China Cuts Banks' Ability to Lend – Part III

News:

Several state-run Chinese banks have ordered some branches to suspend new lending for the rest of this month, suggesting a coordinated effort by Beijing to manage state banks' torrid lending in the year's first few weeks.

Thought:

Another move by the Chinese government this week, which brings unease to the markets around the world. In the past week, the markets were also shocked by President Obama’s proposed new restrictions on large banks and by the doubt of Fed Chairman Ben Bernanke’s second-term confirmation (which will pass for sure, I think). On the economy side, three mega-size companies recently announced huge layoff; 12000 from Verizon, 11200 from Wal-Mart, and 1000 from Home Depot, although the last two companies said the layoffs are not due to the economic reason. The economy and the market are facing tremendous domestic and international pressure and they are heading to a wrong way for the time being after nine months of rebound. The US stock market has dropped more than 5% in just one week after my last post and the damage has yet done. Nevertheless, again, the current correction is anticipated to have a short live only.