It was almost exactly two years ago, when during China's long-forgotten attempt to actively deleverage its economy (remember that? good times...) we commented on the country's s first attempt to estimate what its local government debt is since June 2011.
This is what we said in July 2013:
"China is preparing to admit that the level of problem Local Government Financing Vehicle debt is double what was first reported just two years ago, something many suspected but few dared to voice in the open. But not only that: since the likely level of Non-Performing Loans (i.e., bad debt) within the LGFV universe has long been suspected to be in 30% range, a doubling of the official figure will also mean a doubling of the bad debt notional up to a stunning and nosebleed-inducing $1 trillion, or roughly 15% of China's goal-seeked GDP! We wish the local banks the best of luck as they scramble to find the hundreds of billions in capital to fill what is about to emerge as the biggest non-Lehman solvency hole in financial history (without the benefit of a Federal Reserve bailout that is)."
Not at all surprisingly, after conducting the goalseeked "exercise" of estimating its local government debt, the final number was well below the worst case or even average scenario, while the level of NPLs was at a very leisurely pace around 1% of total.
Zerohedge.com/Tyler Durden/ August 2, 2015
0 comments:
Post a Comment