Modern Business

Chinese Central Banks are worried, but the NYTimes article misses the major worry of Chinese leadership. Chinese families place most of their Savings in Banks (averages about half their Income), and the major criminal element in China are bankers or Those to whom they lend funds. The level of corruption in the Banking system in China probably exceeds any other nation. Uncollectible loans are a way of life in Chinese banking, and a probable 30% of major Bank loans are issued with no expectation of repayment. Bank officers get a healthy kickback on such loans, while the Borrowers scam out their take through excess Operating Expenses and Salaries before Bankruptcy. The Depositors pay the price of the Scam, while continual new Deposits hide the loss of funds.

The real worry of Chinese leadership stands as twofold: first, the growing quantity of Plant, Equipment, and land being left empty by shelled-out projects, and; the increasing Chinese lifestyle threatens to lessen the level of Deposits, so that there may be an approaching Bank Scandal because Deposits may not be redeemable. Leadership must suppress Consumption until Bank profits can provide the needed Cash, but Chinese bankers refuse to surrender their corrupt ways.

The London Exchange moved to protect some heavy Player Short-Sellers. Nickel had a $300 per ton per Day limit on Short-Sellers who could not supply the metal; clear protection for the Short-Sellers. The nickel, which is used to make Stainless Steel, has more than doubled in Price this Year, and Exchange warehouses have barely more than 15% of last Year’s supply. The interesting note, here, lies in nickel Producers attaining monopoly pricing of their Product through claimed Production problems at Mining sites; does it remind of the Oil industry.

A last Note: About half of Hatch, N.M., Chili crop was washed out by rain. Hatch is a wonderful town only a half-hour's drive from where I once lived. It is sad, as they raised some of the best jalepenos in the World. The economic consequences are bad for the town, and the Deming Processing plant will import a greater percentage from across the border. The trouble comes in an inferior Chili at higher Price with more Imports from Mexico, and higher Costs for American Farmers. lgl