Muddy Waters Research founder Carson Block believes that China’s overleveraged economy will eventually face a ‘day of reckoning.’ He just can’t say when.
During an interview with Bloomberg’s Erik Schatzker, Block, who made his name betting against shady Chinese companies trading in the US, explains how the Chinese government’s massive stimulus has led to a potentially destabilizing explosion of corporate-debt growth in the world’s second-largest economy – and why the Communist Party won’t be able to contain the fallout once its twin bubbles -asset and credit – finally burst.
‘I’ve felt for many years that it’s a giant asset and credit bubble. Under the old orthodoxy, that couldn’t be sustained for long, but if you look around the world, the ECB and the Fed are helping to sustain frothy asset values. Japan hasn’t made sense for a while.’
‘Ultimately there will be a day of reckoning, I know that. I just can’t say if it’ll be two months, two years or 20 years.’
This post was published at Zero Hedge on May 27, 2017.
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