Beijing struggles to defuse anger over China's P2P lending crisis
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Re: Beijing struggles to defuse anger over China's P2P lending crisis
#2A bank is a bank, even if it's not called a bank.
This kind of wild west capitalism will eventually halt or at least stifle Chinese progress and growth, just because the risks of investments is too large.
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#3So it's the responsibility of smart investors to bail out dumb investors?
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#4There is a huge structural issue when investors of all asset classes believe the central government will bail them out. It happens to a vastly lesser degree elsewhere. We saw the folly of it in the US in 2008.
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#5So it's the responsibility of smart investors to bail out dumb investors?
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Re: Beijing struggles to defuse anger over China's P2P lending crisis
#6So it's the responsibility of smart investors to bail out dumb investors?
The government, including Li Keqiang, was officially promoting this industry a few years ago. The government also tightly controls the flow of information in China, keeping people from seeing alternate opinions. In addition to that, tight currency controls mean the middle class is starved for worthwhile investments.
I don't know whether these people should be bailed out or not (the companies definitely shouldn't be), but I can see why they're upset with the government. It's not really the same situation as in the US.
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#7I wonder if the average Chinese is aware of these problems if not affected by them directly. If it is not reported in media and you don't know anyone who's affected then how would you know about this?
And knowing about is this important, so you don't put your money in such an investment.
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#8So it's the responsibility of smart investors to bail out dumb investors?
The government, including Li Keqiang, was officially promoting this industry a few years ago. The government also tightly controls the flow of information in China, keeping people from seeing alternate opinions. In addition to that, tight currency controls mean the middle class is starved for worthwhile investments. I don't know whether these people should be bailed out or not (the companies definitely shouldn't be),…
Thanks, that context makes a lot more sense.
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#9A bank is a bank, even if it's not called a bank. This kind of wild west capitalism will eventually halt or at least stifle Chinese progress and growth, just because the risks of investments is too large.
I don't think the risks aee two large it's that the people putting the money aren't properly informed/educated. If you want to lend to people who have a 50% default rate, feel free! Just make sure there is an actuary who can help you manage your risk. I doubt these p2p companies were helping people weigh risk.
Re: Beijing struggles to defuse anger over China's P2P lending crisis
#10I wonder if the average Chinese is aware of these problems if not affected by them directly. If it is not reported in media and you don't know anyone who's affected then how would you know about this? And knowing about is this important, so you don't put your money in such an investment.
It's reported in the Chinese media almost daily right now.