China Cuts Off Housing Bubble Commie Style
In addressing a percieved housing bubble on mainland China, the authorities have responded in typical authoritarian means. "China ended the favorable interest rates for private housing loans Thursday..At the same time, the minimum down payment in cities with rapid housing price increases was raised from 20 to 30 percent."
It seems "citizens" were using the banks to speculate in the rising house market, creating too much risk in bank portfolios. "By the end of February 2005, outstanding commercial housing loans exceeded 1.65 trillion yuan ( US$200 billion), accounting for 23 percent of the commercial banks' medium and long-term loans."
Even if the translation is elementary, the Chinese seem to be more straight forward than US central bankers. "If the housing bubble burst and the borrower could not make the repayment, the commercial banks will be faced with a large amount of bad debts." English.Eastday.com