Since Chinese local governments, unlike the U.S. municipality, do not have the option of filing for bankruptcy, Beijing most likely would need to do a great bailout of local authorities either in installments or at one fell swoop
In addition to the current Euro crisis, Japan, the world's third largest economy, could have its own debt crisis bigger than the Euro Zone as early as 2012.
Goldman's Jim O'Neill said in a recent interview that the world's future prosperity depends on China's growth. If he's is right, then don't count on that much world prosperity, at least in 2012.
The possibility of a Euro breakup is looming larger than ever. Forecast by ING sees an immediate fall in individual currencies in 2012, and GDP output falls ranging from 7% in Germany to 13% in Greece.
In addition to decades of overspending beyond means, there are also some less discussed contributory factors leading to the current debt crisis in the Euro Zone, particularly when compared to the United States.
The new dollar liquidity injection from 6 central banks essentially took the urgency out of a much needed decisive resolution. More crises similar to the one in the Euro Zone popping up to the point of one Scary Grandioso--No more spare bailout capacity.
