Friday, June 03, 2016

China’s Debt Bubble 
Is Bigger Than The Subprime Bubble
Article highlights the immensity of the massive debt crisis in China unfolding now .. "Unproductive debt in China—that is, debt that’s used to drive up asset prices—swelled in 2015, eclipsing the level seen in the U.S. in the run-up to the Great Financial Crisis, said Torsten Slok, chief international economist at Deutsche Bank, in a note to clients published Tuesday. Slok’s findings are illustrated in the chart above, where he compares the level of credit growth required in the U.S. and China to generate 1 percentage point of gross domestic product growth .. Over the past year, Chinese stocks, and more recently commodities like iron ore and steel rebar traded in China, have seen a series of dizzying rallies and frightening crashes as investors, emboldened by easy credit engage in speculation .. 'The problem is that the banking sector in China has been pushing out new lending aggressively, but with slowing economic growth many loans have not gone to create more factories and jobs but to financial assets that have been leveraged to boost returns.'"
LINK HERE to the article

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