Meraglim Blog

China’s Deleveraging Just Made a U-Turn. Bring Back the Debt!

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

The Chinese debt bomb has been a long time in the making and is getting ready to explode. For some, the reaction is, “So what? The borrowers are not defaulting and the government has plenty of money to bail them out if they do. What’s the worry?”

First of all, the defaults are beginning to pile up. Several large corporations and regional governments have defaulted recently. Second, China does have huge reserves but needs those to defend the yuan and bail out the banking system. There’s not much left over to bail out the corporate, individual and real estate sectors as well.

China’s leadership did begin a deleveraging campaign last year to get the situation under control. But the economy began a dramatic slowdown as soon as the credit spigot was turned off. Now, as this article reports, China’s leaders have panicked at the slowdown and have started the credit flow again with lower interest rates, higher bank leverage and more debt-financed, government-directed infrastructure spending.

Of course, all this does is postpone the day of reckoning and make the debt crisis worse when it does arrive. China is at the crux right now. The economy is slowing, debt is exploding and the trade war with Trump has hurt China’s exports needed to earn dollars to pay the debts.

The countdown to a Chinese debt crisis has begun. When the crisis strikes in full force, possibly in 2019, the rest of the world will not be spared.

Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

IF THE SCIENCE IS NOT ON YOUR SIDE, JUST TRY THREATS

It’s clear that good science does not support the extreme claims of the climate alarmists. Yes, there is such a thing as climate change, but it’s slow, difficult to predict and almost impossible to model because of the complexity of the process. The climate alarmists have grabbed most of the headlines for the past ten

Read More »

WHY TRUMP WILL WIN REELECTION: NOT POLLS OR PUNDITS; JUST COMMON SENSE

Political analysts use polls, betting odds, historic trends and other inputs to make their (usually wrong) political predictions. We all remember that “experts” said Hillary Clinton would win the presidency in 2016 (they gave her a 92% chance on the morning of the election), and that the UK would vote to “remain” in the EU

Read More »

HERE’S ANOTHER ELITE WITH ANOTHER PLAN TO TAX AWAY YOUR WEALTH

The elites never rest when it comes to devising new ways to take your money through taxes, inflation or outright confiscation. The latest Trojan horse the elites are riding to take your money is climate change. The climate does change over long periods of time for reasons that are not well understood except that they

Read More »

KRUGMAN SHOWS HE KNOWS LITTLE ABOUT ECONOMICS AND LESS ABOUT FINANCE

We already knew that Nobel Prize winner Paul Krugman knows almost nothing about economics. Now, we see from this article that he knows nothing about banking either. Krugman claims that the repeal of Glass-Steagall and the actions of banks in general were not the cause of the 2008 financial crisis. The conventional wisdom is that Lehman Brothers,

Read More »
Scroll to Top