In 2006, everyone would have considered mortgage lending to be minimal risk. Of course, subprime obligors defaulted from time to time, but then you foreclose and auction off the property and recover at least 95% of the loan, so, where is the problem? And then you start leveraging it more and more until you come to the point where even small losses wipe out your capital, and swoosh....
China looks good right now, all right. But provincial-level debt has reached really staggering levels, and I don't think it is impossible that, at some point, we see province-owned enterprises default. Yes, unlikely. But not impossible, and thus, yes, comparable to CDOs. Before 2006, no one knew really what a CDO was, just that they somehow bundled mortgages and paid decent interests. Right now, no one knows what's going on in Chinese companies (especially state-owned), other than "China is the future" and that they pay decent interests. It might be a good investment, but I would never use borrowed money to leverage it. I don't believe there is such a thing as free money.
@randy - I rely on you to inform us all when exactly we've reached rock bottom ....