Chinese authorities signaled Wednesday that bank lending would slow significantly this year, the latest in a series of moves intended to forestall inflation and stave off bubbles in the stock and property markets.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said he expected Chinese banks to extend loans totaling about 7.5 trillion renminbi ($1.1 trillion), a decline of nearly 22 percent from the record 9.6 trillion renminbi lent last year.

“This year we will continue to control the pace and demand of the credit supply,” Mr. Liu said at a conference in Hong Kong, The Associated Press reported. He added that regulators were paying special attention to loans for local government projects and real estate. All banks, he added, had been ordered to “heighten their vigilance against an impossible, embedded credit risk.”

Stock markets in China and Hong Kong fell on the news. The Shanghai composite index, the main gauge of the mainland Chinese market, ended 2.9 percent lower, while the Hang Seng index in Hong Kong dropped 1.8 percent.

Shares in Bank of China and China Construction Bank sagged 3.4 percent and 3.1 percent, respectively, in Hong Kong, while Industrial and Commercial Bank of China fell 2.6 percent.

Still, economists said the signal from Chinese policy makers was neither surprising nor drastic and showed that Beijing was “tapping on the brakes” rather than engineering a major policy reversal.

“The 7.5 trillion renminbi target for this year is hardly an insignificant amount by anyone’s definition,” said Patrick Bennett, a strategist at Socit-Gnrale in Hong Kong, adding that he believed the market reaction had been excessive.

“Bank lending has apparently been strong in the first weeks of the year,” Mr. Bennett said, “and the recent policy moves and announcements are clearly designed to deal with that at an early opportunity.”

A government stimulus package worth 4 trillion renminbi ($645 billion), coupled with the spree of easy credit as the country’s state-owned banks were told to lend freely, helped China stave off a sharp economic slowdown last year.

The easy cash has helped drive a rapid rise in China’s stock and property markets, while feeding concerns that some of the loans extended by eager banks may turn sour.

Inflation has been on the rise as the Chinese economy has picked up speed, adding to the pressure on the authorities to temper economic activity and limit price increases.

Zhu Baoliang, chief economist for the State Information Center and a senior government official, said Wednesday that consumer price inflation had accelerated “significantly” in December and was likely to average 3 percent this year, Reuters reported.

At the same time, exports, a main driver of China’s economic growth, rebounded more quickly than expected at the end of last year, giving the authorities more leeway to unwind some extraordinary stimulus measures.

In another recent action to scale back lending, the Chinese central bank ordered state-owned banks last week to set aside a bigger share of their deposits as a reserve against failed loans – 16 percent for larger banks, an increase of half a percentage point. Smaller banks reserve requirements were raised to 14 percent, from 13.5 percent.

The central bank raised the rate on a closely watched interbank loan this month, and it raised the rate on its one-year bills. Analysts also expect China to start gradual increases in the benchmark lending rate – a more sweeping policy tool – though that is not expected until the second half of the year.

So far, only a handful of countries, including Australia and Norway, have begun to nudge up interest rates as their recoveries have taken hold.

Lavish bank lending spurred a recovery but also pumped up markets as speculators scooped up stocks and property and even dabbled in garlic, dried chilli peppers and luxury Pu’er tea.

Now, China is reining in its spendthrift banks, shifting toward an exit strategy that aims to avoid a bust.

After a brief slowdown a year ago, China’s economy has bounced back rapidly, with growth forecast at 8.3 percent for this year. Yet the stimulus spending that led that revival – supported by more than 9 trillion yuan ($1.3 trillion) in last year has spurred speculation, raising alarm over a potential housing bubble. The stimulus has also propelled huge investments in industries already larded with overcapacity. On an average day in 2009 some 1,000 new industrial projects were launched, economist Stephen Green estimates.

The challenge now is to stave off inflation and ensure that the stimulus goes into productive investments rather than to speculators.

To help curb those risks, late Tuesday increased the reserves that banks must hold by 0.5 , to 15 percent of their deposits. U.S. banks must hold 10 percent in reserve, though that requirement is based on only a fraction of their balance sheets.

The surprise move followed reports that Chinese banks lent 600 billion yuan, or about $88 billion, in the first week of January – nearly double the total for all of December. “We need to guide rational investment to avoid speculation,” Qi Ji, Vice Minister of Construction, told reporters in Beijing on Wednesday.
Qi’s bland comment belies concerns voiced by many prominent Chinese economists. In the state-run China Securities Journal on Monday, He Fan and Yao Zhizhong of the government-affiliated warned that without tighter controls the economy could grow an unsustainable 16 percent this year.
If stimulus policies remain unchanged, “the economy is destined for serious overheating,” they said.

