With the economic picture in China looking cloudier by the day, party leaders in Beijing appear to be getting a bit desperate. The FT reported today that Beijing has ordered Chinese banks to roll over government loans to local governments for up to four years. These loans, given to local governments at the height of the financial crisis, are now coming due, and most of the governments still aren’t ready to pay up.
While China has not yet descended to the same circle of financial hell as Europe, the two regions seem to be exhibiting some similar tendencies—namely, a propensity for pushing tough decisions down the road in the hope that some miracle will save them. The FT notes that many analysts are skeptical of the Chinese order, believing it will merely put off inevitable defaults for a few years; better to confront the situation immediately. Beijing, however, appears content to drag out the process and hope for the best. “It is a muddling-through process and it is ongoing,” said a man interviewed by theFT. The European echoes here are uncanny.
in the hopes of avoiding this.
The political establishment may be committed, but this commitment is meaningless if it can’t govern the country—a possibility which is looking more likely by the day. Even as yesterday’s vote was recorded, the plaza outside the parliament building looked “like a war zone” according to theGuardian. Greek politicians may be rallying behind austerity, but voters don’t appear to be following their lead. A program of cutbacks and destroyed pensions has proven difficult to sell to an enraged populace.
The vote for austerity yesterday was only 177 out of a possible 300. With major parties almost certain to lose votes in the upcoming April elections, will austerity still have a majority in three months?
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