Events in China and Greece threaten 2008-style credit freeze

Monday, July 6, 2015
By Paul Martin

By Peter Cooper
GoldSeek.com
Monday, 6 July 2015

The stock market crash in China and Greece’s probable exit from the euro threaten to cause an October 2008-style credit freeze. This led to a plunge in global trade in the first half of 2009 with volumes down around 40 per cent in Dubai, the Middle East’s biggest port.

China is a bigger problem than Greece. It’s stock market crash has already cost the equivalent of ten times Greek annual GDP. This was the final stage of the credit bubble in China that started in 2009 with an epic bailout package equal to half its GDP, the biggest in history.

1929-style crash

That this should climax in a 1929-style bubble and crash in its stock market was inevitable. But we still have to deal with its consequences. Chinese domestic demand will now collapse with the funding for its continued expansion.

It’s a ’sudden shock’ experience that Dubai saw in 2009-2010, a very painful and immediate end to a long period of prosperity. Credit will become far more expensive in China, just as Dubai bond yields went through the roof.

But this just is not good news for anybody. China has become an important trading partner and source of investment for many nations. They will all suffer in the wake of the stumbling giant.

Will its 100 million plus tourists now stay at home? How will its companies raise the money to build projects in Africa? How much lower will industrial commodity prices go if Chinese demand is shot to pieces?

Chinese demand

The Rest…HERE

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