Today a major warning was just issued regarding the crisis in China which has turned into panic.
Crisis In China Turning Into Panic
November 13 (King World News) – Peter Boockvar: There was a dramatic miss in the loan data out of China relative to expectations. Aggregate financing in October totaled 728.8b yuan, well less than the forecast of 1.3b….
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Much of that was another sharp reduction in the level of lending outside the official banking sector. Actual bank loans made up 697b of the total figure and this compares with the estimate of 904.5b. The main reason for the reduced pace of lending was in the local government special bonds category along with yuan denominated loans.
SHADOW BANKING PROBLEMS: Expect More Bankruptcies
Bottom line, while bank lending was up 5% y/o/y, it’s clear that the sharp decline in non bank lending, aka shadow banking, is not getting replaced by any notable increase from banks. The Chinese government has certainly taken plenty of steps to prevent any slowdown but you can take a horse to water but you can’t…Curing a debt overhang with more debt is now becoming an obvious challenge. Expect more bankruptcies and hopefully the Chinese government will let that happen.
On the Chinese balancing act, Premier Li today said in a speech:
“China won’t use excessive stimulus to boost the economy as it won’t be sustainable. But China will definitely use strong measures to boost the vitality of the market.”
He also said they won’t devalue the yuan to lift exports. The market instead will likely do it for them.
King World News note: The crisis in China is turning into a panic because of the collapse of the shadow banking system. This has sent China’s real estate market to the edge of panic as well. There was never a question that China was going to hit the wall because of its massive debt. The question now is how catastrophic will the unwind be?
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***KWN has now released the remarkable audio interview with London whistleblower Andrew Maguire and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
ALSO JUST RELEASED:ALERT: EXPECT MORE DISLOCATIONS: Dow Plunges More Than 600 As US Dollar Spikes To New High CLICK HERE TO READ.
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