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On the Chinese Wall of Steroids: Imbalances and Asymmetries

By John E. Charalambakis Ph.D., Managing Director

On the Chinese Wall of Steroids: Imbalances and Asymmetries

 

In a recent study by the McKinsey Institute total credit market debt in China is shown as the largest in the world, and that is only what we know of. The dangers are not limited just to China but are extended to the global financial system. In a world where financial institutions are interconnected and where credit flows create a maze, the overextension of credit in an economy endanger the global financial architecture with a hard landing that could quickly unravel the real economies due to the size of leverage that all leading countries have accumulated in the last 15 years.

 

The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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