Chinese and Japense debt and mortgage cirsis

[franklin]

"Chinese debt binge is fuelling a dangerous property bubble" by MALCOLM TURNBULL June 16, 2010

www.smh.com.au/opinion/politics/chinese-debt-binge-is-fuelling-a-dangerous-property-bubble-20100615-yd1a.html?source=patrick.net

[(Victor) Shih's estimate would place China among the countries with the highest debt to GDP ratio, although it should be noted that China's debt (like that of Japan) is almost entirely funded from its own domestic sources.

And those domestic sources are the prudent households of China who have been depositing their savings in banks at deliberately depressed official interest rates. By lending at low, indeed negative real, interest rates the thrifty households of China have been subsidising what is all-too-often speculative and wasteful investment by government-owned companies]

“China's chief auditor warns mounting local government debt a risk to economy” 24 Jun 2010

www.telegraph.co.uk/finance/china-business/7851504/Chinas-chief-auditor-warns-mounting-local-government-debt-a-risk-to-economy.html

[China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.]

"Property bubble threatens China rally" By Emma Wall May 2010

www.telegraph.co.uk/finance/personalfinance/investing/7691874/Property-bubble-threatens-China-rally.html

[Mr de Blonay said the culture in China was to invest in property, rather than put savings in the bank or stock market. People tend to buy multiple properties off-plan, taking two or three mortgages out at a time. The total area under construction in China, for residential property and its infrastructure, is three times the size of Greater London. The worry is that the real demand will not meet the speculative building, said Mr de Blonay.

"The increasing risk of a bubble in Chinese property is the key factor behind the current policy tightening cycle in China,'' he said.]

"The ring of fire"

www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/February+2010+Gross+Ring+of+Fire.htm

[anansi]

So you are saying we are heading for an economic meltdown..The U.S heavely　indebt to China so as goes China so goes the U.S..so goes the rest of the world.

[franklin]

Jun 29, 2010 1:07:16 GMT -5 anansi said:

So you are saying we are heading for an economic meltdown..The U.S heavely　indebt to China so as goes China so goes the U.S..so goes the rest of the world.

Both companies and banks are hoarding cash right now. I think they are preparing for something its not by accident.

"U.S. Firms Build Up Record Cash Piles" By JUSTIN LAHART

online.wsj.com/article/SB10001424052748704312104575298652567988246.html?mod=e2tw

I have been wondering if what is going on today is like the London Stock Exchange which held a large part of the national debt in Brittan. I wonder if these banks and companies are planning on lending to the government. See after securities in page 167 and 168. Does anyone think anything like this will happen?

OMG wait, that would mean that the government bail outs will be used to bail out the government!

"The Cambridge economic history of modern Britain"

books.google.com/books?id=AWC60koQC6oC&lpg=RA1-PA168&dq=&pg=RA1-PA167#v=onepage&q&f=false

For example companies could gain government support page 168

[Bank of England stock was, in effect, a more liquid form of government stock]

[In all these cases, parliament traded support for a company in exchange for corporate borrowing, and the public supported the scheme by either buying stock, swapping government debt for stock or accepting banknotes]