Friday, April 17, 2015

Germany's Finance Minister Warns about China's Debt and Shadow Banking

Wolfgang Schaeuble, Germany’s finance minister says that “debt levels in the global economy continue to give cause for concern.”

Singling out China in particular, Schaeuble noted that “debt has nearly quadrupled since 2007″, adding that it’s “growth appears to be built on debt, driven by a real estate boom and shadow banks."

According to McKinsey’s research, total outstanding debt in China increased from $US7.4 trillion in 2007 to $US28.2 trillion in 2014. That figure, expressed as a percentage of GDP, equates to 282% of total output, higher than the likes of other G20 nations such as the US, Canada, Germany, South Korea and Australia.

I continue to hold the view that China may be in the early stages of a great financial collapse. Not because it has gone free market, but becasue Chinese central bankers have propped up spectacular slices of the Chinese real estate market via money printing. Real estate projects that would have never been launched in a pure free market without central bank manipulation of the economy.


(via Business Insider)

1 comment:

  1. What would happen if China's debt market imploded and they decided to dump all their U.S treasuries which would destroy the U.S. economy, forcing D.H.S. to use their horde of 62 million rounds of .223 ammunition as Chinese citizens bought up great swaths of farms and foreclosed real estate in California? Now that would be a truly psychotic game of musical chairs the beltway charlatans would love to witness from a good distance.