China's Banks Are An Accident Waiting To Happen To Every One Of Us

A growing number of experts are casting doubt on China's
ability to pull the global economy from recession.

From The Telegraph:

Fitch Ratings has been warning for some time that China's lenders are wading into dangerous water

China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.

Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.

Read more ....

My Comment: A Financial crisis in China will be a disaster for the American economy. As holders of most of our debt, any change in China's status will only result in higher interest rates and borrowing costs ... a condition that will impact Governments from the Federal level straight to the municipal level, as well as all business that are dependent on credit to stay afloat.

So .... can this happen?

China's financial structures are very new, and are (for the most part) regulated with the sole purpose of expanding the Chinese economy. This focused approach reminds me of Russia in 1992. A financial collapse quickly precipitated when Western credit sources and customers dried up with the 1991-92 recession, a drying up of liquidity that subsequently made many Russian banks go into default.

We (in the West) are in a recession now .... so we have to ask the question, will China repeat what had happened in Russia in 1992. The parallels are striking and .... considering what is at stake .... frightening.