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“Full Blown Banking Crisis”: World’s Most Powerful Bank Signals Imminent Meltdown in China

Michael Snyder
September 20th, 2016
Economic Collapse Blog
Comments (58)

Bank of International Settlements, Image source: Wikipedia

Bank of International Settlements, Image source: Wikipedia

This article was written by Michael Snyder and originally published at his Economic Collapse blog.

Editor’s Comment: The long and short of it is that an unprecedented and historic line of credit was issued in order to stabilize and fuel recovery; but now the price on all that debt is coming due, but coming short. As the musical chairs play out, many people are left out in the rain, and huge sums of money are totaling over the edge into the abyss.

What is happening in China will not be contained. If the footprint of global investment isn’t wrecked by exposure by Western markets, then the pattern will soon draw us into the black hole. Tick, tick, tick. Are you ready for what comes after?

The Bank For International Settlements Warns That A Major Debt Meltdown In China Is Imminent

by Michael Snyder

The pinnacle of the global financial system is warning that conditions are right for a “full-blown banking crisis” in China.  Since the last financial crisis, there has been a credit boom in China that is really unprecedented in world history.  At this point the total value of all outstanding loans in China has hit a grand total of more than 28 trillion dollars.  That is essentially equivalent to the commercial banking systems of the United States and Japan combined.  While it is true that government debt is under control in China, corporate debt is now 171 percent of GDP, and it is only a matter of time before that debt bubble horribly bursts.  The situation in China has already grown so dire that the Bank for International Settlements is sounding the alarm

A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late.

The Bank for International Settlements warned in its quarterly report that China’s “credit to GDP gap” has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia’s speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.

Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring.

If you are not familiar with the Bank for International Settlements, just think of it as the capstone of the worldwide financial pyramid.  It wields enormous global power, and yet it is accountable to nobody.  The following is a summary of how the Bank for International Settlements works that comes from one of my previous articles entitled “Who Controls The Money? An Unelected, Unaccountable Central Bank Of The World Secretly Does“…

An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe.  It is called the Bank for International Settlements, and it is the central bank of central banks.  It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City.  It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws.  Even Wikipedia admits that “it is not accountable to any single national government.” 

The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system.  Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does.  Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”.  During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on.  The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.

Normally the Bank for International Settlements is not prone to making extremely bold pronouncements, and so this warning about China seems a bit out of character.

Is something going on behind the scenes that we don’t know about?

Without a doubt, the global financial system is shakier and more vulnerable than most people would dare to imagine.  Global central banks have been on the greatest money creation spree in recorded history, and interest rates have been pushed to ridiculously low levels.

If you can believe it, approximately 10 trillion dollars worth of bonds are trading at negative interest rates right now.  This is completely and utterly irrational, and when this giant bond bubble finally explodes it is going to create a crisis unlike anything the world has ever seen before.

Just recently, Michael Pento of Pento Portfolio Strategies commented on this bubble

He said the current financial conditions are “the most dangerous markets i have ever witnessed in my entire life – and i’ve been investing for over 25 years… The membrane has been stretched so wide and so tight that its about to burst.”

Pento believes that once the bond crash happens, it will trigger a cataclysmic wave of crashes throughout the entire global financial system

Mr Pento has now warned that when policymakers signal they are set to stop buying, which will stop bond prices rising, there is going to be a devastating crash – not just in bond markets but across all investment assets.

He said: “When the bond market breaks, when that bubble bursts, it will wipe out every asset, everything will collapse together… I mean diamonds, sports cars, mutual funds, municipal bonds, fixed income, reits, collateralised loan obligations, stocks, bonds – even commodities – will collapse in tandem along with the bond bubble burst.”

Many had been anticipating that we would have already seen a major financial crash in 2016, but so far things have been pretty stable, and this has lulled many into a false sense of complacency.

But it is important to remember that we have seen corporate earnings fall for five quarters in a row, and it is expected to be six when the final numbers for the third quarter come in.

Never before in history have we had a stretch like this without major economic and financial consequences.  The following comes from a recent Fortune article which referred to an earlier piece authored by Jim Bianco…

None of this, however, is apparent from how stock market indexes have been moving lately, which unlike the charts above have been going up and to the right. “Since 1947, every time profits fell this much, or for this long, a recession was either underway or about to begin,” writes Bianco. “The only exception was the middle of 1986 to early 1987.”

