History rhymes

Credit Bubble Bulletin/Doug Noland

Image of antique alarm clock, black and white“And what about the possible impact of a positive G20 and momentum toward a U.S./China trade deal? Stocks, no surprise, are readily excitable. For global safe haven bonds, however, it’s of little consequence. How can this be? Because even a trade deal would at this point have minimal impact on what has become deep and rapidly worsening structural impairment. Trade deal or not, Chinese exports to the U.S. will decline, right along with capital investment. Even with a deal, the Chinese financial system faces the consequences of years of rapid expansion as economic prospects deteriorate. Sure, 6% growth as far as the eye can see. That implies a further surge in consumer debt and even more dangerous mortgage finance and apartment Bubbles. Unparalleled overcapacity and maladjustment.”

USAGOLD note:  For Noland, it’s all about China’s internal economy rhyming with the U.S.-based sub-prime debacle of 2007-2008. . . “China’s crisis clock,” he says, “began ticking no later than with last month’s takeover of Baoshang Bank.”

Repost from 6-30-2019

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