How much is now bad debt in china? Officially its 1.7 trillion dollars. This is an insane number although it alone wipes out China reserves. However the real number is closer to 100 trillion when all the State Run Organization and insane collective corporate and private bad debt are rolled up and fully accounted for.

Keep this number in your mind. Debt presently is 230% of China gross national product each year or GNP. Said another way China is borrowing 230% more than it is making. This number is only rising. Now China firms leverage 20 billion to buy Starwood – why? Because getting out of their currency and into dollar asset value and cash flow protects these firms locked in the debt spiral.

The Debt Spiral is the death spiral for Chinese Economics – so says the head of Bank of China on Monday ( today USA ) time. The failed communist policy leaders now are saying – hey we’ll fix this – we’ll give stock to firms that have bad debt so our nation and banks can have stock we advance to develop equity over the bad debt. This of course is phony economics and makes the value of stock now buying nothing but bad non performing sink hole debt – where the stock is the same as lost capital.

All this while:

  1. China has a run on manufacturing – suppliers get it and are running out of China to other markets.
  2. A run on business – business is closing down in China because the communist do not play fair and business can not make any money.
  3. Capital investment seeing all this has been running 100’s of billions out of the nations. This is a multi year RUN ON INVESTMENT and will pass one trillion dollars flowing out in 2016 alone. More in 2017.
  4. A run on banks – depositors are doing anything to get MONEY OUT OF CHINESE CURRENCY and into any other currency in the world – out of CHINA.
  5. A run on currency – Chinese are running out of Chinese currency as fast as the black market will exchange their failed money for EU or Dollars or anything other than Ranabi. Yuan is a failed currency. The Communist Nation is a failed state.

The future is what always happens in China with failed leadership. Massive internal social unrest. It is possible China will break up in to many provincial governments – operated autonomously. Its happened throughout Chinese history. Its possible Communist will be simply purged from the nation when the pain of their failed policies reaches a few more burn pain points.

Economics is unforgiving folks. This is no rocket science. China is a manipulated state central controlled economy that lies about its math and numbers. The real economic math is a nation mis managed and about to have deflation and a DEBT BOMB SPIRAL destroy the economy completely. Hard landing.

China reported it right in the past two weeks. They are not going to have a hard landing. Such a notion IS actually preposterous now. 230% debt to GNP for decades?

China is going to have a CRASH LANDING way beyond hard.

Economics never fails to tell the truth folks.

I trust the math.

Berny Dohrmann – Safe Harbor for your coming financial storms…..CEO SPACE May 15th