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Chinese Auditor Warns "Out Of Control" Chinese Debt Could Spark Bigger Crisis Than US Housing Crash
"This could be even bigger than the US housing crisis," warns senior Chinese auditor Chang Ke, as his accounting firm has all but stopped signing off on bond sales by local governments (as we warned most recently here). As the FT reports, Zhang's firm "audited some local government bond issues and found them very dangerous," as they don't have strong debt-servicing abilities. "It is already out of control," he continues, "the only thing you can do is issue new debt to repay the old," he said. "But there will be some day down the line when this can’t go on." With more than 2,800 counties having discovered the investment-vehicle-bond (a way to avoid the prohibition or directly raising debt), Zhang notes that this "frightening" evolution has led to a situation where he puts little faith in the government guarantee, advising that "when the time comes, it won’t be the government that assumes responsibility. It will be the accounting firms and the banks that do."
A senior Chinese auditor has warned that local government debt is “out of control” and could spark a bigger financial crisis than the US housing market crash.
Zhang Ke said his accounting firm, ShineWing, had all but stopped signing off on bond sales by local governments as a result of his concerns.
“We audited some local government bond issues and found them very dangerous, so we pulled out,” said Mr Zhang, who is also vice-chairman of China’s accounting association. “Most don’t have strong debt servicing abilities. Things could become very serious.”
...
“It is already out of control,” Mr Zhang said. “A crisis is possible. But since the debt is being rolled over and is long-term, the timing of its explosion is uncertain.”
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Local governments are prohibited from directly raising debt, so they have used special purpose vehicles to circumvent these rules, issuing bonds under the vehicles’ names to fund infrastructure projects.
Investment companies owned by local governments sold Rmb283bn of bonds in the first quarter of 2013, more than double the total for the same period last year. Such an increase would normally be expected to boost the economy, but China’s growth unexpectedly slowed to 7.7 per cent in the first quarter of 2013.
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“The only thing you can do is issue new debt to repay the old,” he said. “But there will be some day down the line when this can’t go on.”
Mr Zhang added that he grew alarmed when smaller towns and counties discovered that investment vehicle bonds were an easy way to raise financing. “This evolution was quite frightening,” he said. “China has more than 2,800 counties. If every county issued debt, it could lead to a crisis. It could be even bigger than the US housing crisis.”
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But Mr Zhang puts little faith in official guarantees, ...: “When the time comes, it won’t be the government that assumes responsibility. It will be the accounting firms and the banks that do.”
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shit hole
Send them Krugman with $1T platinum coin.
Som Ting Wong
Ah, very much the wrongness will corresponded on some thing, and somehow that is very something.
Calling for a worse alternative works wonderfully. Can never hide the current reality, though.
This sort of outcomes tells somehow very much of incongruity with US houses crashed. US accounting firms, banks, Too Big Too Failings investment financial stuff stand far above when it comes to Ponzi, kicking the can, shifting the blame and so other things. With avoiding penalties of severity these guys managed evasion on even the unlethalest stuff aplombously.
Does not align with stated consequences on Chineses banks and stuff. Leaves trail of non sequiturous droppings.
The crustyness of inconsequential people matterings.
favorite soup at lunchtime Cream of Sum Yung Gai
Party on Wayne!
China Daily, 17 April 2013 : A suicide was reported today by Beijing authorities. Mr. Zhang Ke of the ShineWing accounting firm was found dead floating in the Yongding River with two self inflicted bullet wounds to the back of the head...
Bill his family for the bullet.
"A suicided was reported today by Beijing authorities."
Fixed.
http://www.youtube.com/watch?v=ZS2Z19yTuPI
No kidding, it's about to implode in China. It will be bad.
there are so many things floating on chinese rivers these days.
But but but...the financial black hole (that is China) was going to save the world!!! ;-)
The Chinese 'put back' provision in the servicing agreement will be enforced with T-80 tank's.
Let me guess,US banks set up this scheme, US banks will end up owning it.
If you think this is a Chinese problem, you are wrong.
Isn't globalization great ?
The T80 will run out of gas before it gets to the battlefield...lol.
It works like this, if I had an unbelievable amount of debt issuance and I needed to stash it someplace where auditing interest payments & principle could be whatever the two parties agreed on...where would I stick it?
Add to that, excess labor capacity (on the Chinese side) it seems like a win-win "contractually"), for without those idle hands making widgets, they might find other things to do with their hands, that the chi-com dragons would prefer not happen to them ;-)
Internal memo from Barak Obama:
GET ME A WHITE MALE TERRORIST NOW!
