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Bank of America warns of ‘lethal’ damage to China’s financial system as deflation deepens

‘Deflation, Devaluation, and Default’ loom in China this year. The denouement for Shanghai’s bourse will not be pretty, says the US bank.

by Ambrose Evans-Pritchard, The Telegraph:

China is at mounting risk of a financial crisis this year as growth sputters and deflationary pressures trigger a wave of defaults, Bank of America has warned.

The US lender told clients that a confluence of forces are coming together that threaten to chill the speculative mania on the Shanghai stock exchange and to expose the underlying fragility of China’s $26 trillion edifice of debt.

“A credit crunch is highly probable,” said the bank in a report entitled “Deflation, Devaluation, and Default”, written by David Cui and Tracy Tian.

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3 comments to Bank of America warns of ‘lethal’ damage to China’s financial system as deflation deepens

  • Ed_B

    If China really does have such severe financial problems, they are not alone. In fact, it would be difficult to find more than a handful of countries that do not have severe financial problems. But then, is this not what we expect when the problems are huge and widely distributed if there is to be a world-wide financial reset? If it isn’t, then what incentive would there be for such a reset?

    • Rodster

      Right on Ed. I’ve been saying for far too long that this shit storm that’s coming is GLOBAL. And when the SHTF it will take everybody out. No nation or economy escapes this. You have the potential for a global systemic collapse and govt’s around the world defaulting and collapsing while dealing with their pissed off citizens.

      China has the potential for a major shit storm because they need to keep 1.5 billion of their citizens pacified.

      • Ed_B

        Hey, Rodster… it’s good to hear from you. 🙂

        Yes, this WILL be a global problem and those few who do not have severe financial problems will be surrounded by other countries that do. Food, fuel, and electricity will become scarce. The just in time supply system will run out of time and be unable to supply a lot of the smaller cities and towns out there. People will fight to the death for a few scraps of food and a little drinking water. Medical care? Only that which we can do for ourselves.

        When the SHTF, EVERYONE is gonna get splattered. Those of us who stack and prep will be better off than those who do not but it is unrealistic to think that we will avoid all trace of the flying brown-stuff. Bottom line will be: keep your family, friends, and neighbors close, prepare to defend those you love and that which will be needed to survive, and above all, keep your profile as low as possible… because those who do not ARE gonna attract bullets.

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