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Here's the thing about China, if it doesn't pay up, the world at large can't do anything to China. The world is dependent on Chinese export. If China sinks it w
by pankajdoharey 9y ago
Here's the thing about China, if it doesn't pay up, the world at large can't do anything to China. The world is dependent on Chinese export. If China sinks it will sink the world economy with it. Too Big to fail actually applies to China. If China falls short of paying up its mortgages or loans on time it can't be recovered by anyone. The only thing one could do is wait. So all the talk is useless, China gas got everyone by the balls. There is no way to threaten China, nor can any sanction be put on China because the world trade would suffer. China is indeed the world's factory. In my opinion, Moodys is wrong this Debt-Fueled growth of China will and has to be sustained for safeguarding everyone's investments, China cannot be sunk at this point at any cost. Moodys is not the sole authority on rankings and their opinion matters less and less in the context of China.
- don_draper 9y agoI question the assertion that allowing things to fail like big banks or China would be bad in the long term. And this is economics, which like religion, isn't an exact science so neither of us know for sure.
- emodendroket 9y agoCan you point to an example where such things happened and the result was not calamitous? I can't think of many happy endings to stories that involve massive bank runs, which would presumably be what happened when big banks started failing.
- known 9y agoChina's external debt is just 8% http://www.usdebtclock.org/world-debt-clock.html http://www.usdebtclock.org/world-debt-clock.html
- dgregd 9y agoChina doesn't import that much goods from the west. So crisis there shoudn't have big impact on US and Europe. Except real estate market. It seems that US, European land/houses are the only thing Chinese are interested in.
- kerbalspacepro 9y agoIt will have an impact on resource-exporting countries though.