Jared Loughner should be available as soon as his trial is over.
I'm still trying to figger out why Gabby Gifford's ole man hasn't been charged with attempting to make a strawman gun purchase.
Ohhh, thats right...it was a PC/media gun driven purchase, so that made it ok...still, the line does read something like, are you buying this firearm to transfer to another?
I'm sure it was all approved by the Universal Background checking Holder & David Gregory ;-)
Internal memo from Barak Obama:
GET ME A WHITE MALE TERRORIST NOW!
___________________________
Not even. Barack Hussein Obama managed to kill sons and daughter of America with his plan to re-industrialize America.
He got what he wanted: kill us and a media noisey bomb.
Signed: an American.
Surprising piece of news. Please expand.
Mr Zhang added that he grew alarmed when smaller towns and counties discovered that investment vehicle bonds were an easy way to raise financing. “This evolution was quite frightening,” he said. “China has more than 2,800 counties. If every county issued debt, it could lead to a crisis. It could be even bigger than the US housing crisis.”
I wonder who taught them this trick.....BWAAAAAAAA.... great job Lloyd
...
Send them Geithner he doesn't have a job.
well ... can only mean one thing ... QE for China.
ghost towns to da moon
do they have a "Chinese Fed"? i was under the impression that the Government just printed the money and gave it to people over there. "the real important people get a lot" of course.
C Fed = PBOC
http://www.zerohedge.com/news/2013-02-08/china-accounts-nearly-half-worl...
"China Accounts For Nearly Half Of World's New Money Supply""But there will be some day down the line when this can’t go on."
Tomorrow works just fine for me.
Ruh-roh. whoda thunk it
ZH had it first, as usual -
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/09-2/Chinese%20Shadow%20Banking%20System.pdf
I like the Chinese very much. The Politburo, not so much.
Get in position: buy physical gold and silver.
When it becomes serious you have to tell the truth.
First Europe tries to cause a bank run, now china tries to spark a housing crash. Gold comes crashing down out of nowhere....
Oh no! China housing crash!
No more buy U.S. Treasuries!
Will they buy Japanese and Italian bonds, or just force more children and old ladies to work for $1.00 an hour?
God save those poor people over there, but if they don't revolt against their overlords, what can you do?
Speaking of which, we face a similar situation in the U.S., though it is plastered over with Red, White, and Blue paper mache.
Silly comment, under the current circumstances.
Tianamen Square, as one example.
Which was absolutely crushed.
God bless the educated forward thinking that were in Tianemen Square.
The majority of Chinese citizens are trapped in the 19th century, completely obedient to TPTB.
Their homes and farms are leveled for a Happy Meal toy factory, and they can do nothing about it. When they fight they are killed and/or beaten and removed from land owned by their families for 500 years or more.
They have no rights, they have no recourse to protect their rights. At least we can still buy firearms arms and call our government and leaders worthless pieces of shit.
Fill in the blanks, you aren't making much sense here.
"The majority of Chinese citizens are trapped in the 19th century, completely obedient to TPTB."
Absolutely correct.
Because they don't know or have some inkling of knowing, TPTB cut off access to knowledge of the outside. A guy at work has a "child" over in Shanghai. The first thing that happened was a work around so that free (that is, uncensored/uninhibited) communications could be set up back to the states.
Its slowly crumbling...and the politburo knows it...they're just grabbing all they can before the collapse.
Thats the funny thing about human nature, from the powerful to the powerless...its always self interest, all things being equal ;-)
http://en.wikipedia.org/wiki/Kunshan
Well, at least they haven't gone full retard, their corporate tax rates are low enough for investment ;-)
Sorry to correct you nmewn ;-]
But "absalutely correct" is erronous or at best a HUGE GIANT FUCKING understatement.
I am now living in China and will be for a yr and WOW! I knew what it would be like, but actually speaking to them still left me shell shocked.
The avg chinese person makes the american sheep look like Neo fighting the Matrix!!! They are utterly brainwashed. You cannot have a conversation about politics, economics, history.... or anything.
As a programmer the best analogy I can give is that it's like talking to a program, they repeat EXACTLY what they are programmed to repeat.
Honestly it makes me want to cry....
Well, the majority may be brainwashed but those pigs floating through Shanghai had to come from somewhere. Human nature being what it is, its my understanding they came from "illegal" pig farms.
That is, pig farmers seeking profit over compliance with state mandated market limits on their production, which drives down costs to consumers.