If you remember, there was a pretty important event that happened in 1987: A massive stock market crash that sapped close to 30% of the S&P 500’s value in just five days.

It is only a matter of time before this earnings recession takes a major bite out of Wall Street.

Stock prices can stay at irrationally high levels for quite a while, but history has shown that every bubble bursts eventually.

And when this bubble bursts, it is going to make 2008 look like a walk in the park.

This article was written by Michael Snyder and originally published at his Economic Collapse blog.


GetPreparedNow-MichaelSnyderBarbaraFixMichael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.

Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream

If you want to know what is coming and what you can do to prepare, read his latest book Get Prepared Now!: Why A Great Crisis Is Coming.

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Author: Michael Snyder
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Date: September 20th, 2016
Website: http://theeconomiccollapseblog.com/archives/the-bank-for-international-settlements-warns-that-a-major-debt-meltdown-in-china-is-imminent

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58 Comments...

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  1. anon says:

    So are they waiting to see who wins the election?

    If Trumps wins they crash the world banks. If Hillary wins, it kicks the can down the road.

    Bunch of bullshit. It all leads to War in the end.

    • yourdaddy says:

      Don’t be surprised if this election is suspended…Hillary is either dead or dying and will soon be ruled out as a candidate. Imagine Obama intervening with, “In the interest of fairness, we must suspend this election until the democratic party can re-group and proffer a legitimate candidate in order to provide the American people a true choice. Holding this election with only 1, real option would effectively silence a large part of the country. During this time, I will remain in my position of the Chief Executive.”

      The Trump supporters won’t stand for this, nor will he, and there will be an uprising/unrest like we’ve never before seen…I wonder if that is why FEMA has procured over a billion rounds of ammunition and the military has coyly deployed MRAP’s all around the country for “free.”

      The Trump-Hillary sideshow is just that…Neither will ever see the office of the President..
      -Dad

      • SPACE MAN says:

        DADDY

        I think you are on to something…….

      • Colt M4 says:

        Yourdaddy,if Obama were to try that, i along with you think this would be the start of a second civil war. You see by federal law the election HAS to be held the first Tuesday in November. So he can say well gee, this isn’t fair, well that’s just to bad, hold the election or have a civil war! Right about now many people are ready to thin the heard of useless liberal eaters, so let them start it, and those that are prepared will finish it!

      • durangokidd says:

        I have a Franklin that says the election takes place. I have another Franklin that says TRUMP wins. Obama DOES NOT have the authority to unilaterally stop the election.

        ANY TAKERS ??? 🙂

        Only the Supremes could stop the election, and they cannot justify stopping it because one candidate out of four may not be physically fit.

        The dems could replace her, by say the end of September, if she exhibits more debilitating symptoms; but neither the president nor the democrat party has the authority to stop the election from moving forward.

        That’s the law contrary to the Internet meme to the contrary. Vote. Vote early and vote often. Vote TRUMP. The continued existence of America depends upon his occupancy of the Oval Office. 🙂

        • “Obama DOES NOT have the authority to unilaterally stop the election.”

          This is very much true … but … has Obama and ‘Pals done anything that was within the guidelines of the Constitution?

          Remember — He says he does not need Congress or approval from any form of Governance … he has a Pen … an he’ll draw up and sign anything he deems to see fit.

          Federal Government does not follow the Laws of this Land.

          • WTF? You people talk as if these treasonist bastards have something over on us! Just get your shit together and million patriot march on these motherfuckers and get er done already! They can stay and die or run. We are comin for you sobs and it wont be pretty. No more talk. Coming to a city near you and me!

        • highspeedloafer says:

          I’m with DK, yourdaddy is way wrong here.

          • Kevin2 says:

            DK is correct. Obama has wiggle room but not rule by decree.

            I think they will tie Trump up domestically as was done to Jessy Ventura. On foreign affairs, one old fashioned false flag attack upon the US and Trump will have us off to war. TPTB just had to give Hillary a call. Trump on the other hand will need to be unknowingly manipulated. TPTB are quite capable of it.

