There has been a lot of talk recently about a Chinese credit bubble and some have predicted that the collapse is going to be very bad. The Chinese government does seem aware of the talk and they have started to act on it (in fact, just today they restricted banks' lending abilities.) How does everyone here feel about it? Also, what do you think the outcome will be?
MYP, I am COMPLETELY confused. As the world does not seem to be turning as it should according to our text books on economy. There are certain very fixed economic principles, like if you have too much debt, debt gets called in, and you go bankrupt. I'm very glad you started this thread however, as I am very curious what the views would be of others.
I'm beginning to see China's credit bubble as the other side of the coin of the US debt bubble. As long as the US can have the confidence of their people, and keep conning them about this debt, being OK and part of governing, etc., and also as long as the US can keep the economy going, and be a World Leader that others look up to, the Chinese credit bubble would survive. But if another debt bubble is going to burst soon in the United States, and I wonder whether there is a possibility given that the stock exchanges are partying again, I'm almost certain the Chinese will be in trouble too.
