With Special Guest BERT DOHMEN
Publisher of the China Boom-Bust Analyst
& Gordon T Long & Ty Andros
29 Minutes, 46 Slides
With the aid of 46 supporting slides, Bert Dohmen, Ty Andros and Gordon T
Long discuss what their individual research is telling them about the situation
in Asia.
During the last six months China has injected nearly $1.6 trillion in new
credit (21% of GDP) into the economy. If there can be a credit crunch even
with that much credit being added to the system, then you know that the problems
are big.
The crunch is in fact the result of one of the following:
- A shortage of lendable funds,
- Governmental lending restrictions,
- Banks being unable to find creditworthy borrowers,
- All three of the above.
The recent liquidity shock came from the realization that the government was
no longer willing to provide infinite liquidity. In fact, they are trying
to get control over the unregulated "shadow banking system," which is estimated
to be around $10 trillion, although no one knows the real size.
The June credit crisis was the first big sign that the country's trillions
of dollars in bad loans can no longer be hidden. Non-performing loans in
China are monstrous and increasing by the day.
This has so far been hidden by the false GDP growth numbers released by the
government. The official number contains governmental spending as well as "artificially
enhanced numbers" from the party officials in their districts to make themselves
look better.
China's private sector is already in recession.
Small and medium size firms are facing a self-feeding avalanche of bankruptcies.
The reality of this cannot be hidden much longer. It is now surfacing.
China is the big elephant. A China recession could become like a tsunami around
the world.
China is now experiencing a very serious credit crunch, similar to 2007 in
the US that precipitated the global financial crisis. Anyone who expects
improvement in China now is whistling in the wind.
Dohmen's prediction, without hedging, is that the contraction will accelerate! The
only unknown: will the government launch another massive rescue mission as
in 2009 and risk another, even bigger bubble?
THIS MARKET MAKE NO SENSE, AFTER YOU TAKE A STROLL THROUGH DETROIT THEN BEJING
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