        • Anonymous says:

          Any takers? It’s in the archives.

        • durangokidd says:

          BTW, with respect to the topic at hand, I told this community YEARS ago that either China or Europe would be the trigger for economic convulsion, (not the USA), when everyone was screaming “HYPERINFLATION”.

          Remember ???

          Europe has 28 central banks and one currency. China has printed 15 TIMES the number of Yuan as the FED has printed dollars in the same time period that the FED has been accused of printing money.

          Yes, its in the archives. 🙂

        • yourdaddy says:

          Hey Durango:
          I’ll take the bet. But more specifically, the terms of the bet are this:

          “I believe neither Trump or Hillary will be inaugurated.”

          If you are interested in that wager, considered it booked. 🙂
          -Dad

      • I have seen the circumstances forming for years, that will cause a stream or a torrent of Americans to seek Refugee Status in CanaDa, to escape crazy, American style, home grown terrorism.

        With America’s love and worship of guns, the US being this worlds biggest merchant of the forces of Death and Destruction to the world, Americans will eventually reap what they have sown.

        https://ray032.com/2016/09/13/back-to-the-future/

          • I was away for 3 days and when I returned, I received 200 email. Not one was personal. They were all news alerts and links to articles, which brought me here. I believe most people glance and skim articles, read the words without thinking too much on what they say, and miss embedded links.

            To the many from here who followed the link above, I hope you were not disappointed with what you read? Sometimes it is sometimes hard to believe the printed word, whether they be from Holy Books or Secular newspapers and the Internet.

            For those who didn’t follow the link ‘BACK TO THE FUTURE’ it revives a newspaper report published by THE KANSAS CITY TIMES from 40 years ago, on September 13, 1976. The original 1976 newspaper record can be expanded and read in the article. It records:
            “He came to town for the Republican National Convention and will stay until the election in November to do God’s bidding: To tell the world, from Kansas City, this country has been found wanting and its days are numbered […] He gestured toward a gleaming church dome. “The gold dome is the symbol of Babylon,” he said.”

            The world couldn’t see that in 1976, but can now.

            These are the first two parts of the three part ‘Writing On The Wall’ recorded in Daniel 5 during the Captivity of Babylon some 2600 years ago.

            In that Biblical story, the Key words to me are these: They drank wine, and praised the gods of gold, and of silver, of brass, of iron, of wood, and of stone.
            In other words, ‘It’s the Economy, Stupid!’ as is the euphemism since the Clinton years.

            It was not until 9/11, and 7 years later, with the Global Financial Meltdown-Economic Pearl Harbour-Tsunami in the Fall of 2008, the whole world was able to see the Writing on the Wall for the 1st Time at the same Time.

            The original Babylon, this world’s 1st Imperial, Hegemonic Nation, because of it’s economic and military might, sought to control and dictate to the other smaller, weaker Nations, is now called Iraq. The US is the latest, greatest of all subsequent Imperialistic Nations in that line throughout History. The Tail struck the Head!

            Watching from CanaDa, I see with my flesh eyes, there is someone who wants to wield that Imperial power in THIS MATERIAL WORLD who praises the god of gold. The American people will be in denial if they blind their eyes to the reality of it!

            https://ray032.com/2013/09/01/signs-of-the-times/

      • swampratt says:

        yourdaddy I believe your spot on

      • Deborah Stewart says:

        You’re the only other person than myself that has described in details like you did here,I thought with all the episodes that showed Hillary being ill was a setup,they wanted it to be known. I think that she might even fake her own death and everything that you said would happen in that order.

      • Look at Katrina. That shows how much power and resources our non-government has. We are the largest standing army in the world. Want to call our bluff? Like Rocky said, GO FOR IT!

    • WhoWTFKnows... says:

      The Gold & Silver Market did not get this Big News yet today. They are still trading flat-line. lol

      ~WWTI…

    • USMC1982 says:

      Anon-

      That is exactly right. Plan A and plan B. Also, If Trump wins, the last month Obama will be even more of a mad man.

