How many times did those pieces of paper have to be downgraded and then defaulted upon before we realized that the bad news from the defaults was just plain bad news? The Federal Reserve, after all, either couldn't or didn't want to cut rates fast enough to stem the collateral damage from these.
Plus, in similar fashion to what occurred in 2006, nobody was buzzing about those bonds being infectious, a virtual Ebola virus bumper crop headed our way. Could that be what awaits China?
Now, we know that the Chinese economy is a command economy. If Credit Equals Gold Number #1 trust doesn't equal gold and is, instead, left to equal dross, we know it will be because of a decision by the communists to let it happen. They'll have done it to change the culture of overcapacity for the sake of personal enrichment.
That, per se, is good.
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But how about all of the imports that are needed to build things that are backed by these kinds of pieces of paper? How about all of the machines that won't be needed? How about all of the manufacturing product that we expect China to need? How about IBM's (IBM) warning that these state-owned enterprises are huge business generators for many of our tech companies?
All of this just confirms what I have been saying since the beginning of the year: The No. 1 worry for our markets right now, the biggest concern we should have, is China. That's because right now, bad news looks like it's going to bad news, at least for some time to come. This particular piece of paper is giving the whole issue a fuse -- a fuse that runs out in eight days.
Random musings: Credit Doug Kass with keeping this issue in front of us. He's got the best bead on it.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the securities mentioned.
Editor's Note: This article was originally published a 7:34 a.m. EST on Real Money on Jan. 23.