Take the case of the U.S. at the start of the 2007-2008 credit crisis. Credit markets became totally frozen. The commercial paper (90-day corporate IOUs) market froze and even large companies like General Electric ( GE) couldn't roll their paper on expiration. We saw this right away as a crisis scenario, but amazingly no one in the financial media rang the alarm bells. And what was U.S. money supply growth at the time? Like China, it too was in the double-digits, rising from a 12% to a 15% growth rate by the end of 2007. In spite of this, the credit crisis intensified culminating in an Armageddon scenario in 2008. During the last six months China has injected nearly $1.6 trillion in new credit (21% of GDP) into the economy. If a credit crunch can occur even with that much credit being added to the system, then you know that the problems are big. The June crisis in China was serious. In my opinion, it was probably the start of a more serious situation. Reportedly, a number have banks halted all lending because of "liquidity shortages." This included branches of the Bank of China and Industrial & Commercial Bank of China. The above banks are among the largest in China, and are all government-controlled. An official from the huge ICBC was quoted as saying: "All of our loans have been put on hold. There may be some credit lines when it comes to July, but it will definitely be used up in a few days." On June 23, ICBC customers had trouble using its online, counter and ATM services. This included making withdrawals and paying bills. The same thing happened to BOC users a day later. Imagine, "all loans have been put on hold." That's what precipitates every credit crisis. During the June crunch, interbank lending rates spiked to an all-time high of 25% on June 20. Unable to rely on the government to maintain liquidity levels, banks are quickly losing confidence in each other. Thus, they stop lending to each other. That produces a wave of credit restrictions, which produces even more bankruptcies in the private sector. To us, this is reminiscent of how the 2007-2009 global crisis started in the U.S. The next phase will be when banks stop issuing letters of credit to companies that need to import products or materials. That will make the economy come to a screeching halt. I hope it won't happen. A China crisis would infect the entire globe. But at least let this article put you on alert. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.