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behaviorkat

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  3. China money ~ China cuts bank reserves in policy shift to lift economy

    in Foreign Currencies

    Posted

    BEIJING | Wed Nov 30, 2011 10:08am EST

    BEIJING (Reuters) - China's central bank cut reserve requirements for commercial lenders on Wednesday for the first time in three years, a policy shift to ease credit strains and shore up an economy running at its weakest pace since 2009.

    China's policy change came just hours before coordinated action by major central banks, including the Federal Reserve and the European Central Bank, to ease credit strains in world markets buffeted by the euro zone debt crisis.

    Official concern is rising that the global economy is on a slippery slope as the euro zone struggles to decisively tackle its two-year crisis. Global markets rallied on the combination of central bank news.

    China's central bank said on its website it lowered the amount of cash that banks have to set aside by 50 basis points, effective Dec 5. That cut the reserve requirement ratio (RRR) for the biggest banks to 21 percent from a record high 21.5 percent, freeing up funds that could be used for lending.

    "This is a big move -- this is easing," said Stephen Green, China economist at Standard Chartered Bank in Hong Kong. "It's a clear signal that China is on a loosening mode. The next move will be another RRR cut in January."

    The cut releases between 350 billion yuan and 400 billion yuan ($54.8 billion to $62.7 billion) into the banking system, analysts estimated.

    The People's Bank of China (PBOC) joins the central banks of Brazil, Indonesia, Thailand and the euro zone, among others, in easing monetary policy, a reflection of the alarm that the euro zone debt crisis and a sluggish U.S. economy could drag the world back into a recession.

    CREDIT CRUNCH

    China's unusually high reserve rate requirements have made life difficult for private-sector companies. While they account for 75 percent of urban employment, they find it far harder to secure bank loans than politically well-connected state-owned enterprises.

    Worried about a destabilizing jump in unemployment, Beijing is eager to lend them a hand. In recent weeks, China has seen a spate of major strikes in its export powerhouse in the Pearl River Delta.

    Ten of 19 analysts in a Reuters poll on Tuesday had predicted China would cut its bank reserves in December by 50 basis points. Eight had expected a move in the first quarter of 2012 and one not until the second quarter.

    Purchasing managers' data on Thursday could confirm the pressure on China's manufacturers from the global slowdown after a flash PMI from HSBC last week suggested the sector was shrinking.

    As recently as the middle of 2011, China was still tightening monetary policy to combat stubbornly high inflation, which rose in July to a three-year high of 6.5 percent.

    However, as the economy felt the chill of a slowdown in global activity and inflation eased, Beijing adopted a policy of "fine tuning" that included loosening credit for cash-starved small firms.

    Beyond growth concerns, capital outflows driven by the global market jitters also help explain the central bank's move, said analysts. Capital inflows have been the main source of money supply growth in China.

    "I think the move is partially driven by capital outflows in November. Also, it may indicate that the economy has weakened quite bit and that the official PMI reading does not look very good," said Zhiwei Zhang, China economist at Nomura.

    There are fewer maturing central bank bills due in December, which also put strains on liquidity conditions for banks.

    MORE EASING AHEAD

    The cut in the reserve ratio was the first since December 2008 and marks a monetary policy shift to an easing bias.

    "The move sends a clear message that the central bank is ready to relax its policy stance," said Shi Chenyu, an economist with the investment banking unit of Industrial and Commercial Bank of China.

    The central bank could have achieved the same loosening on credit quietly, said Mark Williams, chief economist at Capital Economics in Britain.

    "The fact that it chose to act in this more public way is a signal not only that policymakers are loosening but that they want to be seen to be doing so. Accordingly, we see this as a decisive shift in policy stance," he said in a note.

    Ting Lu of Bank of America/Merrill Lynch expects the central bank to cut reserves requirements three times, by a total of 150 basis points, before the end of next year.

    Analysts said the China news would boost riskier assets on hopes that easing policy in China will boost the country's demand.

