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Tuesday, June 28, 2011

China Debt

More info on a looming potential bubble burst in China.

It looks familiar, heavy infrastructure and housing building based on an unending asset expansion bubble and paid for with ultra loose credit. Somewhere down the line the bubble implodes.

CNN: China's debt bomb
Most recently, China's top auditor said that loose lending standards and a sharp rise in local government borrowing (for building projects, of course) may have created a mountain of debt that cannot be repaid...


What's happening in China should sound familiar because it is reminiscent of what happened here in the US. Confronted by an economy that couldn't deliver real wealth to the people, our bureaucrats loosened borrowing standards in the 1990s.

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