Sabbath 110236120A

Dear Friends,

As we progress into financial chaos in Europe we may well find that China and the Asia Pacific are about to sink into a financial morass akin to the 2008 GFC also and may face a financial crisis greater than the US and the EU unless it gets its debts under control.

The ABC business editor Peter Ryan has reported on 18 April 2013 that one of China’s top auditors has revealed his accounting firm has stopped approving requests from Chinese local governments to increase their debt exposures.

China’s great economic growth is beginning to slow significantly. Much of the debt is held by local authorities in provinces, cities, regions and villages and they are thought to owe collectively at least $US3 trillion.

In 2008, when the collapse of Lehman Brothers triggered the global financial crisis, China needed to protect its growth and status and, as a result, pumped more than $US500 billion of stimulus into its economy and created a massive credit boom.

Now a senior Chinese auditor who is the head of China's accounting association, Zhang Kew Hoc, has told the Financial Times of London that he has stopped signing off on risky bond sales by local governments.

Michael Pettis, a professor of finance at Peking University, is reported as saying that the ramped up caution shows China's debt party might soon be over.

"The problem is that so much of this investment is going into empty real estate, empty highways, empty airports, unnecessary manufacturing capacity, etc, that we're in the position, and have been for many years, where debt is rising more quickly than the ability to service that debt," he warned.

"So that's the conundrum they face - if you want to bring that problem under control, you have to bring investment down, and if you bring investment down growth rates will slow very, very sharply."

The warnings about Chinese debt are widespread. The International Monetary Fund has also been warning about China's debt levels, and investment banks and ratings agencies are now paying it much attention after failing to read the initial signs leading up to the GFC.

There is a very big focus on China's real estate sector, which accounts for 13 per cent of the country's GDP.  Corruption is also rife. There has already been a sharp decline in values but, unless Chinese authorities intervene to stop a real estate bubble, some economists are quite worried that there could be much more than a correction but a crash that could rival the US one, which of course almost brought down the US economy back in 2008. This crash will not leave Australia and the Asia-Pacific unaffected and the US and EU will also face their own serious problems with such a problem in China. The external holdings of China are more than offset by their internal debts and the property bubble they have created. They may well find that the collapse will see a major financial crisis that will also see AU collapse as a result of the slowing growth. The collapse of the carbon trading system in Europe to ca $4.00 is also following on to collapse the AU budget due for May and will see a massive black hole in the AU finances. It is also worth noting that almost a quarter of all property sales in AU are now by distressed sellers through mortgagees and liquidators or the like. This is especially high in Queensland and some 75% of sales there are distressed especially in the high end of the market. The financial crisis in US and EU will see much greater stress over the next few months. These problems are designed to force the crisis to panic the markets to enable the NWO reorganisation of the financial system over the remainder of 2013 into 2014.

The Middle East will also be used to panic the security fears of the West and justify the ongoing conflicts.

We will examine that aspect shortly.

Pray that we are able to deal with the problems and have our people address the Laws of God and stop their inexorable path into immorality and oblivion. The NZ passage of same sex marriage legislation was laughed off when the NZ religious fraternity warned their politicians against the act and they were rubbished publicly on the floor of the NZ house. We will see how long God will be mocked. Fortunately the political leaders of the main parties in AU are not swayed by the NZ position.

Wade Cox
Coordinator General