    World stocks jumped 2.6 percent on the combined news from global central banks and China markets are expected to rally when they open for trading on Thursday.

    Few analysts expect China to start cutting interest rates anytime soon though.

    China's interest rates are already negative when adjusted for inflation. Policymakers worry that cutting them now would only prompt savers to pull money out of the banking system in search of better returns elsewhere, thus crimping bank lending.

    China's economic growth has eased for three straight quarters due to tight credit at home and flagging demand overseas. The economy grew 9.1 percent in the third quarter from a year earlier, its weakest pace since the second quarter of 2009.

    Data since has suggested a further slowdown. The red-hot property market is showing signs of cooling as sales fell in October from a year earlier for the first time in six months.

    A flash purchasing managers' index from HSBC on Nov 23 showed that China's manufacturing sector shrank in November, reviving worries of a hard landing for the world's fastest growing major economy.

    HSBC releases the final figures on Thursday alongside an official survey that analysts forecast will show that the factory sector stalled in November.

    Such data would back a forecast this week from the Organisation for Economic Co-operation and Development forecast that China's growth will slow in 2012 to below 9 percent for the first time in a decade.

    (Additional reporting by Lu Jianxin and Shao Xiaoyi; Editing by Neil Fullick and Don Durfee)

    http://www.reuters.com/article/2011/11/30/us-china-economy-rrr-idUSTRE7AT0TK20111130

    ~looks like a wait........

  6. Thanksgiving Thread "

    in Off Topic posts

    Posted

    May all your Thanksgiving holidays be filled with family and friends whom you love and they love you.

    I will bless the Lord at all times;

    His praise shall continually be in my mouth.

    My soul shall make its boast in the Lord;

    The humble shall hear it and rejoice.

    O Magnify the Lord with me,

    And let us exalt His name together.

    (Psalm 34:1-3)

    Nice Psalm!

  9. Thanksgiving Thread "

    in Off Topic posts

    Posted

    "It isn't what you have in your pocket that makes you thankful but what you have in your heart"

    (copied this from chat and wanted to add a comment)

    ---- "and if you have something in your pocket use it to strengthen and grow your heart"

    Thank everyone here at Dinar Vets for growing my heart even when my pockets were empty........

    What is your Thanksgiving thought, saying or prayer? :)

    Go RV!!

    • Upvote 2

  14. IMF address at APEC

    in Foreign Currencies

    Posted

    http://www.imf.org/external/np/sec/pr/2011/pr11411.htm

    IMF Managing Director Christine Lagarde Statement at the APEC Leaders Summit

    Press Release No. 11/411

    November 13, 2011

    Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), made the following statement today at the Asia-Pacific Economic Cooperation (APEC) Leaders Summit in Honolulu, Hawaii:

    “I am honored to have been invited to participate in discussions at the APEC Leaders meeting today. The APEC economies are a major engine of growth and a vital contributor to the global recovery at this critical moment for the world.

    “I emphasized the IMF's concern about the current risks to the global economy, with a particular focus on the challenges facing the Euro Zone countries—and the urgent need for them to implement the policy actions agreed by their leaders in October. Without a solution to the Euro Zone crisis, the world economy could be swept into a downward spiral of collapsing confidence, weaker growth, and fewer jobs. This would affect all nations and so we all have a stake in resolving that crisis.

    “I also note that it is important to avoid other risks to the global economy, especially those related to low growth and unacceptably high unemployment. To meet these difficulty challenges, all countries must play their part to help rebalance the global economy.

    “For APEC’s advanced economies, this means primarily adopting strong medium-term fiscal consolidation plans, which will create space to accommodate growth and jobs now. For APEC’s emerging market and developing economies, it means addressing underlying vulnerabilities including better social safety nets; investing in infrastructure, health and education; financial sector reform; and exchange rate appreciation where necessary.

    “We need to work together to support growth that creates jobs, is inclusive, and benefits all. APEC embodies that spirit of shared responsibility and action.”

    • Upvote 6
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