First it was Baoshang Bank , then it was Bank of Jinzhou, then, two months ago, China’s Heng Feng Bank with 1.4 trillion yuan in assets, quietly failed and was just as quietly nationalized. Today, a fourth prominent Chinese bank was on the verge of collapse under the weight of its bad loans, only this time the failure was far less quiet, as depositors of the rural lender swarmed the bank’s retail outlets, demanding their money in an angry demonstration of what Beijing is terrified of the most: a bank run.
Local business leaders, political cadres and banking executives rallied Thursday at the main branch of Henan Yichuan Rural Commercial Bank, just outside the central Chinese city of Luoyang, where they stood one by one before a microphone to pledge their backing for the bank, as smiling employees brandished wads of cash before television cameras to demonstrate just how much cash, literally, the bank had.
It was China’s latest, and most desperate attempt yet to project stability and reassure the public that all is well after rumors spread that the bank’s chairman was in trouble and the bank was on the brink of insolvency. However, as the WSJ reports, it wasn’t enough for 31-year-old Li Xue, who showed up for the third day Thursday to withdraw thousands of yuan of her mother’s life savings after hearing from fellow villagers that Yichuan Bank – which is the largest lender in Yichuan county by the number of branches and capital, and it is also a member of PBOC’s deposit insurance system, according to the local government – was going under.
It’s a fact: low-wage workers don’t save much for retirement. States are aiming to fix that. But here’s a question: is it really a problem that needs to be fixed? How hard should we push the poor to save for retirement?
Bureau of Labor Statistics data show that 75% of workers in the upper half of the salary distribution — those who earn at least $36,000 on a full-time basis — participate in a retirement plan. Among workers in the bottom quarter of the wage distribution, with average salaries of about $24,000 per year, only 25% participate. That’s a big difference.
3 Charts Showing Just How Boxed-in the Fed Is | Robert P. Murphy: The Fed met market expectations by cutting its target for the fed funds rate by 25 basis points, down to the range of 1.75 – 2.00 percent. In this post I want to demonstrate just how boxed in the Fed has now become, with the help of 3 charts. First, let’s review just how low interest rates have been (and still are), in a long-term historical context:
Powell Lied: Quantitative Easing Is Back | Daniel Lacalle: The Federal Reserve, through its president Jerome Powell, has indicated that it is preparing to increase its balance “organically”. The effort to separate this latest monetary policy change of course from a full-blown new QE (quantitative easing) is, at the very least, amusing. If we look at what is being discussed, it has nothing to do with organic expansion and looks a lot like a new repurchase program.
In a truly free market economy, the likelihood that banks will practice fractional-reserve banking will tend to be very low. If a particular bank tries to practice fractional-reserve banking it runs the risk of not being able to honour its checks.
New orders for durable goods decreased 1.1 percent in September, led by a 2.7 percent fall in transportation equipment. Over the past year, orders are down 5.4 percent to $248.2 billion, about 5 percent below the recent high of $262.2 billion in September 2018 but more than 70 percent above the March 2009 recession low (see chart). Excluding the volatile aircraft category, orders were off 0.9 percent for the month and 0.9 percent below September 2018, essentially a flat trend over the past year (see chart again). The flat trend in new orders for durable-goods excluding aircraft suggests slow growth for the equipment investment segment of gross domestic product.
Within the report on new orders for durable goods are data on new orders for capital goods, or business investment. This subcategory is particularly important for two reasons. First, business investment can have a major impact on future productivity trends, and productivity is critical for helping offset cost increases as well as raising living standards over the long term. Second, capital-goods orders tend to be early indicators of turns in the business cycle. Real new orders for core capital goods — that is, real non-defense capital goods excluding aircraft — is one of the indicators in AIER’s Leading Indicators index.