China is suffering a brutal economic “hard landing” as the pay-back for their massive Keynesian stimulus spending to revive economy growth after the 2008 credit crisis. China’s stimulus bought two years of economic boom, but the cost of this instant gratification was unleashing venomous run-away inflation that forced the central government to hammer the economy this year. Touted by most Wall Street analysts as the world’s engine of growth, we now learn that regional Chinese governments are so cash-strapped they are refusing to make interest and principal payments on their bond debt. Given the state integration of banks and the economy, if Chinese local governments are unable to pay their debts, who will bail-out China’s economy?

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