If one thought the schizophrenic lies out of Europe between 2010 and 2013 were bad enough (the bulk of which it now appears were orchestrated by Mario Draghi), here comes China, a country which already has a “credibility” issue so to say, which has no choice but to lie as blatantly as possible in order to preserve some semblance of stability. The reason: as first forecast here months ago, and as has subsequently materialized, the credit/liquidity collapse in the country that lives and breathes on credit creation (the bulk of which is created in the shadow banking system) is rippling through the banking sector and causing unprecedented fallout for a financial industry that is already starved for every marginal yuan (and in a Keynesian “credit=growth” world, the economic crush is just waiting beyond the next corner).
Not unexpectedly following news that various retail and online banking services had been impaired in the early part of the week at China’s biggest banks, now Caixin reports that banks are simply shutting lending to both businesses and individuals.
A number of banks have temporarily halted lending to businesses and individuals apparently due to mounting pressure from liquidity shortages.
They include some branches of Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC), sources from the two banks said.
The bank was already having a hard time keeping up with deposit-to-loan ratio requirements even before the liquidity shortages hit, not to mention executives’ recent determination to sort out the bank’s liquidity management and control loans.