They may not realize it or call it something else but there is no denying what it is, its capitalism in this example ;-)
Ya well if you turned over the farm to the animals I dare say the situation would be even worse. Everyone wants to live like a rock star these days but nobody wants to work for it. Unfortunately that extends right through society and includes govt reps and corporations
So what's the solution?
I love it when people get bludgeoned with reality till they are quivering heaps of shit.
Obviously they feel pissed at JPY devaluation and want to talk down RMB value first.
reading this shit can really make you go insane
"U.S. Treasury Secretary Jack Lew warned his partners in the Group of 20 on Wednesday against the perils of "beggar thy neighbor" currency devaluations, picking out China for special mention, while noting that Japan was also on Washington's radar screen."
Fed up ;-)
The race to debase is on.
It is impossible to go insane enough to be able to understand how insane it is!
Japan has the new global reserve currency, because they have the most savings. China can crash or inflate, and they can CHOOSE TO CRASH or suffer HYPERINFLATION.
This is the GREAT GLOBAL RESET.
http://www.cecm.sfu.ca/~rpearcea/dontvoteforgold.pdf
Hmmm.... spend my savings on gold...... but that boat leak is serious
Own gold if you're afraid of hyperinflation in your country. Every country around the world EXCEPT JAPAN must now CHOOSE TO CRASH or HYPERINFLATE. And thankfully, they're choosing crash.
LMAO@ the "broken china."
How many central bankers does it take to fuck up the world's economy?
All of them.
Politicians fucked it up. Central bankers kept it going. Japanese citizens VOTED to fix it. The RESULT is that all global prices will be reset and all speculative gains will be purged. A NEW BULL MARKET AWAITS THE WORLD.
http://www.cecm.sfu.ca/~rpearcea/dontvoteforgold.pdf
PMs diving again.
They're going to need moar paper.
We should be exhorting them Forward into the abyss ;-)
And What is this PM Attack means now? It's NY Globex ??? FUcking crooks, Who is pushing buttons now?
sell! sell! sell!
(and somewhere else Buy! Buy! Buy!)
it's fun watching this in real time
I watched many currencies intervention, JPY, CHF and so on, this is exactly how it looks like.
Why would Central Banks wanna devaluate their own Gold resourses ?
Just release GOLD to the people for FREE and forget about it. Why bother knoking down
price daily..?
In other news, Bejing is reporting a coming press release concerning the death of that auditor and a new Q/E program whereby $65 Trillion Yuan will be used to fight off the coming struggle.
Nothing is going on other than PM's f*cking intervention again.. FX is quiet no news. I was curious why is the f*ck Mines dive 7-10% at the end of the day while GOLD barely moved? That the answer now.. .GOV CASINO..
Any way to blame the Yids for this one?
C'mon boys, dig deep into those pea brains
lol
LasVegasDave, CHINA was forced to adopt the Western debt engine system after steam engine gun boats sailed up the Yangtze River, and were able to blow everything out of the water:
http://en.wikipedia.org/wiki/Yangtze_Patrol
"... unequal treaties imposed on China by Great Britain after the Opium Wars ... "
The industrial revolution that began with Steam Engines was matched by the Debt Engines which were developed at the same time:
http://www.worldtrans.org/whole/monetarysystem.html
Neolithic civilization went right around and the world, and back. Contemporary China is the result of the West going East, until the East went West. China has been forced by the Western advances in science and technology to embrace our style of social insanities. They have adopted those to the point where they have become even more insane than the previous others were.
One indication of that is that China now makes more "money" out of nothing than we do:
http://www.zerohedge.com/news/2013-02-08/china-accounts-nearly-half-worl...
With respect to your question, it is really not who they are, but what they do! The Anglo-American (Zionist) banksters drive through the paradoxes from too much of their kind of "success," leading to others copying their systems, and attempting to do that better than they did.
Those, in the past, and somewhat still in the present, who may have been the best at being dishonest, and backing that up with violence, and thus, were able to operate as the top carnivores in the human systems are like prize fighters. No matter how good they are, for however long, there always eventually comes along somebody better.
Like artists inspire other artists, organized crime gangs inspire other organized crime gangs. Since all aspects of culture are integrated, and tend to work better the more so they are, those who are the best at force backed frauds tend to inspire others to emulate what they had accomplished.
Paradoxically, the Westernization and modernization of China has resulted in them destroying themselves too, even more so than we already have. No group of human beings have a complete monopoly on robbery and murder. Those who were relatively the best at operating those systems in the past do not necessarily always stay that way. Rather, they tend to eventually be superseded by someone else.
