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VodkaPundit

Pop Goes the Weasel

March 18th, 2013 - 3:21 pm

Admittedly it doesn’t look that good when tiny little Cyprus could be the straw that breaks the barn door after the twain don’t meet. But fear not, comrades! For China shall pull us all out of the dumpster with her enormous currency reserves:

For the first time, a mainland Chinese company has defaulted on its bonds. SunTech Power Holdings has been clinging on by its teeth but after failing to repay $541mm of notes due on March 15th – and following four consecutive quarters of losses through the first quarter of 2012 and since then having failed to report quarterly earnings – owed to Chinese domestic lenders, the firm is restructuring. As Bloomberg reports, Chinese solar companies are struggling after taking on debt to expand supply, leading to a glut that forced down prices and squeezed profits – and most notably were unable to renegotiate its liabilities and obtain “additional flexibility” from creditors. This is highly unusual and perhaps is the beginning of a trend for Chinese firms. We already know the little discussed but gargantuan size of China’s corporate bond market (which dwarves the US relative to GDP) as the mis-allocated credit tsunami of the last few years begins to hit its lending limit – just as Chinese corporate leverage is surging.

Um… OK, so China might be bubble about to pop, too.

I’m starting to wonder if anybody is going to make it out of 2013 alive.

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All Comments   (8)
All Comments   (8)
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Oh, we'll be alive. As in publishing, it's not the dahilings of the establishment who come out of a mess alive. Who would have thunk it ;)
I'm just worried about my parents -- at their age -- in Portugal.
1 year ago
1 year ago Link To Comment
So the stories I read a year ago or so about rehypothecated assets in China were true? Who knew they were building a veritable house of cards with their economy? Buckleup buttercup its gonna be a bumpy ride.
1 year ago
1 year ago Link To Comment
Isn't it amazing how you can't trust the word of a totalitarian regime?
1 year ago
1 year ago Link To Comment
I'm making more money every year, which means next year we'll be able to afford the LUXURY appliance box under the overpass. Things just get better every day Tovarish.
1 year ago
1 year ago Link To Comment
"I'm starting to wonder if anybody is going to make it out of 2013 alive."

Well, I might!
1 year ago
1 year ago Link To Comment
Preppers get mocked because of the ones who take it to extremes and get all the publicity. Too many of them seem to buy into the lone "mountain man" or family survival strategy way out in the mountains, when it would be better to think going tribal in a small city or medium size town in an agricultural area near a river.
1 year ago
1 year ago Link To Comment
"As Bloomberg reports, Chinese solar companies are struggling after taking on debt to expand supply, leading to a glut that forced down prices and squeezed profits..."

Steve, WADR I do not think this story betrays the China bubble we often hear about. However, this does show that poor decision making in the headlong rush into the solar panel business was not uniquely a US phenomenon. Reasonable people the world over were seduced by the "green rush" and built up capacity and inventory for which, sadly, the demand never materialized.
1 year ago
1 year ago Link To Comment
Could someone remind me why preppers are constantly mocked?
1 year ago
1 year ago Link To Comment
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