{"id":23974,"date":"2017-05-18T18:26:14","date_gmt":"2017-05-18T23:26:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23974"},"modified":"2017-05-18T18:26:49","modified_gmt":"2017-05-18T23:26:49","slug":"chinese-insurer-warns-of-mass-defaults-social-unrest-due-to-mass-redemption-run","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23974","title":{"rendered":"Chinese Insurer Warns Of “Mass Defaults, Social Unrest” Due To “Mass Redemption” Run"},"content":{"rendered":"

Chinese Insurer Warns Of “Mass Defaults, Social Unrest” Due To “Mass Redemption” Run<\/a><\/h3>\n
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One month ago, China came “this close” to the one event which terrifies Beijing more than anything: a run on China’s shadow banks.<\/p>\n

As a quick reminder, 150 customers of China’s Mingsheng Bank, the country’s largest private bank, were furious in mid-April when <\/a>they learned that some 3 trillion yuan invested in Wealth Management Products, the backbone of China’s shadow banking system, had vaporized after bank employees had engaged in fraud and embezzled the funds without ever investing it (later it emerged <\/a>that Mingsheng employees had put the money into \u201ccultural relics\u201d and jewelry, for their own use).<\/p>\n

And while fraud and embezzlement are both endemic in China, the bigger concern raised by the article was the threat of a bank run across China’s massive and unregulated, nearly $10 trillion shadow banking system. Indeed, while there have been numerous allegations and warnings that China’s entire shadow banking facade, dominated by WMPs and other “investment products”, is nothing but a giant ponzi scheme in which\u00a0 recoveries – should there be a bank run, a topic recently discussed on Bloomberg<\/a> – would be non-existent if there is ever a bank run, defaults of WMPs issued by big banks \u2013 and this case an unapproved WMP \u2013 are rare, as are shadow bank runs.<\/p>\n

For now. <\/em><\/strong><\/p>\n

However, in a stunning announcement made by one of China\u2019s largest insurers, Foresea Life has warned of “mass defaults and social unrest<\/strong>” unless China’s regulator lifts a recent ban on its issuance of new products. In a letter to China\u2019s insurance regulator, first reported by the Financial Times<\/a>, Foresea Life Insurance which is a heavy investor in WMPs, has warned\u00a0 that the company expects “redemptions”<\/strong><\/em> of 60 billion yuan, or $8.7 billion, this year and might be unable to meet payouts unless it is able to sell new products.<\/strong><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Chinese Insurer Warns Of “Mass Defaults, Social Unrest” Due To “Mass Redemption” Run One month ago, China came “this close” to the one event which terrifies Beijing more than anything: a run on China’s shadow banks. As a quick reminder, 150 customers of China’s Mingsheng Bank, the country’s largest private bank, were furious in mid-April […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,15316,6876,3174,15318,15317,4318],"class_list":["post-23974","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-mass-defaults","tag-shadow-banking","tag-social-unrest","tag-wealth-management-products","tag-wmps","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23974"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23974\/revisions"}],"predecessor-version":[{"id":23976,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23974\/revisions\/23976"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}