Chinese local government debts are "out of control"; "could spark a bigger financial crisis than the - Polidicks

[quote](Financial Times) -- 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." The International Monetary Fund, rating agencies and investment banks have all raised concerns about Chinese government debt. But it is rare for a figure as established in the Chinese financial industry as Mr Zhang to issue such a stark warning. "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." Local government debts soared after 2008, when Beijing loosened borrowing constraints to soften the impact of the global financial crisis. Provinces, cities, counties and villages across China are now estimated to owe between Rmb10tn and Rmb20tn ($1.6tn and $3.2tn), equivalent to 20-40 per cent of the size of the economy. Last week, Fitch cut China's sovereign credit rating, in the first such move by an international agency since 1999. On Tuesday, Moody's cut its outlook for China's rating from positive to stable.[/quote] [url]http://edition.cnn.com/2013/04/16/business/china-local-debt/index.html?hpt=ias_c2[/url]

So does this mean that China won't be the economy of the future?

So if China is also in debt, who the fuck has all the money?

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] banks

[QUOTE=kaskade700;40313302]banks[/QUOTE] China's banks are state owned. So if the banks have all the money, China still has all the money. China is stealing money from itself. China is bankrupting China! We must stop China! :tinfoil:

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] a big percentage of our debt is owned by americans. [img]http://www.ritholtz.com/blog/wp-content/uploads/2011/03/whom-does-the-us-government-really-owe-money-2010.png[/img] and apparantly china owes us some too.

Fuck this gay earth and all the people on it. Write me up for the trip to mars, I don't care if there are commies or not.

[QUOTE=Scapegrace;40313245]So does this mean that China won't be the economy of the future?[/QUOTE] At this moment it doesn't [I]mean[/I] anything. The auditor is warning about a potential crisis that may arise if this escalates further. [QUOTE]This evolution was quite frightening,” he said. “China has more than 2,800 counties. [B]If every county issued debt, it could lead to a crisis.[/B] It could be even bigger than the US housing crisis.”[/QUOTE]

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] Switzerland.

[QUOTE=Ricool06;40313344]China's banks are state owned. So if the banks have all the money, China still has all the money. China is stealing money from itself. China is bankrupting China! We must stop China! :tinfoil:[/QUOTE] China will just erase yesterday's numbers and replace them with better looking numbers. Crisis adverted!

[QUOTE=Emperor Scorpious II;40316156]China will just erase yesterday's numbers and replace them with better looking numbers. Crisis adverted![/QUOTE] I'm glad China stopped itself in time to save itself.

[QUOTE=Ricool06;40316290]I'm glad China stopped itself in time to save itself.[/QUOTE] Someone is bound to get medals.

I think who he's really warning are Chinese leaders that they might have to bail out local governments, in much the same way that taxpayers in the West bailed out banks and corporations. If Chinese local governments go bankrupt, that could lead to unrest, depending on how bad local economies are affected.

[QUOTE=cecilbdemodded;40316396]I think who he's really warning are Chinese leaders that they might have to bail out local governments, in much the same way that taxpayers in the West bailed out banks and corporations. If Chinese local governments go bankrupt, that could lead to unrest, depending on how bad local economies are affected.[/QUOTE] That'll be dangerous. We all know how much Beijing tolerates civil unrest.

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] Jews EDIT: Also [QUOTE=JayFeather1337;40313357]a big percentage of our debt is owned by americans. [img]http://www.ritholtz.com/blog/wp-content/uploads/2011/03/whom-does-the-us-government-really-owe-money-2010.png[/img] and apparantly china owes us some too.[/QUOTE] I like how they made it 13,562 Billion. As if we are unable to comprehend that number is the same as 13.5 Trillion dollars.

Maybe some random country in Africa will somehow become the world financial leader from all the other ones crashing and burning.

[QUOTE=A B.A. Survivor;40316933]Maybe some random country in Africa will somehow become the world financial leader from all the other ones crashing and burning.[/QUOTE] Zimbabwe

[QUOTE=Ricool06;40316290]I'm glad China stopped itself in time to save itself.[/QUOTE] Sounds like the American government with that fiscal cliff thing.

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] its ok, china's debt is bought by their state-owned banks, and the state owned banks are backed by state-owned insurance companies, so nothing could possibly go wrong except for when the goverment occurs a deficit, then the flow of cash stops and the entire system collapses [editline]17th April 2013[/editline] [QUOTE=SuddenImpact;40313380] Write me up for the trip to mars, I don't care if there are commies or not.[/QUOTE] you want to go to a [B]red[/B] planet?!

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] me

China will grow poorer [editline]17th April 2013[/editline] They should capture some oil derrecks for extra income

[QUOTE=lintz;40313296]So if China is also in debt, who the fuck has all the money?[/QUOTE] [IMG]http://www.thethirdcity.org/blog/wp-content/uploads/2011/06/sheikh_hamad_bin_k_1360578c.jpg[/IMG]

[QUOTE=JayFeather1337;40313357]a big percentage of our debt is owned by americans. [img]http://www.ritholtz.com/blog/wp-content/uploads/2011/03/whom-does-the-us-government-really-owe-money-2010.png[/img] and apparantly china owes us some too.[/QUOTE] does anyone else think it's kind of amusing that Brazil, of all countries, has a big enough chunk of our debt to even be listed? :v:

[QUOTE=Furioso;40323656]does anyone else think it's kind of amusing that Brazil, of all countries, has a big enough chunk of our debt to even be listed? :v:[/QUOTE] The most populous and quickly developing country on your adjacent continent? No.

[QUOTE=Mlisen14;40323751]The most populous and quickly developing country on your adjacent continent? No.[/QUOTE] I was simply expecting a more prosperous country, not trying to imply anything

Question Is ANY country ever gonna pay its debt?

[QUOTE=kaskade700;40313302]banks[/QUOTE] It's funny and quite concerning that most of this world's economy is based on something without any inherent value. Loads of money is made of transactions that actually never dealt with anything of actual value.

[QUOTE=dass;40323781]Question Is ANY country ever gonna pay its debt?[/QUOTE] Not really, 'paying' it's debt is not something that exists with governments. There are many instruments that they can use to reduce or transfer debt, like Q.E, adjusting interest rates, Deficit reduction etc. so that they can effectively buy their own debt with cheaper debt.

[QUOTE=Furioso;40323778]I was simply expecting a more prosperous country, not trying to imply anything[/QUOTE] One of the most rapidly developing economies? The 6th largest economy according to CNN?

[QUOTE=GoDong-DK;40323836]It's funny and quite concerning that most of this world's economy is based on something without any inherent money. Loads of money is made of transactions that actually never dealt with anything of actual value.[/QUOTE] Yes it is. If it wasn't worth anything then it wouldn't be traded in.