Debt Correctors

As usual when the latest Chinese financial scandal hits the press, the unsaid bears as much scrutiny as what is said. "Property bubble disaster" - said. "Bond market collapse" -said. "Liquidity crisis" - ditto.

What's not mentioned by the MSM is the Chinese government's distinct silence on bailing out Evergrande. This flies in the face of U.S. Great Recession precedence, wherein a financial group that works its way up to "2 Big 2 Fail" status is no longer bound by the chains of free market reality, and is buoyed over its bad decisions by government handouts.

China shows no signs thus far of plunging Evergrande into a warm bath of liquidity. This is in line with its "De-lever '21" theme, as is searching for hidden debt even at the local government level.

"The story of Evergrande's collapse is basically a story of malfeasance at the board level," says Edward Lehman. " And no matter how well-managed its receivership, there will still be shockwaves. What's telling is that the government almost certainly won't be bailing the company out. China's insistence on reining in debt is quite counter to how the West is solving its problems, but proof positive of its commitment to stable, quality growth, even at the cost of short-term calamity." Rico Li