The danger, experts say, is that China’s municipal governments could already be sitting on huge mountains of hidden debt — a lurking liability that threatens to stunt the nation’s economic growth for years or even decades to come. Just last week China’s national auditor, who reports to the cabinet, warned of the perils of local government borrowing. — NYT
The NYT publishes the first in what will be a series of articles examining China’s system of government-managed capitalism, and the potential weaknesses that could threaten the nation’s remarkable economic growth. The first article entitled "Building Boom in China Stirs Fears of Debt Overload" explores how the current construction boom (for housing, infrastructure etc) in China's cities may signal economic trouble ahead. Primarily because the investments are usually made using debts which are frequently hidden, on the balance sheets of special investment corporations.
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If we are so deep in debt, and the EU is too, and China and seemingly every other developed and undeveloped country, then it must be asked who are we all in debt to? And how did this entity create all this "debt"? Did they invent it out of thin air and expect everyone to pay it back in non-existent currency? Theres a natural relationship between the amount of currency in circulation to debt, and it would seem to me impossible to issue debt of a magnitude 200 or 300% more than all the currency in existence. The much bigger question is who do they expect to collect on it? Send in Dog the Bounty Hunter?
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