Chart shows China’s debt bubble bigger than subprime bubble
Published: June 1, 2016 7:32 a.m. ET
‘Unproductive’ debt up sharply since 2009: Deutsche Bank
Getty ImagesChina’s credit bubble continues to grow.
By
JOSEPHADINOLFIMARKETS REPORTER
Here’s yet another sign that China’s economy may be teetering on the brink of a massive debt crisis.
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 below, 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. (He notes that the red bar for 2015 also grew, suggesting more credit growth is now required in the U.S. to produce one percentage point of GDP growth).
Deutsche Bank should know as they themselves are heading for a fall based on their own overleveraging, derivative trading all built on such asset bubbles....
if we are going to attempt to reform? or transform the system...we'd better get to understand it!!