The Financial Times reported that a startling number of Chinese firms may default on their bonds. As the British newspaper noted, "international bond investors" lent US$33 billion to Chinese enterprises more or less on faith in the past two years. A wave of defaults from what is supposedly the world's strongest economy would be a destabilizing event.The odds of Chinese firms skipping bond payments are, historically speaking, pretty strong. Mitigating that tendency are powerful interests who do not want that event to occur, starting with financially strung-out Western banks. Meanwhile, if the Chinese businesses' "so sorry" notes were to occur in tandem with the European sovereign debt crisis and the American Tea Party's nutty notion of pushing the US government into default, we would experience the Black Swan event from which a second Great Recession (at best) might develop. The reasoning why anyone would want to provoke an economic catastrophe, simply to prove an ideological point, is elusive at best.
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