China's major shadow bank Zhongzhi declares 'severe insolvency' with a $36 billion shortfall, signaling liquidity problems in the $2.9 trillion Chinese shadow banking sector.
Known for real estate investments, Zhongzhi attributes the deficit to internal management issues facing operational risks.
Internal management issues=embezzlement, Ponzi, fictitious accounting.
The crisis further highlights instability in China's real estate market, raising concerns of possible contagion effects to other banks and to banks in other countries, like the USA.
