 

[Crakface]

Someone will give them a loan, n then they'll be owned.

 

[Scientific Playa]

be prepared for more fake QE shocks this week


How Economists and Policymakers Murdered Our Economy — Paul Craig Roberts
Jan 25, 2014 Paul Craig Roberts Editorials 0


by Paul Craig Roberts
RINF Alternative News
How Economists and Policymakers Murdered Our Economy

Paul Craig Roberts

The economy has been debilitated by the offshoring of middle class jobs for the benefit of corporate profits and by the Federal Reserve’s policy of Quantitative Easing in order to support a few oversized banks that the government protects from market discipline. Not only does QE distort bond and stock markets, it threatens the value of the dollar and has resulted in manipulation of the gold price. See http://www.paulcraigroberts.org/2014/01/17/hows-whys-gold-price-manipulation/

When US corporations send jobs offshore, the GDP, consumer income, tax base, and careers associated with the jobs go abroad with the jobs. Corporations gain the additional profits at large costs to the economy in terms of less employment, less economic growth, reduced state, local and federal tax revenues, wider deficits, and impairments of social services.

When policymakers permitted banks to become independent of market discipline, they made the banks an unresolved burden on the economy. Authorities have provided no honest report on the condition of the banks. It remains to be seen if the Federal Reserve can create enough money to monetize enough debt to rescue the banks without collapsing the US dollar. It would have been far cheaper to let the banks fail and be reorganized.


US policymakers and their echo chamber in the economics profession have let the country down badly. They claimed that there was a “New Economy” to take the place of the “old economy” jobs that were moved offshore. As I have pointed out for a decade, US jobs statistics show no sign of the promised “New Economy.”

The same policymakers and economists who told us that “markets are self-regulating” and that the financial sector could safely be deregulated also confused jobs offshoring with free trade. Hyped “studies” were put together designed to prove that jobs offshoring was good for the US economy. It is difficult to fathom how such destructive errors could consistently be made by policymakers and economists for more than a decade. Were these mistakes or cover for a narrow and selfish agenda?

In June, 2009 happy talk appeared about “the recovery,” now 4.5 years old. As John Williams (shadowstats.com) has made clear, “the recovery” is entirely the artifact of the understated measure of inflation used to deflate nominal GDP. By under-measuring inflation, the government can show low, but positive, rates of real GDP growth. No other indicator supports the claim of economic recovery.

John Williams writes that consumer inflation, if properly measured, is running around 9%, far above the 2% figure that is the Fed’s target and more in line with what consumers are actually experiencing. We have just had a 6.5% annual increase in the cost of a postage stamp.

The Fed’s target inflation rate is said to be low, but Simon Black points out that the result of a lifetime of 2% annual inflation is the loss of 75% of the purchasing power of the currency. He uses the cost of sending a postcard to illustrate the decline in the purchasing power of median household income today compared to 1951. That year it cost one cent to send a post card. As household income was $4,237, the household could send 423,700 postcards. Today the comparable income figure is $51,017. As it costs 34 cents to send one postcard, today’s household can only afford to send 150,050 postcards. Nominal income rose 12 times, and the cost of sending a postcard rose 34 times.

Just as the American people know that there is more inflation than is reported, they know that there is no recovery. The Gallup Poll reported this month that only 28% of Americans are satisfied with the economy. http://www.gallup.com/poll/166871/americans-satisfaction-economy-sours-2001.aspx?version=print

From hard experience, Americans have also caught on that “free trade agreements” are nothing but vehicles for moving their jobs abroad. The latest effort by the corporations to loot and defraud the public is known as the “Trans-Pacific Partnership.” “Fast-tracking” the bill allowed the corporations to write the bill in secret without congressional input. Some research shows that 90% of Americans will suffer income losses under TPP, while wealth becomes even more concentrated at the top.

TPP affects every aspect of our lives from what we eat to the Internet to the environment. According to Kevin Zeese in Alternet, “the leak of the [TPP] Intellectual Property Chapter revealed that it created a path to patent everything imaginable, including plants and animals, to turn everything into a commodity for profit.”

The secretly drafted TPP also creates authority for the executive branch to change existing US law to make the laws that were not passed in secret compatible with the secretly written trade bill. Buy American requirements and any attempt to curtail jobs offshoring would become illegal “restraints on trade.”

If the House and Senate are willing to turn over their legislative function to the executive branch, they might as well abolish themselves.

The financial media has been helping the Federal Reserve and the banks to cover up festering problems with rosy hype, but realization that there are serious unresolved problems might be spreading. Last week interest rates on 30-day T-bills turned negative. That means people were paying more for a bond than it would return at maturity. Dave Kranzler sees this as a sign of rising uncertainty about banks. Reminiscent of the Cyprus banks’ limits on withdrawals, last Friday (January 24) the BBC reported that the large UK bank HSBC is preventing customers from withdrawing cash from their accounts in excess of several thousand pounds. http://www.bbc.co.uk/news/business-25861717

If and when uncertainty spreads to the dollar, the real crisis will arrive, likely followed by high inflation, exchange controls, pension confiscations, and resurrected illegality of owning gold and silver. Capitalist greed aided and abetted by economists and policymakers will have destroyed America.

About Dr. Paul Craig Roberts
Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

 

[blackzeus]

Brehs, if China starts printing paper, the world is f*cked, gold 'bout to go through the roof. This is probably the most important thread for the next few weeks

 

[ADevilYouKhow]

I think 14' will be glorious dont get spooked

 

[blackzeus]

Someone will give them a loan, n then they'll be owned.

Breh, who's going to give them a loan? God? We, the most powerful economy, are running on Chinese savings. If the savings accounts are tapped dry, they're going to do the natural, which is to call in some loans, at which point we will just print more paper, they will call in more loans, and we will print more paper, and then dollar crashes. I'm not saying sh*t's over tomorrow, but if this report is real, it's a VERY serious problem, and not one that's going to be solved without a SIGNIFICANT, FUNDAMENTAL change to the world financial structure, which is basically paper debt.