Sep 05

Don’t Forget China’s “Other” Spinning Plate: Trillions In Hidden Bad Debt (ZeroHedge, Sep 5, 2015):

Given the global implications of what’s going on in China’s stock market and the fact that the yuan devaluation is set to accelerate the great EM FX reserve unwind while simultaneously driving a stake through the heart of beleaguered emerging economies from LatAm to AsiaPac it’s wholly understandable that everyone should focus on equities and FX. That said, understanding the scope of the risk posed by China’s many spinning plates means not forgetting about the other problems Beijing faces, not the least of which is a massive collection of debt.


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One Response to “Don’t Forget China’s “Other” Spinning Plate: Trillions In Hidden Bad Debt”

  1. Marilyn Gjerdrum Says:

    When the Wall Street Journal was allowed to print the truth, it covered stories about people who would buy cars on credit, and abandon them, then go and get another…….Insanity.

    We can thank Moody’s….They exported Enron Accounting to the rest of the world. If one googles Enron Accounting, there is a sentence or two…..Thanks to the Wall Street Journal, I can recall how it worked; they spelled it out very clearly…

    Enron would take a debt of $1 million, and move the debt into a shell corporation so they could show incredible profits and drive their stock price upward. They would list the debt as an asset in the shell corporation. Then, they would create fake work orders from the shell to Enron for $999,900.00.
    Enron would then show the false work orders as income on their balance sheets…….

    Enron did this innumerable times, and as long as the market went up, so did their on-paper worth. However, the market went down, and within days, Enron collapsed, ruining the lives of millions.

    Here in CA, they ran up false energy claims and drove our electric bills up ten fold……all for their own greed. Jeff Skilling went to federal prison supposedly for 10 years….he was out in less than two, none of those bastards ever paid for their crimes. Ken Lay, the president, conveniently died on the morning of his scheduled sentencing……since he was never sentenced, his family kept the hundreds of millions he stole….

    This type of thinking runs throughout China’s economy, politics, financial management and government……They adopted the worst of the west and mixed them with their own cunning tricks………They were allowing naive Chinese citizens to put up their homes to buy stock on margin…..Even the US with the mortgage backed securities didn’t go that low. One had to have a pulse to buy a house, even using a MBS high interest loan…..

    This story is excellent. I really like Zero Hedge, they point out the salient facts in economic terms; well reasoned and sensible. I love their metaphor of spinning plates; it describes the entire scenario beautifully.

    People need to keep their heads and not fall into listening to fear mongers……Fear is deadly, and it played a big part in keeping the Great Depression going until we entered WWII…..

    After we entered the war, we had to deal with shortages and other war related hardships. I am old enough to have known many people who lived through those years, and fear kept people from spending for many years. I knew people who kept their money buried in their yards; their experience with failing banks caused lifelong distrust….

    This time, we are confronting a global depression on a scale such as we have never seen. It is essential we keep our heads.

    China’s disaster of economic management is just beginning to unravel. They have tricks we have not thought of yet……

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