China’s Hidden Debt Risks 2012 Crisis, Northwestern’s Shih Says

[Mike 03]

This is something to think about very seriously.

Excerpt:

March 3 (Bloomberg) -- China’s hidden borrowing may push government debt to 96 percent of gross domestic product next year, increasing the risk of a financial crisis in the world’s third-biggest economy, Professor Victor Shih said.

“The worst case is a pretty large-scale financial crisis around 2012,” said Shih, a political economist at Northwestern University in Evanston, Illinois, who spent months researching borrowing transactions by about 8,000 local-government entities. “The slowdown would last at least two years and maybe longer,” the author of the book “Factions and Finance in China” said in a phone interview March 1.

Surging borrowing by local-government entities, uncounted in official estimates of China’s debt-to-GDP ratio, is the key reason for Shih’s concern. Harvard University Professor Kenneth Rogoff said Feb. 23 that a debt-fueled bubble in China may trigger a regional recession within a decade, while hedge-fund manager James Chanos has predicted a Chinese slump after excessive property investment.

You can read more here:


http://www.bloomberg.com/apps/news?pid=20601087&sid=aN94MF7BDx_A&pos=6

[HeresyLives]

1. And except that China has a couple of trillion

in reserve funds alone, this makes perfect sense. :eyes:

[heli]

2. There will be riots in the streets

The social safety net is very thin in China.

[HeresyLives]

3. LOL

[lunasun]

4. Hard place to start a riot!

[Blackhatjack]

5. Chinese Leaders are aware of potential for political rebellion linked to economic downturn

Once the people have a taste of economically elevated lifestyle, they won't well tolerate a significant economic step backwards without challenging those in power.