KYLE BASS: There's a 'ticking time bomb' in China

Business Insider ^ | Feb. 10, 2016 | Julia La Roche

[TigerLikesRooster]

KYLE BASS: There's a 'ticking time bomb' in China

Julia La Roche

Feb. 10, 2016, 3:29 PM

Hedge fund manager J. Kyle Bass, the founder of Dallas-based Hayman Capital, has a warning about a "ticking time bomb" in the Chinese banking system.

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.

[TigerLikesRooster]

P!

[proxy_user]

I suppose they’re going to tell us that very little of this money will ever be paid back....

[butterdezillion]

OK, so how does this fit with what Kevin Freeman said about China and Russia joining to form a new financial system based on South African gold?

Are they figuring to run up the debt within this fiat system, blow it up, and start over with a gold-based system?

I know nothing about banking and economics so I don’t understand how this ties together - how on the one hand Chinese banks would be running up this huge debt while on the other hand the Chinese government is setting up a different financial system. The only thing that makes sense to me is that the Chinese government sees the collapse of the world’s current financial system and is preparing to have something to replace it with, to keep it’s nation going.

Am I understanding this right?

Because if I am, then the Chinese government should be really ready to blow up the old system and start the new...

[spintreebob]

Guess who the USA bails out... its only fair ;>

[TigerLikesRooster]

They have visions to be a new world power. So they embark on drawing up the grand scheme. But it is a dream, based on their overconfidence that their economy is rock-solid and growing at break-neck speed without any structural flaws. The reality: they are about to be drowning in their debts. Their grand dream has to wait for a long time.

[sarge83]

They are communists and lie with great ease and our politicians and business people lap it up like chocolate. I take anything China reports with a grain of salt, they are like the Norks.

[politicket]

Remember not too many years ago when many people thought China was going to rule the economic world?

The world is in a deflationary spiral - and has been since late 2006. The ability of governments to create false credit expansion to keep the money supply from crashing can only go so far.

Precious metals are not the answer. A monetary system based on completed labor instead of debt is what we need to get back to.