China Tells Media To Stop Talking About The Cash Crunch, And To Say That Everything Is Just Fine

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Nothing instills confidence in the financial system like the government issuing a directive to media telling outlets to report that everything is just fine.

Alas, that’s exactly what China has done.

The FT reports:

In a directive written last week and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop “hyping the so-called cash crunch” and to spread the message that the country’s markets are well stocked with money.

The second half of June was really consumed by the surge in SHIBOR (China’s LIBOR-like interbank lending rate).

The surging rate was apparently official government policy (the People’s Bank of China let it run up as a message to banks to be prudent in their behaviour) but it invited a lot of chatter about liquidity seizing up in the Chinese banking system, and of course other talk about China’s massive debt pile, and the shaky financial products that are sold through the banking system.

But anyway, at least in China, the word is to stop talking about it all.

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