Source: Bloomberg Briefs

Category: Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “China’s Bloated Financial System: A Quick Guide”

  1. ch says:

    The constant western media focus on China’s debt seems a bit one sided. Balance sheets have two sides – that’s why they are called balance sheets.

    There are assets (collateral) and liabilities (debts). The western financial press’ hyper focus on the debt side of the equation without looking at the asset side is at best misleading.

    Do you know of any high quality, unencumbered collateral that China could use to offset all this debt? China has been buying record quantities of it, so much so that they crashed the derivative mkt for it in 2013.

    Just because the western media ignores the value of gold as the ultimate unencumbered collateral to offset debt does not mean the Chinese are doing the same.

  2. Ephman says:

    You might have a point if all the debt was owed by a single entity called “China,’ but the debt is owed by a variety of companies and levels of government. If you own a bunch of unencumbered T-bills and gold, it does not help me with my debt problem. From everything I read, much of the debt was used to create assets that are, in fact, not worth much: low-quality real estate not in demand; high-cost high-pollution factories that will have to be destroyed; etc. Just in the same way that we could create economic activity by paying people to dig holes and then paying other people to fill them in, we may find that China’s growth, while impressive, was not as strong as we thought.

  3. [...] example, here). Barry Ritholtz at The Big Picture has a series of charts showing the credit madness here. Personally, I still think China will ‘do a Japan’; that is, experience a sudden and [...]