Precipitating Event

Special Report – China’s answer to subprime bets: the Golden Elephant | Reuters.

The Chinese financial system is floating some pretty specious paper. Whenever a financial crisis strikes, there is one precipitating event that is its proximate cause. Usually, while everyone is looking in one direction (Europe) it is something else that actually causes the crises. This Chinese shadow banking system is a disaster waiting to happen. The question will its crash cause the next financial crisis or will the next financial crisis cause its crash. The heavy leverage of questionable assets fulfills is ripe for either scenario.


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