Getting used to a debt crisis!

By Joe Zhang

Mckinsey says that Asia is probably sliding into a debt crisis 22 years after the last one.

I have to disagree, at least as far as China is concerned. China has already been in a debt crisis for at least two years. Mass corporate defaults are commonplace; the leasing sector has been virtually wiped out; eight thousand microcredit firms have been killed; the credit guarantee sector (the CDS writers) has died a death by a thousand cuts; about two thousand P2P lending platforms have folded; several million retail investors have lost money. The only bright spot is the US dollar bond market in Hong Kong powered by Chinese real estate companies.

Do not hold your breath for some dramatic event or milestone. It may never arrive. We are getting used to the crisis. As long as the Chinese banks continue to lend without the institutional constraints you see in Europe (the fiscal disciplines or the ECB rules) or the US (the annoying Fed), we are just fine.