The one reason why Chinese and world markets are headed for disaster

The problem with the gravy train is that sooner or later, it comes to a stop. This is what investors are afraid of as Chinese manufacturing shows unmistakable signs of a major slowdown. It's proof positive that economic growth is down in the world's most populous nation, and with that, investments are certain to tumble. What this means for the rest of the world is disaster.

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LOS ANGELES, CA (California Network) - China has been a great bet for investors for decades with a booming population, improved resource extraction and manufacturing. Add to that a rising standard of living, and China becomes a growth machine where investors can hang their fortunes.

On Monday, Chinese markets fell by 7 percent. That's a massive drop. As a result, world markets also took a hit. As China's markets drop, so too do the interlinked markets around the world. The world is heavily invested in China.

Growth in China is slowing, and perhaps more than the government is willing to admit. Government policies have empowered consumers at the expense of manufacturers, and this is costly for manufacturers. Government figures have not been supported by private reports either, which show that manufacturers themselves are spending less. All this points to a dramatic slowdown.

China has a lot of debt, despite popular belief. While China has purchased a lot of U.S. and other foreign debt, the nation actually has a national debt of $28 trillion. Many Chinese have bought homes for prices above their true value. Local governments are becoming insolvent. The end result is a pending collapse that will drain massive amounts of money from the Chinese economy.

The bottom line is that China is a on a bubble. The first troubling signs that bubble is about to burst came across on Monday. Whether investors start moving their money out of China, or they simply stay in until China goes bust, the result is the same. International markets will be damaged.

Damage done to markets, even overseas, has a direct impact on daily life in America. Retirements are tied up in the market. Americans rely on cheap imports from China, which could someday stop.

An economic slowdown in China can mean the U.S. economy slows as well. That's a serious problem because the U.S. economy is already flirting with recession. A recession in the U.S. would mean lost jobs, and even possible political upheaval.

Our fortune is too closely tied to China's for comfort, and things don't look good for China. As a result, things don't look good for you either.

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