Monday, July 18, 2011

China's Local Government Debt Looms Over Portfolios

Using overvalued property as collateral for real estate loans. Nothing could go wrong with that.

China’s $2 Trillion In Local Lending Raises Questions About Funds
“In China, as in the U.S. before the collapse of the subprime mortgage market in 2007, local debt is backed by collateral that is overvalued, may be hard to sell and, in some cases, doesn’t exist,” wrote Bloomberg in a recent report.

These estimates put local government debt higher than the Chinese national debt.

No comments: