EverGrande: Fail Or Bail? What Will China Decide? Update

Update: So, we have a looming financial crisis in the banking sector on the horizon with Evergrande. (All depending how China handles things of course)  Now, in just the last few days, the 6 largest Wall street banks have now turned downbeat on the economy.

https://www.zerohedge.com/markets/six-largest-wall-street-banks-issue-market-red-alerts

Interesting timing no?

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Remember PIIGS everyone? During the European Financial crisis...everyone seemed to be worried about those PIIGS.......

Portugal, Italy, Ireland, Greece and Spain. A lot of countries were worried about those 5 countries, because their banks were EXPOSED to the PIIGS banks.  If the PIIGS banks went under, other countries banks would go under.

It's Financial Contagion.....

Now we have China's Evergrande. Evergrande is China's second largest property developer. This company's rise was built on debt, and now the chickens have come home to roost.

Here's a paragraph for you to try to wrap your heads around.....

"The largest banks in the world are Chinese, with 6 of the top 11. The exposure of Chinese banks to real estate developers is enormous. About half of the assets (loans) held by the top ten banks are in China, about $15 trillion."

https://asiamarkets.com/china-evergrande-subprime-on-steroids-the-greatest-threat-to-markets/

This is a big problem. Banks around the world will be affected if Evergrande goes down. They are all intertwined.

But China isn't stupid. They know that can't go on creating credit forever. So, what do they do about Evergrande?

If they bail them out, there will be some problems in the markets, but the crisis will pass and the band will play on....

If however, China lets them fail, then you will most likely have a financial contagion that will sweep the globe.

Hmmm....a problem in China that will affect the world. Now where have we've seen that before?    ;)