China faces the biggest property default on record as credit curbs threaten to break the housing boom, leaving a string of "ghost towns" across the country.

The Chinese newspaper Economic Daily News said Xingrun Properties, in the coastal city of Ningbo, is on the brink of collapse with debts of $570m, mostly owed to banks. The local government has set up a working group to contain the crisis.

"As far as we know, this is the largest property developer in recent years at risk of bankruptcy," says Zhiwei Zhang, from Nomura Securities.  "We believe that a sharp property market correction could lead to a systemic crisis in China, and is the biggest risk China faces in 2014. The risk is particularly high in third and fourth-tier cities, which accounted for 67% of housing under construction in 2013."

Yu Xuejun, the banking regulator for Jiangsu province, says developers are running out of cash. This risks undermining land sales needed to fund local government entities. "Credit defaults will definitely happen. It's just a matter of timing, scale and how big the impact is," he said.  The charts below tell the story.

Might as well start with the belly-laugh of the week.  Who is this?



It's the President of France, Francois Hollande.  The pic was taken Tuesday (9/03) during his visit to a school in Denain, a city in northern France, and put online by AFP (Agence-France Presse, the government owned & operated news agency).  It instantly went viral and has all France in hysterics.

AFP pulled it within hours, issuing a "mandatory kill" order to its outlets not to publish it, as it damaged the "dignity" of the president.  Too late.  President Imbécile is now Hollande's nickname for millions of Frenchfolk.

Don't you wish all of America could laugh at Zero that way?  This week we may be on the verge of your wish being granted.  And not just America, but most all of the entire world.

Measures that slow the economy block better solutions



Should Americans be spending more on public security, or less? After a week of two horrific events, the Boston Marathon attack and the Texas fertilizer-plant explosion, most would probably answer the above question by saying, “We’re not spending enough.” Such an emotional response is not surprising particularly after seeing the highly competent and courageous response of the police, firefighters and medical first responders.

On Friday, I received an email from a friend asking the question, “Did it make sense to close down half of Massachusetts for a day to capture one 19-year-old suspected terrorist? No, unless he was part of a bigger cell which was the unknown for the police. Did the huge redeployment of law enforcement resources for the week to catch the perpetrators result in more nonrelated terrorist murders or auto fatalities (or perhaps even fewer)?”

One occasionally hears the comment that “we should spend whatever is necessary” to stop terrorism. It sounds good, but on reflection, it makes no sense, and here's why...