I have previously described the United States as the engine that drives the global economy, and when the U.S. has a financial crisis, the world has a financial crisis.

While things are not looking great in the U.S. markets, it is China and the expected default of Evergrande that is hurting markets across Asia and around the world. To give you an idea of its scale, Evergrande is often called “China’s Lehman Brothers,” a reference to the collapse of Lehman Brothers that kicked off the 2007/8 Great Recession in the U.S.

China has pumped up its economy by encouraging banks to lend money very low rates to businesses that build buildings and create jobs and economic activity. The problem is many of these buildings sit empty, collecting no rent, and leaving their developers dependent upon more loans to prop them up. Known as ghost cities, they are assets that have little value because no one wants to buy them or pay rent to live there. Described by some as a giant Ponzi scheme, this behavior was encouraged by the government and regulators.

Until one day, it was not.