The Richest Man In Asia Is Selling Everything In China
From the article:
Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.
I don’t know about you? But when the richest man in Asia pulls up stakes there is a reason for it. Is he getting out while the getting is good?
Also from the article:
After years of unprecedented monetary expansion that has put the economy in a precarious state, the Chinese government has been desperately trying to reign in credit growth.
The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.
The Terms: (If you’re not accustomed to financial things. I’m learning too.)
An example of Shadow Banking for instance would be Mortgage Companies, or Money Market Mutual Funds. Financial Institutions outside of regular banking.
The IMF: It stands for International Monetary Fund. This organization has been around since 1944. The IMF’s stated goal was to assist in the reconstruction of the world’s international payment system post–World War II.
Countries contribute funds to a pool through a quota system from which countries with payment imbalances temporarily can borrow monies and other resources.
That’s not all….
Through this fund, and other activities such as surveillance of its members’ economies and the demand for self-correcting policies, the IMF works to improve the economies of its member countries.
The IMF is a self-described “organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” (This information is from Wikipedia)
Also from Wikipedia: Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time.
Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.
These two lines are the heart of the situation. And…just a bit scary if you consider the Chinese will not be the only ones affected by this. The next two lines are the possible outcomes of this situation. In either of the cases it has worldwide implications.
If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices.
I like the way the article says “If” they’re successful and “the world will ONLY see major drops”. Oh, that’s all. (sarcasm) That’s supposed to be the good news.
If they fail,…..the spillover could become pandemic.
That’s the bad news.