  2. Ppod says:

    I thought the banks were going to collapse last year…and the year before that…and the year before that…

    • Lone wolverine says:

      The FED promised not to monetize the debt. They lied to kick the can. QE 1, QE 2, QE infinity. How many more tricks do they have . Can they just keep printing dollars for infinity? Who can predict when they will collapse When they keep cheating ? The next cheat will be a bank cyber attack. Credit cards erased. Bank accounts erased Not enough cash for everyone. With your paper record you will stand in line for hours to get your 20 dollar allotment . Then do the same thing the next day and the next day and on and on. If no one is getting paid at work and they don’t have the cash to buy gas they stop going. That includes the truckers that deliver gas and food. But the big problem is EBT cards and the looting and burning and home invasions. You would have to take your wife and kids with you everywhere Or leave them home for the rioting looters. Those EBT people are out of food before the end of the month. Some have barely eaten in days. They will be lean and mean. And many will be canibles in two weeks . After the dust settles the die off will eliminate most EBT people. That will include little old men and ladies. And erase many bank accounts.stocks ,bonds treasury notes. Freeing up billions of dollars to be syphoned off. I think most deaths will be from suicide. Who can go two weeks without food. It will be all over in 30 days. Then they will repair the system and the survivors will rebuild for food. A measure of wheat for a days work.

    • Bailout – Bailout – Bailout

      QE1 – QE2 – QE3 – QE INFINITY

  3. Observer says:

    But what about the Mongolian Beef? And what are they angry about?

  4. Sgt. Dale says:

    All these bank collapses overseas? These things are like UFO reports. Too damn far away to confirm them.

    Not to say that it is not happening, but too far away to really see for myself.

    Just saying.

    Sgt.

  5. nlightened2 says:

    Heck did said: “When the bond market breaks, when that bubble bursts, it will wipe out every asset, everything will collapse together… I mean diamonds, sports cars, mutual funds, municipal bonds, fixed income, reits, collateralised loan obligations, stocks, bonds – even commodities – will collapse in tandem along with the bond bubble burst.”

    So when money becomes everyone’s bottom line is when everybody will be found at the…….

    Bottom.

  6. Ron Ahrens says:

    All planned, all predicted, and all part of the imminent destruction of our world and “Final Solution” de-population plan of the Globalist fascist genocidal psychopaths controlling it all, but no worries for the dumbed down boot licking fascist cowards of Police State hell on earth America-they have football, mindless entertainment, beer, Big Pharma poison, and all the GMO and chemical filled toxic garbage they can shove in their toxic dump disease ridden dumbed down depressed bodies….”USA WERE #1″…”USA WERE #1″ in complete mass delusion dumbed down INSANITY.

  7. I thought as of Oct.1st, the IMF was going to rate the dollar equally to the yang? This would boost their economy, and hurt ours…….

  8. Ordinary Joe says:

    I keep hearing that this crash is going to make previous crashes look like a walk in the park. This will be the mother of all crashes. The world has not seen a crash like this in the history of the world. and so on and so forth.

    OK. I think much of it is hysteria because we MAY be in uncharted waters. Would anyone care to define the above word picture of the alleged coming crash?

  9. Ron Ahrens says:

    It is going to be soooooooo awesome and exciting to watch Hillary and the Globalist psychopaths steal another sham election in the Police State hell on earth of collapsing America. As a lifelong historian and expert on human nature, it will be truly epic and fascinating to watch the coward boot licking dumbed down toxic dump American’s go back to getting their drunk on, consuming massive amounts of addicting poisonous toxic fake food, and watching football as if nothing happened, after their children’s future, freedom, and liberty from the most vile evil criminal genocidal government the world has EVER seen is irreversibly destroyed once Globalist fascist psychopath Hillary is placed into office by the monsters the American cowards worship as Gods……American boot licking cowards deserve EVERYTHING coming their way once psychopath Hillary and the Globalist steal this sham American Police State hell on earth election. It is truly sad, shameful, disgusting, and horrifying to know the American cowards children they should of NEVER, and all future generations, will suffer greatly for the AMERICAN COWARDICE in the face of this Globalist fascist psychopathic murderous evil that hijacked our government and entire society.

  10. Dave says:

    Another great article by Snyder; I appreciate the info, and, the “meat and taters” of the equation.

