China in major financial distress?

[akhhorus]

This is just stunning and would cause a massive economic collapse in this country if we had this amount of NPL debt, and we have an economic many times larger than China's. And as a reference, the S&L Scandal caused major economic problems in the 1980s, and they only totaled 150 billion(and we had a much larger economy that could absorb it).

http://www.theaustralian.news.com.au/story/0,20867,19067992-36375,00.html

According to Ernst & Young, the accounting firm, bad loans in the Chinese financial system have reached a staggering $US911 billion ($1.18 trillion), including $US225 billion in potential future NPLs in the four largest state-owned banks.

This equals 40 per cent of gross domestic product and China has already spent the equivalent of 25-30 per cent of GDP in previous bank bail-outs.

Just stunning.

[RedskinsDave]

All they have to do is collect on the debt we've let them purchase and they transfer the problem to us.

[Spence]

Chinese banks are forced to extend a lot of unwise credit to ramshackle state-run enterprises. So much of that stuff is in black books that I don't think anyone -- including the entire Chinese leadership -- has any idea what the true numbers are.

[akhhorus]

All they have to do is collect on the debt we've let them purchase and they transfer the problem to us.

I don't think they have even enough to transfer it to us without paying a large bill. And if they did that, I believe their currency would fall apart, making the remaining NPL debt(300 or so billion US) much harder to pay off.

[Spence]

We owe a ton of money to China, but those loans have terms. The Chinese would wipe out a lot of the money we owe if they tried to call in those loans early.