China’s Currency And Economy Are Imploding
by Michael Pento
DavidStockmansContraCorner.com
March 1, 2016
A little over six months ago the owners of the Baha Mar, a $3.5 billion Bahamian resort, filed for bankruptcy. Shoddy construction from the China State Construction Company led to delays resulting from leaking plumbing, porous Chinese concrete and large cracks at critical stress points. The doomed project even led to the death of two Chinese workers. Although the building is 97% complete, the structural deficiencies make it uninhabitable. Given the Chinese proclivity to build ghost towns, it makes you wonder if their construction crews are accustomed to erecting buildings that are never intended to be occupied.
The Bahamian Baha Mar can now join the Hall of Shame of Chinese exports that include cancer causing laminate flooring, noxious drywall and exploding hover boards…just to name a few. As if they don’t have enough vacant edifices of their own, one has to also wonder if the Sino Scam artists in Beijing have now resorted to exporting empty cities.
But perhaps the most troubling export from China has yet to come. It is the financial crisis that will unravel with the unwinding of the country’s $30 trillion credit bubble. At the World Economic Forum in Davos, Harvard professor Ken Rogoff described China’s credit bubble as the “Last big domino to fall as the global debt super cycle unwinds.”
Professor Rogoff believes the stated 1.5 percent rate of non-performing loans held by banks is just as fictitious as China’s inflated GDP data. He considers the real figure to be between 6 and 8 percent.
The growth of China’s bad loans is troubling; they have risen by 256 percent in the past six years, even as the ratio to total lending has dropped. The actual amount of delinquent debt is unknown because banks conceal bad loans by rolling them over. But the problem is that the credit in China is now growing much faster than the economy.
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