The resulting bust could derail growth and leave banks with massive holdings of bad loans. The government earlier reimposed taxes on some property transactions and clamped down on lending for second homes, ordering tighter scrutiny of loans and inflows of foreign funds to prevent illegal investments.
But such requirements might not deter deep-pocketed investors looking for fast gains. Among those notorious for running up property prices in are private businessmen from the capitalist manufacturing bastion of Wenzhou.

Having helped drive up prices for property and stocks the Shanghai benchmark surged 80 percent last year the Wenzhou speculators, among others, moved into agricultural commodities. Last autumn, cash flooded into the market for garlic, and then into the wholesale market for dried chilli peppers, which tripled in price in late 2009 to about 30 yuan ($4.40) per kilogram. Market vendors complained of scarce supplies, and consumers and restaurants griped about the cost. In an earlier speculative frenzy, investors focused on Pu’er tea.

“Farmers were hoarding the chilli peppers, expecting the price to rise, and the market speculators were buying as much as possible to control the supply,” said Gao Wang, an analyst with Orient Agri-business Consultant Ltd, a leading agriculture and food business consulting company. Underscoring their appetite for risk, some of the Wenzhou speculators will be heading to holiday in February even after some were burned by the Middle Eastern city state’s meltdown in late 2009.

“Most of us have realized that traditional manufacturing industries no longer bring us more profits, so many who used to run factories are switching to stock markets or real estate,” said Zhou Dewen, the head of a Wenzhou business association, who is heading the tour. “We think it’s time to go and see how is Dubai’s economy going as opportunity always follows after the crisis,” Zhou said.

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ezConsolidation is an online debt consolidation service provider that helps you save money by reducing your interest rates, lowering your monthly payments, avoiding bankruptcy and having only one payment per month.
Credit Counseling, Debt Management, Debt Consolidation, Debt Settlement, Debt Elimination, Credit Card Consolidation, Credit Card Debt, Bankruptcy
Debt Consolidation loans are various sorts of credit types that you are able to use in order to consolidate your debt. There are several different types of loans out there that will allow you to consolidate your debt in different sorts of ways. These ways include second mortgage debt consolidation loans, such as a home equity line of credit home loan, or cash out refinance debt consolidation loan, or even a credit card balance transfer is available to help consolidate debt that you have built up over a period of time.

There are common mistakes that you can try and avoid when you are trying to consolidate your debts. Firstly of you should always shop for a particular lender and not for a certain type of loan. The quality of the loan that you end up with depends squarely upon how trust worthy the company you choose is. You should always look at their history up front in order to make certain that they have quite a few happy customers that go back several years. This enables you to be certain that the company you go with has a long history of helping individuals that are in the same situation as yourself.

You should try and avoid the unknown debt consolidation companies and try to stick with companies that are fairly large and reputable in nature. While this could go against your instinct to hunt for the best particular deal, this is done in order to be sure that you do not become just another statistic. Lots of people that have problems with their debt and need help consolidating are usually seen as the most vulnerable towards people that are looking to take advantage of their respective situations. A larger and more known company usually has a fairly comprehensive financial regulation behind it. They are unable to take the risk of ripping people off without damaging their reputations as a result. It is bad business for them in the short run and even the long run. They are likely to have a lot of ways to make sure that it is a safe thing for you and that you will also be treated fairly.

While debt consolidation is an excellent way to reduce the amount of outstanding bills that you needed to pay or even lower the interest rates of your current bills or perhaps even to get some tax relief from it. Just like anything else in life though, you should be careful not to over do it though. You should not at all use debt consolidation to get yourself out of debt because you have over spent and then continue to over spend. This will not help you at all in the long run or the short run. Additionally, you should not pay off the debt that has you paying off the debt that has lower interest than the loan consolidation is even worth to you. It is also important not to deplete your home equity continually so that you do not leave yourself with assets available in the case of an emergency as it will lower your standard of living years down the line when you will eventually need it.

By utilizing debt consolidation you are capable of relief from your current budget. It will allow you to bring down your current monthly payments on your debt and to as a result have more cash available in order to spend on other things that you may need. Not only this, but some of the options available to you will also allow you to get some tax benefits in the process.

