caylus commits - thursday, page-216

+5%-8% or -58%?

FYI:

How Can China Save Europe When It's Defaulting On Its Own Debt?

“Xu Lin, a senior official at the National Development and Reform Commission, says there is no need to “panic,” but there are plenty of reasons to think that China’s economy is already landing hard. And a hard landing will soon cause LGFV defaults around the country, which will roil banks. Fitch early this month put China’s local-currency debt on downgrade watch due to concerns about bank asset quality and general concerns about financial stability.
Many analysts, thinking Beijing has plenty of cash, don’t worry. Yes, it is sitting on $3.2 trillion in foreign exchange reserves, but for various reasons dollars, euros, and yen are of little use in a local-currency crisis. Of course, the central government can print more renminbi to pay off LGFV creditors, but that, by increasing the money supply, would only aggravate what is China’s most serious economic problem, inflation.

Everyone now wants to know whether Beijing will buy Greek and Italian debt to save Europe. Yet the better question to ask at the moment is this: “Can China save itself?”

http://www.forbes.com/sites/gordonchang/2011/09/18/how-can-china-save-europe-when-its-defaulting-on-its-own-debt/

Maley: China’s debt binge hides an imminent crisis
by Karen Maley, of Business Spectator

"Papering over the problem, he warns, doesn’t make it disappear. “While we can’t predict where complex systems will go, we know that the longer their volatility is artificially suppressed, the more emphatic will be its release when it does come. It is more likely that China has one and a half times (and counting) the 2008 financial crisis ahead of it.”