From WSJopinion: Watch out for America’s “Evergrande moment”—the point at which a generations-long property boom no longer looks quite so sustainable, writes JosephSternberg
Global investors suffered a bad moment earlier this week when they belatedly started to worry the financial fiasco engulfing Chinese property developer Evergrande Group might spread beyond the country’s borders. After a one-day drop in the Dow Jones Industrial Average, they got over their unease—but only because most observers view this situation entirely the wrong way.
The question is not whether an exploding debt bomb at a Chinese company will spread financial shrapnel abroad. It won’t. The explosion would detonate within the concrete bunker of China’s closed financial system, which will dampen if not entirely mute any shock waves. The better question is whether similar explosives lie ticking in other developed economies. The answer is that there’s probably some version of Evergrande in most of them.
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