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Is China facing a Lehman Brothers moment?

Money Week/John Stepek/9-9-2021

antique image of humpty dumpty clinging precariously to wall

“Unlike most other countries, China is quite keen to pop [housing market] bubble. The danger is that defusing house price bubbles is the financial system equivalent of juggling nitroglycerine.”

USAGOLD note: If China experiences a Lehman Brothers moment, there will be repercussions around the world and in the United States, though we may not understand at this juncture what form they will take. Stepek believes that things will not get out of hand but cautions his readers to be wary. “Do keep an eye on China,” he concludes. As was the case with Lehman Brothers, if Evergrande is on the ropes, a bailout will be required to keep it afloat. American authorities opted to deny that bailout to Lehman. One wonders what China will do in the current environment as it tightens what it considers capitalist transgressions. Stepek offers some solid background spiced with his opinion on how the Evergrande situation is likely to evolve.


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