Friday, May 13, 2016

China Is Imploding
Kyle Bass* sees the bursting of China's credit bubble as one of the biggest macro imbalances in the world: "Things are going to happen sooner rather than later .. If you follow these systems historically and what has broke them, from the U.S. to Europe to Japan and so forth, there are patterns. When you start thinking about how levered China actually is, their asset liability mismatches are 10% of the system vs the U.S. at 2-3% prior to our crisis. State Owned Enterprises’s are going bankrupt. The currency is an afterthought – just a product of the credit system .. We’ve seen credit declines in their partners – Hong Kong and Singapore. HK real estate is collapsing. As if the Chinese government is omnipotent enough to decide when this will happen! Look at credit growth at Malaysian banks. All these emerging markets have grown credit relentlessly .. China just had the lowest GDP print in the last 41 years. Reverse migration for the first time in years. I suppose I need someone to define hard landing for me. Banking cycles take 12 quarters to reach peak and we’re two quarters in."
link here to the reference

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