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| China-Japan-Koreas |
| China's credit bubble on borrowed time as inflation bites |
| 2010-12-06 |
| The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist. It warns that the Communist Party will have to puncture the credit bubble before inflation reaches levels that threaten social stability. This in turn may open a can of worms. "Many see ChinaÂ’s monetary tightening as a pre-emptive tap on the brakes, a warning shot across the proverbial economic bows. We see it as a potentially more malevolent reactive day of reckoning," said Tim Ash, the bankÂ’s emerging markets chief. Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month. |
| Posted by:tipper |
| #4 #3 - A US default would also topple the world's financial system, taking China down with it. Every country has been running on too much borrowed money, and none want to pay off the loans, even if they were able to, which they aren't. |
| Posted by: Anguper Hupomosing9418 2010-12-06 19:35 |
| #3 I have a sneaking suspicion that a default by China would topple enough of the world's financial system that the "protection" advocated by RBS wouldn't be worth the paper / electrons it was written on. |
| Posted by: AzCat 2010-12-06 19:06 |
| #2 AEP so salt required. |
| Posted by: Bright Pebbles 2010-12-06 10:22 |
| #1 ...has advised clients to take out protection against the risk... This is another major element that fueled the current financial mess. If you gamble with financial instruments, you should not be able to take 'protection against risk'. You are just trying to tag someone else with what should be your own concern with your own money. Do you underwrite Las Vegas gamblers? A very very small group of people do, and they take their loses without hammering everyone else. These big boys will expect someone else, ie the peons, to ultimately back their loses. Fortunately for them and unfortunately for everyone else, they have agents at the levers of power who will stick it to the peons to cover their gamble. |
| Posted by: Procopius2k 2010-12-06 09:27 |