    China is doing well. It is positioning itself with tangible assets as in buildings, “things” and all kinds of metals. I believe it started from zero debt (when truly communist) to exponentially pursuing tangible items. Based on the West’s standards of debt, it is capitalizing on the clever standards and catching up. The difference here is that it can shut down debt payment requests by employing nationalistic boundaries.

    Again, it is positioning itself. Note: Things include military hardware and modernization.

    If we can see this then the political and economic establishment sees this situation too. So, what are they doing about it?

    Dave

  11. I wonder if China would just plain default on some of that “corporate” debt and be alright with it. The economy is even more centrally planned than here.

    They basically have all the manufacturing they need to survive with only trade for some foodstuffs and hydrocarbons. In fact they have been setting up deals around the world for hydrocarbons in exchange for infrastructure build outs so they will most likely be alright for fuel.

    The problem will be with the world economies that have transitioned to service economies. They don’t make shit and if a crisis in China spreads and supply lines break from a credit freeze, these economies will be in trouble.
    You can’t have a viable healthy economy by just servicing each other. You need to produce actual goods to trade or use.

    Anatomy of an Economy

    Agrarian——->
    Industrial—–>
    Service——–>
    Collapse

    There are 150.5 (million) total jobs in the US (BLS 2014).

    120.6 are service jobs
    19.1 are goods producing
    2.1 are agriculture

    Service jobs are parasitical on the economy. In order to afford to pay for service jobs (that create no goods to sell) you need to either create a surplus of goods or a surplus of debt.

  12. TEST says:

    Off topic, but for those of you interested, a couple very good articles on the Islam issue:

    THE CONFRONTATION BETWEEN CHRISTIANITY AND ISLAM, http://thepoog.com/?p=9158

    MUHAMMAD AND NIETZSCHE; http://thepoog.com/?p=9159#comment-3348

    Web site is run by a close friend of mine. Want to stop the darkness enveloping the West? Get educated, then start informing others.

  13. Brian says:

    An old chinese curse is “May you live in interesting times!”. We are! Is it time to learn to create necessities by methods long forgotten? Go forward into the future by going into the past!

  14. This is all man made and so artificial. The sky is falling; the Sky is Falling!!! Says who? Says the Bank for International Settlements! So? Who cares what the rich peoples bank says? We don’t have anything to lose. If the system crashes we can start over again without currency. It is called TRADE.

    • Lone wolverine says:

      We will start over . After they destroy the economy raise the taxes on your property confiscate it for unpaid taxes. Just like they did in the civil war to the south. It’s all part of the plan. They either destroy your property buy it up for pennies pay you pennies to rebuild it for them. Or just confiscate it for the taxes you can’t pay because they destroyed the economy. All wars do the same thing. It’s a land grab .

  15. Put an end to H1 Visas

    Why should we employ Chinese, Indian, etc. when our College graduates are working at crummy service jobs, are unemployed, and drowning in student loan usury. Don’t give me that lame excuse “we can’t find qualified applicants”. Stop putting applications out in front of the Black Lives Don’t Matter recruitment table; and you’ll find plenty of well qualified all Americans.

    __

  16. swampratt says:

    Lock&Load theres gonna be a party in America NOV 8 2016 no matter who wins

  17. For once it seems that all of the expert commentators
    agree. Can anyone say How Will it all END?

  18. gazooks says:

    So, BIS, the ‘great central authority’ of global banking, the all-powerful, all knowing seeing-eye of economic governance that conceived, designed and created this monster-fraud is merely ass-covering for its profound ‘blunder’ in the great monetary experiment now about to consume all its intended victims.

    It’s like a mugger who’s been long lurking, working an alley telling you you’re gonna die before he shoots you in the face and steals your watch and wallet.

    Hey, you’ve been warned, fair’s fair. Shit’s real, friends. Get ready & good luck.

  19. Maybe the BIS finds it necessary to institute an old custom and put out a scare story about it’s enemies.They are always making some boogey man claim about somebody like 911 and let;s go gettem.in 1907 JP Morgan published a story about the Knickerbocker Co. story here https://www.youtube.com/watch?v=4FyZ8UMXXxA about 25 mins. in.