July 2, 2010
The G-20 is apparently relying on China  to drive the world economy.
But as I (and many others) have previously pointed out , China isn’t necessarily the unstoppable powerhouse that people assume.
The Telegraph notes  that:
China’s chief auditor has warned that high levels of local government debt could derail the country’s economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.
CEBM is also warning  that Chinese exports and imports will decelerate in the third quarter and going forward.
And yesterday, Tyler Durden reported  on a startling development:
This week’s DTCC data [shows that] with a total of 456 million in net notional derisking, France was the top entity in which protection was sought in the past week. [For more on France see this .]
But what is probably most notable, is the sudden and dramatic appearance of China in the top 3rd position. Welcome China! And after tonight’s surprise PMI miss [see this  for details] and the resulting market drubbing, we are confident within a week or two, China will promptly become a mainstay of the top 3, and will quickly rise to the top position, where it rightfully belongs. We are also confident those perennial Eastern European underdogs, Romania and Bulgaria will shyly make an entrance in the top 10 next week.
Not shown on the table, but certainly in need of noting, was our very own state of California, which with 377 million in net derisking, was the 3rd most shorted entity of all. Is the last bastion of “all is well” propaganda about to fall?
(For more on sovereign credit default swaps, see this ).