A Wave Of Defaults Across China

Dr. Michael LaitmanIn the News (from Forbes): “Last week a failure by Shanghai Chaori Solar Energy to meet interest payments on its debt became China’s first onshore corporate bond default, prompting some alarmed and alarming talk about a wave of defaults across China. …

“Here’s what’s happening. China’s economy is slowing down, and at the same time, Premier Li wants to increase the role of true free market behavior in China. Where companies would once have been bailed out either by banks or the government (or by both – most major Chinese banks are to some extent still state-owned), now there is a sense that small companies will be allowed to default on their debts in order to send a message to the markets. What Li wants is for people to understand that investment carries risk, that a bail-out is not automatic, and that markets must be able to accommodate failure and default. …

“The negative view is that one default must lead to another, and another, until a wave of defaults reduces investor confidence to the point that money leaves the whole sector and then prompts a whole other round of defaults, while also reducing the possibility for companies to raise new capital. But few who have watched China for long see any chance of the country letting that happen: if there was a sense of systemic crisis, it would intervene.”

My Comment: The entire world order is in default, and the sooner we recognize this, the easier it will be able to change it to the new world order:  a rational economy.

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  1. Are we allowed to comment on Sabbath Evening?

  2. Dear Rabbi,

    I am not sure about the New World Order, but in my understanding, the main reason companies in China face bankruptcy, is largely related not only to the extremely low moral standard that is prevailing in China as a whole, but also the ongoing persecution of a peaceful group of people — Falun Gong practitioners. As you probably already know, Falun Gong or Falun Dafa is a peaceful spiritual cultivation practice that is based on principles: Truth, Compassion, Forbearance that puts accent on improving moral character. The evil CCP Regime has been brutally persecuting millions of people simply for their faith. Prosperity of any society is directly proportionate to its morals, when the morals decline, prosperity vanishes just the same.

    China’s economy became so prosperous because Chinese people are extremely hardworking and also experienced numerous suppression from the CCP, thus they became accustomed to working hard in order to sustain themselves. But if the CCP will continue doing its evil deeds, the Chinese economy will collapse. History proved is many times. Since the quarter of the China’s GDP goes to fuel the evil persecution of Falun Gong, countries and people who invest money now in China are fueling the evil persecution, so they become accessorial to the crimes committed by the evil CCP.

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