I wrote about China quite a few times last year. Suggesting that their stock market bubble is unsustainable and will collapse. In addition to warning people not to touch China with a ten foot pole at the present moment. Here is a small sample…..  China’s Nasdaq 2000 Crash Is Set For A Bounce and Is China Beginning To Collapse?

But wait, there’s more……much more. And when you thought you have heard it all China takes it to the next level.

• China just announced one of the largest single layoffs in history

Chinese officials announced plans to lay off roughly 1.8 million workers in the coal and steel industries, as part of president Xi Jinping’s politically difficult effort to restructure the world’s second-largest economy. It’s unclear as to the time frame for the cuts, which were announced by Yin Weimin, China’s minister for human resources and social security.

My only question is……how do you spell “revolution and social unrest” in Chinese?

I also wrote about exactly that two years ago……Will China’s Economic Collapse Force A Revolutionary Change?

But wait, there’s more….

If you think China’s stock bubble was nuts, look at what’s now happening in its property market

FOMO, or the fear of missing out, has become an increasingly popular acronym of late, joining the ranks of QE, POMO, ZIRP and NIRP in the everyday vernacular of people in financial markets.

FOMO? Ladies and gentlemen ….sometimes there is nothing left to do. Just shake your head, get some popcorn, get comfortable and watch this insanity blow sky high. I would assume sooner rather than later.

China Hands Out 1.8 Pink Slips As Financial Engineering Insanity Continues   Google

The chart above is truly jaw dropping. I have written about China quite a few times last year. For instance, Is China About To Collapse – Drag Us All Down

Hedge fund manager Kyle Bass has a very good take on the same subject matter. A view worth studying.

Over the last ten years, China’s banking system has grown from less than $3 trillion to $34 trillion, equivalent to around 340% of Chinese GDP. To put it in perspective, the US banking system had about $16.5 trillion of assets heading into the financial crisis, equivalent to 100% of US GDP. “Credit has never grown faster or larger than it has in China over the past decade,” Bass wrote in a letter to investors dated February 10. There is no precedent.

He goes on to say….

What does this mean for Chinese banks? There is a bad answer and a worse answer. The bad answer is that Chinese bank capital – the equity buffer – is significantly overstated. A TBR requires much less capital to be set aside (only 2.5c as opposed to 11c for an on-balance sheet loan) at the time of origination (anyone thinking Fannie and Freddie?). Adjusting reported bank capital ratios for this effect changes reasonable 8-9% Core Tier 1 capital ratios (CT1) to undercapitalized 5-6% levels. Now, the worse news. TBRs are one of the biggest ticking time bombs in the Chinese banking system because they have been used to hide loan losses.

Finally…..

“One can make many assumptions regarding the collectability of such loans, but our takeaway is that the system is already full of massive losses,” he said. WMPs, TBRs, and the 8,000+ credit guaranty companies constitute the majority of China’s shadow banking system. This system has grown 600% in the last 3 years alone. This is where the first credit problems are emerging, away from the eyes of regulators. The Chinese government has the capacity and the willingness to do what it needs to do to prevent a banking system collapse. China will save its banks, and the renminbi will be the valve for normalization. It is what any and every government would do if put into a similar situation. China should stop listening to Kuroda, Lagarde, Stiglitz, and Lew and start thinking about how to save itself from the impending disaster in its banking system.

What does all of that mean? 

China only has two options. An outright banking and economic blowup/collapse or substantial Yuan devaluation. Invest accordingly. The problem is, everyone is trying to devalue their own currency, with the FED/USD about to join the party.

We have been talking about China’s “ponzi” economy for well over a year now. Here is just a small sample of our previous work China’s Housing Collapse Is Already In Full Swing. It now appears that China’s massive fraud is beginning to unravels. Consider the news flow.

• China’s 2014 economic growth slowest in more than 2 decades

• China’s $20 Trillion Headache Underscored by Stock Swings

• The Scale Of The Chinese Real Estate Crash Is Terrifying

Here are just a few more bits that should scare the bejeezus out of you.

• Chinese corporate borrowers owed $14.2 trillion at the end of 2013 Vs $13.1 trillion owed by U.S. corporations.
• This means that as much as 10 percent of global corporate debt is exposed to the risk of a contraction in China’s informal banking sector.
• Cash flows and leverage at Chinese corporations are the worst among global peers, having deteriorated from being the best in 2009.

As I have mentioned in the past, most of China’s economic growth over the last 5-6 years has been financed by massive credit expansion. The likes of which we have never seen before. The result? 

• $21 Trillion Debt Mountain. Roughly the same size as the entire US Banking Sector. It took the US 220 years to get to that number, it took China just 5 years of explosive credit growth.
• $6 Trillion In Shadow Banking. Actually, no one knows how large this number is. I have read good data/reports putting this number at $10-15 Trillion range.
• Empty cities, shopping centers, massive speculative bubble in real estate, built out infrastructure, rising cost of labor and export driven economy.

How much longer can this go on? Well, that’s a Trillion dollar question…..or a $40 Trillion dollar question. Apparently, it is already unraveling. Either way, one thing is for sure, this will not end well nor will it end in an orderly fashion.

Shocking: China’s Collapse Is Accelerating  Google

We have been talking about China’s “ponzi” economy for well over a year now. Here is just a small sample of our previous work Shocking: China’s Housing Collapse Is Already In Full Swing. It now appears that China’s massive fraud is beginning to unravels. Consider the news flow.

• China’s 2014 economic growth slowest in more than 2 decades

• China’s $20 Trillion Headache Underscored by Stock Swings

• The Scale Of The Chinese Real Estate Crash Is Terrifying

Here are just a few more bits that should scare the bejeezus out of you.

• Chinese corporate borrowers owed $14.2 trillion at the end of 2013 Vs $13.1 trillion owed by U.S. corporations.
• This means that as much as 10 percent of global corporate debt is exposed to the risk of a contraction in China’s informal banking sector.
• Cash flows and leverage at Chinese corporations are the worst among global peers, having deteriorated from being the best in 2009.

As I have mentioned in the past, most of China’s economic growth over the last 5-6 years has been financed by massive credit expansion. The likes of which we have never seen before. The result? 

• $21 Trillion Debt Mountain. Roughly the same size as the entire US Banking Sector. It took the US 220 years to get to that number, it took China just 5 years of explosive credit growth.
• $6 Trillion In Shadow Banking. Actually, no one knows how large this number is. I have read good data/reports putting this number at $10-15 Trillion range.
• Empty cities, shopping centers, massive speculative bubble in real estate, built out infrastructure, rising cost of labor and export driven economy.

How much longer can this go on? Well, that’s a Trillion dollar question…..or a $40 Trillion dollar question. Apparently, it is already unraveling. Either way, one thing is for sure, this will not end well nor will it end in an orderly fashion.

Is China Beginning To Collapse? Google