The paradoxical ways that the Western triumphs of too much success from being the best at dishonesty, backed by violence, are now moving East, are similar to so many other things! The transnational banksters are a new hybridization of the top carnivore functions in the human ecology, and a new hybridization of the dominant organized crime gangs.
Anyway, the relevant point to your question is that it is misleading, and relatively useless, to worry about "who" rather "what." There does not have to be a genetic continuity, for the methods of organized crime to be imitated, to the point where those imitating them become even better at that ... which then drives them to become even more insane and self-destructive than we were!
China is now playing through, in ways which are quicker, and on a larger scale, the systems of social insanities, due to triumphant force backed frauds, in ways which are surpassing what the West previously did.
The Anglo-American (Zionist) empire has been a great inspiration to all the other organized crime gangs around the world to up their own game.
Too bad, so sad, that the only possible ways to survive through this would be to up that game by a quantum leap, through radical paradigm shifts, in both the basic sciences, and political science, that gave rise to the Steam Engine and the Debt Engine systems, that have been able to conquer the whole world, and thereby, force everyone else to embrace similar financial frauds, done even better, in order to hold their own.
What the whole world "needs" is more and better science and technology continued to be applied, which requires radical paradigm changes in militarism, to operate better murder systems, doing death controls, so that the money system debt controls that they back up could be transformed, through a sufficiently scientific revolution.
A thoughtful response. Kudos.
But China is a nuclear armed power.
And life is about choices. There's lots of water under the Yangtze bridges since the Opium wars.
When I look at china I see fascism, with preferred cronies getting rich (much like the U.S.)
Dont see how you could blame the Yids or Anglo American Zionism. Really, its just the rapacious quality of human nature.
But what the hell, Im sure a rational argument can be made for blaming the Jews, and for hunting them down.
Scapegoating is something that all societies are hard wired for, so I guess the chinks can learn to hate the Yids too.
The Chinese pegged their currency to the tribes' fiat currency (the U.S. dollar). Tribe members on Wall Street sold the Chinese the goyim's toxic mortgage securities, and China has never quite recovered.
Even more waters passed under the 'american' bridges since 1776,July,4th.
So if life is a matter of choice, well, one can state that 'americans' were certainly not coerced into 'americanism' and what consequences followed.
Contrary to some others...
Didn't I already tell you to get lost?! Don't think that you will not be called out on your bullshit, just because TheFourthStooge-ing is still asleep.
AnAnonymous gives more of the same tired Chinese citizenism propagandations. His strained logics are just endless repeations, uniformously ridiculous.
These are tough days for propagandists. The reality is so quickly adverse to them they need to be on deck 24/24 to dress reality so it conforms to their propaganda.
All terrorism eminates from Israeli's illegal actions in Palestine - ask this Israeli who has turn on his country http://www.youtube.com/watch?v=c4ZfnpN4Dfc
In the U.S. it's neither. What's the matter, don't they have rogue traders in China?
Kanye West - All Falls Down ft. Syleena Johnson
http://www.youtube.com/watch?v=8kyWDhB_QeI (4:05)
http://www.youtube.com/watch?v=F9D6TkKZW7Q
http://www.youtube.com/watch?v=fY0oPg1h8fQ
"G20 Draft: Committed to avoid competitive devaluations."
I get it, no intervention: Just print all together and keep Gold under the carpet, thanks,
G20 crooks translated ok..
Looks like they've really taken to that reserve currency thing!
In the spirit of previous Apple upgrades:
I have now raised my 2015 Gold Target from $5,000 to $10,000....
Yuan is flash paper. Gives a nice show and then disappears.
Let them eat rice, oh wait...
Want some lead with that?
P.O.N.Z.I. everywhere. When the bond market bubble bursts, it's all over, and the end game is on. Prepare accordingly, good luck to all.
This could be like 911 time a hundred.
Evelyn Rothschild on China & One World Currency - http://www.youtube.com/watch?v=FRrv1pSzGyc
Pump und Dump. :)
No one needs Chinese junk. The fertilizer plant that blew up probably installed valves made in China. Fuck China.
I have always been perplexed by people's facination of the Chinese economy. "Free" democratic, and "republican" governments lie through their teeth about important economic indicators. What does one expect from a communist government within a culture that strives to please? Now paired with the rot and lies of the western world economies, I am surprised things have lasted as long as they have.
It's my fondest wish to see that shithole of a country collapse and die. I've spent enough time there to know they're my least favorite people on Earth. Pakistan was a paradise after being in China. Here's to a very hard landing! Prost!