James Lewis

Big Losses Are Hidden on China's Bank Balance Sheets

It interests me greatly how many economists, traders, politicians, intellectuals miss the pure and simple fact:

Under all economic, balance sheet principles every single country in the world is insolvent and bankcrupt. The western/eastern emperor has no clothes on, never has and never will. This is the whole principle of a fiat money system and financial credit system.

The USA is certainly insolvent, but has the best cashflow possible as it can print money and holds the reserve currency.

Japan, China, Europe - all insolvent, all bankcrupt!

The difference between USA, Japan and Europe is that they are closely integrated in the financial system. China is still outside it. If China fully integrates its system. No banking crisis will ever be terminal. If China stays outside the system and has a banking crisis, then China itself will face its own depression which is very likely to lead to severe social unrest. However if China intergrates itself and adheres to the basic tenents, then it has a very large cushion regardless of how the non-performing loan situation plans out.

If everyone in the world agreed that everyone in the world was rich. Then everyone in the world would be rich.

Money is an illusion. Confidence, stability, trust and peace are the true currency of the world and they are worth everything.