ZeroHedge has a must-read on "The Case of the Missing Steel." Citing a Reuters article on the slowdown in China's steel industry, ZeroHedge makes the broader claim that the entire global economy is an inverted pyramid balanced precariously on a shrinking base of worthless collateral:
[W]e have been warning for years that i) the inventory of the world's credible assets is literally evaporating in absence of technological efficiency and CapEx spending (which is also the reason for the ECB's endless lowering of collateral requirements) and ii) illegal rehypothecation of assets, which infinitely dilutes claims on real assets, can and will lead to total losses even for investors who thought they had strong collateral backing.
We now know that this has been happening in China with the most critical component of its economic growth miracle: steel. We will soon discover that all other assets: stocks, bonds, commodities (including gold and silver) and finally cash (think deposits) have been comparably rehypothecated and criminally commingled. The end result will be the most epic bank run in world history....
Complete article here.