So the Chinese debt bomb that has been a long time in the making is finally getting ready to explode. 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 defaults are beginning to pile up. Several large corporations and regional governments have defaulted recently.
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, this solution is strictly temporary. All it does is postpone the day of reckoning and make the debt crisis worse when it does arrive.
With every passing day, a Chinese financial collapse draws closer. The rest of the world will not escape the consequences.
When the crisis strikes in full force, possibly in 2019, the rest of the world will not be spared.
- Source, James Rickards
