World attention has focused in recent months on an acute refugee crisis occasioned by the mass migration to Europe of hundreds of thousands now fleeing the Syrian civil war. Less noticed has been another refugee crisis at least as ominous as that underway in the Middle East and Europe — the fleeing of money from China. What’s going on, and why is it ominous?

To understand what is happening, we must first remind ourselves what happened in the U.S. and global economies in 2008 — and how China responded to it.

In 2008, the U.S. experienced the precipitous crash of what had been a highly overvalued real estate and associated bond market. Those markets’ prices had been driven by cheap credit used by investors to speculate in residential real estate and mortgage-related financial instruments. Because these investments had been financed by private debt, post-crash investors found themselves suddenly owing much more than they owned — their assets had plummeted, but the debts that they had incurred to buy them had not. FULL REPORT