China to let banks sell off loans

Will it create another sub-prime crisis?

(11-08-2013, 11:34 PM)Stockerman Wrote: This is a brilliant move. This is akin to asking your neighbours to see if anyone wants to buy your "trash". There would always be buyers if the yield is high enough.

Those non-performing loans can be packaged with better performing loans to create some exotic loans to be sold off.

The Chinese are learning the game fast from their US counterparts!

(11-08-2013, 12:15 PM)freedom Wrote: Everything which produces a cash flow should have value no matter how low the value is, it has value.

So for the potential nonperforming loans to be sold by potential Chinese banks.

The loans are nonperforming which still produces cash flow or will produce cash flow.

If the loans are sold at too cheap a price, a lot of people are going to buy them at their own fair price.

There is nothing wrong with securitization, but price matters. Just value investment, buying over valued good company does not make a value investment, but a speculation.

there aren't exactly toxic loans, they are just loans. Stupid investors pay a high price for a loan which is not worth the money, that's the cause of toxicity. So stupidity creates toxic loans, not the loan originators/packagers.

(12-08-2013, 12:34 AM)freedom Wrote:

(11-08-2013, 11:34 PM)Stockerman Wrote: This is a brilliant move. This is akin to asking your neighbours to see if anyone wants to buy your "trash". There would always be buyers if the yield is high enough.

Those non-performing loans can be packaged with better performing loans to create some exotic loans to be sold off.

The Chinese are learning the game fast from their US counterparts!

(11-08-2013, 12:15 PM)freedom Wrote: Everything which produces a cash flow should have value no matter how low the value is, it has value.

So for the potential nonperforming loans to be sold by potential Chinese banks.

The loans are nonperforming which still produces cash flow or will produce cash flow.

If the loans are sold at too cheap a price, a lot of people are going to buy them at their own fair price.

There is nothing wrong with securitization, but price matters. Just value investment, buying over valued good company does not make a value investment, but a speculation.

there aren't exactly toxic loans, they are just loans. Stupid investors pay a high price for a loan which is not worth the money, that's the cause of toxicity. So stupidity creates toxic loans, not the loan originators/packagers.

IMO, the real culprit of the toxicity was, AAA rating for re-packaged low quality sub-prime loans, and sold as quality products to investors.

Of course, most investors were not smart enough, and had taken it as long term investments.

China banks’ bad loans rise for seventh quarter

BEIJING – Non-performing loans at Chinese banks rose for the seventh consecutive quarter, climbing 13 billion yuan ($2.1 billion) to 539.5 billion yuan in three months ended June, and extending the longest streak in at least nine years, the Bloomberg news agency reported on Wednesday.

Soured debt increased across all lender categories, including state-owned and regional banks, Bloomberg said, citing data from the China Banking Regulatory Commission.

http://www.todayonline.com/business/chin...th-quarter