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USD – Over the past month, data has confirmed that US growth has shifted to a higher gear with growth rates around 4% heading into 2010. That said last week’s data has been more mixed regarding the H1 outlook. In fact, it seems as if hard data is picking up, while soft and more forward-looking data has been more mixed. While the November data for industrial production revealed that the manufacturing sector outside autos is gathering speed, the local business surveys indicators have been mixed, so far. Also, in housing, hard and soft data have diverged. The NAHB survey weakened in December, while housing permits picked up in November. Despite the more flattish tendency in permits and starts over the past few months, the outlook is for an increase in residential construction by 15-20% in Q4 and similarly in Q1. The huge slack in the economy is becoming increasingly evident in inflation data. Leaving out auto prices, core PPI and core CPI are clearly trending lower at the moment. Indeed, the November data underpins expectations that core CPI inflation will dip below 1% during 2010. Last week’s Fed meeting did not add much new information regarding the policy outlook. The FOMC upgraded its assessment of the economy but did not change the outlook for growth and inflation. Once again, it was communicated that the exceptionally low level of interest rates will remain in place for an extended period. Expectations amongst market participants are that the Federal Reserve will not hike before Q4 10, but that the central bank will probably begin absorbing excess reserves by the middle of next year.

EUR – The euro saw a steady decline last week on market risk aversion that sent investors fleeing into the USD. The euro began last week on a strong footing of 1.4682 before falling 2.8% to a four-month low of 1.4273. The euro was hamstringed by several factors, not the least of which was the credit rating for Greece being cut to BBB+ from A- by Standard & Poor’s. In response Greek five-year government bonds reversed their advance, pushing the yield up 4 basis points to 5.06%. In addition UBS set a target rate for investors to sell the euro against the dollar, targeting $1.39. UBS said investors should end the trade if the euro strengthens to $1.46. Goldman Saks issued the apposing side positing a buy recommendation in the 1.45 range for a move back above 1.50, neither of which transpired.
German Chancellor Angela Merkel’s government may sell fewer bonds than it expects next year as growth in Europe’s biggest economy accelerates. The Federal Finance Agency is set to publish a breakdown of bond sales as soon as today after Merkel’s Cabinet approves the 2010 draft budget in Berlin.

GBP – The British pound sterling is trading steady after falling to two-month lows against the US dollar last week, but continues to be weighed down by weak UK economic data such as November retail sales last week. The highlight this week would be the final reading of third quarter GDP out tomorrow and the minutes to the Bank of England’s December policy meeting on Wednesday. The GDP is expected to be revised upward to minus 0.1% from the previous quarter’s reading of minus 0.3%. Interest rates are expected to remain at low levels in 2010. The pound sterling will remain under pressure ahead of next year’s election as the country is running a large fiscal deficit. Standard & Poor’s warned that it will downgrade the UK’s AAA credit rating if debt is not reduced.

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Let’s face it, with the economic recession many people have lost their homes due to foreclosure. While there have been a number of items which have been attributed to the economic collapse, the number one item is the bursting of the home bubble. Homes all across the United States began to loose value and people began to loose them to foreclosures. This led to a loss in jobs and ultimately a drop in spending. As all of this came forward, the world’s economy began to get hurt until there was almost no country in the world that was not affected.

A foreclosure is a serious deal. Sure the value of the home is half of what it was when you took out the mortgage, but if you lost it, your credit record would be affected and of course you would have to look for a new place to stay. While the value of the home may have dropped, that does not mean it will not rise once again and likewise no one wants to deal with the credit record issues which would prevent you from purchasing a new home.

If you do not want to loose your home to foreclosure, you do not have to. A number of specially designed lending programs have been available to prevent any further foreclosures. You just need to realize that these programs are meant to help you to keep your home. Once you have decided to put forth the effort to find out more about these specially designed foreclosure programs, you will realize their importance.

They will help you to reduce your monthly payments and lower your overall interest rates. Not to mention the most important part which is to help make sure that you are able to keep your home and handle all of the payments. This will and does help many people every single day. Stop your foreclosure and stay in your home simply by choosing to take advantage of these specialized lending programs which have only been made available to help stimulate the economy and prevent further collapse of lending institutions around the nation and prevent further foreclosures from happening.

In the end though, the choice will be up to you. Of course you will have to qualify for these special programs that will help prevent your foreclosure and allow you to stay in your home. If you are still making the same income as you were before the recession and have not been affected as much as many others, then the chances of you qualifying for loan restructuring will be slim to none; but if you are like the countless families all over the nation who have felt the effects of the economic recession, been laid off, lost your job completely or worse, then you may actually qualify for it and be able to keep your home.

I choose the word need carefully for it is more urgent than the alternative want and adds more strength to the issues discussed. For most readers though the need word will apply, perhaps not in all cases, but certainly in some and I would stress an understanding of how the issues impact you.

1) Purchase. It goes without saying that a significant percentage of people buying here cannot purchase outright for cash. For whatever reason, they do not have access to the necessary capital and therefore, irrespective of age, they will need assistance in funding.

