Detailed Analysis of China Debt Crisis

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Joe Leote

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Jul 29, 2022, 12:28:16 PM7/29/22

to Money Group

According to this report mortgage debt is causing serious political-economic problems in China:

Hyman Minsky, author of Stabilizing an Unstable Economy, has adequate models to comprehend the problems caused by these patterns of finance. As I recall the loans provided to the purchaser of finished assets are called "take out loans". The problem in China is that too many investments are highly leveraged, too many investment development projects are unfinished, and the volume of "take out loans under these conditions tends to be rapidly reduced. This restricts cash flow in the whole system and invalidates the bubble price of previous investments leveraged with debt.