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The Chinese economy is a house of cards, tied largely to the U.S. economy, which is collapsing as well.

However, China's prosperity is built on a web of fake loans, and false collateral. Foreign businesses are leaving in mass.

After years of top-down, criminal management, the chickens are now coming home to roost.

Those looking for leading market stress catalysts should turn their attention to the latest news out of China, where credit stress is once again exploding as a record number of local government financing vehicles (or LGFVs, also considered the currently most aggressive form of Chinese shadow banks) are openly cracking with a record number missing payments on a popular type of short-term debt last month.

A total of 48 LGFVs were overdue on commercial paper, which typically carries a maturity of less than a year, up from 29 in June, according to a Huaan Securities report citing data from the Shanghai Commercial Paper Exchange. Their missed payments amounted to 1.86 billion yuan ($259 million), more than double the 780 million yuan in June, reported Zero Hedge.

The revelation, according to Bloomberg, is set to aggravate concerns about the financial health of LGFVs, which are mostly tasked with building infrastructure projects that may take years to generate investment returns (think the more politically correct form of Chinese ghost cities). 

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