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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (109451)	1/3/2011 3:41:41 PM
From: russwinter	4 Recommendations Read Replies (1) \| Respond to of 110194

Yes, "the consensus" from those paying any attention is that China can use its reserves to cover roughly a quarter to half trillion USD in losses from the local government sector. Besides the obvious question about the effects of pulling reserves out of the financing of the rest of the world (in debt trap mode, unable to absorb even slight interest rates increases), we also need to add the cost of several years of bubble activity from the private sector. Add the industrial and export sector as well to the tally. Even assuming that China has sufficient reserves to bail their banks, there is a follow on effect because the country is on steroids and has huge overcapacity. Therefore, I don't see how they can engineer any slow down at all once the artificial "all at one time" factors (local govs projects, real estate speculation, over dependency of low input cost exporting) are removed in any serious way.