China is an amazing political and economic entity. Watching it is fascinating.
Is it slowing? How much? Is it a lot? Is it a lot more than even the pessimists think? Is the Chinese banking system looking at a “black hole moment”? Can the banks be bailed out by the Chinese central bank without setting off a worldwide economic wildfire? No one knows the answer to these questions, including the powers that be in China.
China is the ultimate crony capitalist state. It is a country which is built on lies on top of more lies on top of more lies on top of more lies.
This could be a good thing overall for China as the “alternative sources,” trusts, what is often called the “shadow banking system,” might actually be a stabilizing and limiting force in the economy. The rates of interest on loans through the shadow banking system are much higher than what municipalities can obtain through traditional lenders, and probably more accurately reflect the real risk of loans. (Which are considerable it appears.)
So long as the dollar retains its “reserve” status we’ll continue to run the world economic show.
China is slowing, and probably pretty quickly. The banking sector is in real trouble. It is possible that the real estate correction now underway will be far worse than the one we recently saw in the United States and in other parts of the West.
China, as we have written for quite a while (along with many others) is in serious trouble. Underpinning the “Chinese Dream” is piles and piles and piles of (likely bad) debt.
Kyle Bass is a smart guy and he’s been watching Japan closely and for a long time. The Hail Mary pass the Bank of Japan just tossed up has bounced in the end zone. Bass says it’s close to game over.
My bet is that the powers that have been created by the business/government partnership of the last 25 years aren’t going to fall in line readily.