They’ve been building factories with no orders, commercial space with no takers and cities with no residents – all on money created out of thin air and then force-fed through the economy via easy lending terms. The wind has been sown:
Pressures mount as China attempts to walk a fine line between overheating and an economic bust accompanied by massive social unrest.
Elsewhere, central bankers assume the global economy is in recovery. In reality, the global economy is in another speculative binge fueled by reckless global stimulus, with China at the head of the pack.
Meanwhile, global imbalances grow with most eyes on Greece and Spain. Let’s not forget the massive property bubbles in Australia and Canada, and massive speculation in China. In the US, cities and states are on the verge of bankruptcy.
Something is brewing alright. That something is “trouble”, and not just for China.
The crash, when it comes, will be quite spectacular. Sooner or later – and very likely sooner rather than later – the bubble will burst, and all the money the western economies have invested in China will vanish like a puff of smoke…and, dear people, for many major, global banks, China has been the one bright spot on the balance sheet.
This will get rather messy.
UPDATE: Don’t anyone say you weren’t warned
Foreigners cut Treasury stakes; rates could rise
Foreign demand for short-term Treasurys tumbles, led by China; chance of higher rates looms”
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