Now there are various types of purchasers
i) The investor or speculator. They will want the cheapest, most economical route to acquiring property so, with mortgage finance available even to non-residents up to 80% and perhaps more, they will not need to use their own capital and the lender will help carry some of the risk.

ii) Holiday Homes. A lot of would be retirees sample the country by buying a property here whilst retaining their main home as well as their jobs back in the UK or otherwise. With easy access to mortgages back in their own country it is tempting to borrow against the main home but I would question the danger that goes with that. Better to put the finance for an investment property on the same.

iii) Retirees. This is self explanatory and most people in this category would look to buy for cash. But why would you do that when you have a risk for Inheritance Tax, currency exchange and the potential to earn a greater return on your capital than borrowing in euros. More on these points to follow.

2) Inheritance Tax (IHT). It is dangerous to blow this issue out of perspective but is perhaps more dangerous to ignore it without understanding the current risk that all purchasers should be addressing.

What is certain is that for property purchasers here, the issues of IHT and the necessity of a Will should be a critical part of the initial planning. Having said that, time is normally on your side but, if you have a property here and have no idea how best to structure a defence against inheritance laws and tax in Spain, then best you do something about it sooner rather than later.

Inheritance laws in Spain are dramatically different than say, in the UK. Many people assume that European states are similar in this respect. Wrong! In fact, the UK is somewhat unusual in offering attractive allowances whereas the same is not said elsewhere and certainly not in Spain. There is no spouse exemption on the main home and personal allowances are small and fall to the beneficiary rather than the deceased. So there is a real need to understand and plan or you (or more to the point your beneficiaries) could get a nasty surprise.

3) Low Euro interest rates. The current average euro mortgage pay rate is little more than 3% whilst, at least for , returns on capital are in excess of 5% without taking any investment risk at all. Now, if we take an example of a purchase here for say Euro 200,000 (130,000) the difference EVERY YEAR is at least 4,000 euros or 2,700. So, if you utilise the Interest Only tool and defer the repayment of the mortgage capital for say, 20 years, that amounts to a massive 80,000 or 54,000! Wow!

4) Foreign Currency Exchange rate risk. Now there is the threat of exchange rates moving against you in the above example, but the same can also be said if you purchase your asset (your property) with no liability (your mortgage) to mitigate an exchange rate risk, especially if your capital base and income is in another currency (). Investors worldwide (and I am talking multi national conglomerates) use the offset mechanism all the time rather than running complex and risky financial exchange rate products such as Foreign Currency Futures and Options. These cost money with potentially a nil return. You can do it simply by reducing your own capital and borrowing via a mortgage.

5) Equity Release or Eventual inheritance. My experience in working in the Financial Services markets for the last 15 years has led to an odd conclusion; far too many people, parents in fact, pay far too much attention to their detriment in trying to create an eventual inheritance for their children.

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Gold jumped to a record price as the slumping dollar boosted bullion’s appeal as an alternative asset. Silver also gained.

Gold futures touched an all-time high of $1,174 an ounce in New York, after the dollar fell as much as 0.9 percent against the euro. Gold has posted records during nine sessions this month, and is up 32 percent this year as investors and central banks increased their holdings of the metal to preserve wealth. Russia’s central bank said it bought more bullion last month.

“All this buying shows no confidence in the dollar,” said Bernard Sin, the head of currency and metals trading at bullion refiner MKS Finance SA in Geneva.

Gold futures for December delivery rose $17.90, or 1.6 percent, to $1,164.70 an ounce on the New York Mercantile Exchange’s Comex division, the biggest gain in a week.

In London, bullion for immediate delivery climbed $13.73, or 1.2 percent, to $1,164.33 an ounce at 7:43 p.m. local time after earlier touching a record price of $1,174.

Gold may surge to $1,500 an ounce over the next 18 months, Bank of America Merrill Lynch analysts said today in a report.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, slid on speculation that the Federal Reserve will hold U.S. interest rates at historic lows indefinitely. The Fed cut the target range for its benchmark lending rate to zero percent to 0.25 percent in December. The dollar index is down 7.6 percent this year.

Russia’s central bank increased its gold holding to 19.5 million ounces last month from 19 million ounces in September, Bank Rossii said on its Web site.

Government Buying
Governments, the biggest holders of gold, have been expanding their bullion reserves, helping to spur an 8.3 percent rally in the metal’s price from Oct. 20 to Nov. 20. India’s central bank bought 200 metric tons from the International Monetary Fund in October. Mauritius and Sri Lanka also have been buying gold. The IMF still has about 200 tons left to sell.

“Any given emerging-market central bank cannot hedge against further U.S. dollar weakness by buying euros or sterling,” Bank of America Merrill Lynch said, citing the likelihood of rate moves by the European Central Bank and the Bank of England. “This is because there is a significant probability that the ECB and the BOE will have to follow any monetary policy moves by the Fed.”

The ECB’s benchmark lending rate is at 1 percent and the Bank of England’s main rate is at 0.5 percent.

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