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This is taking can kicking to a whole new level!
"The debt to GDP ratio has already doubled to 260pc since 2007, reaching $26 trillion, more than the US and Japanese commercial banking systems combined.
Credit is stretched to dangerous levels and is losing its potency. Wei Yao from Societe Generale said it took $2.50 of credit to generate $1 of extra GDP before the Lehman crisis.
This has jumped to $5.50 as the economy reaches credit saturation. This is very little gain, at great risk."
http://www.telegraph.co.uk/finance/china-business/11766449/China-losing-control-as-stocks-crash-despite-emergency-measures.html
"The debt to GDP ratio has already doubled to 260pc since 2007, reaching $26 trillion, more than the US and Japanese commercial banking systems combined.
Credit is stretched to dangerous levels and is losing its potency. Wei Yao from Societe Generale said it took $2.50 of credit to generate $1 of extra GDP before the Lehman crisis.
This has jumped to $5.50 as the economy reaches credit saturation. This is very little gain, at great risk."
http://www.telegraph.co.uk/finance/china-business/11766449/China-losing-control-as-stocks-crash-despite-emergency-measures.html
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didnt they just keep buying the dollar during rampant growth?
Wouldnt that mean america would be dragged down with them down the hole....then the rest of us? |
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I always thought that China had relatively little debt, and Wikipedia puts it at 31.7% of GDP.
https://en.wikipedia.org/wiki/List_of_countries_by_public_debt What's going on? I know there are different ways to measure this kind of thing - what am I missing? |
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Jim always writes well ... http://www.jsmineset.com/
CIGA 22 |
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http://www.kitco.com/
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http://www.scotgoldresources.com.au/
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.....Chinese Ponzi .....masquerading as economic miracle........running out of cheap money......print (create with the click of a button) more please central planners........
.....cos as we all know.....you can't taper a Ponzi scheme......in China...or anywhere else in the global QE zero interest rate Ponzi illusion that has been implemented since 2008........nope. |
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You can`t help but feel it`ll all end in tears.
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Patra The Cat:
Always important to read the small print. That 31.7% figure is for 2012. And it covers only public debt. The whole problem is the vast mess of unperforming municipal loans, shadow banking and margin trading which has sent Chinese shares and real estate soaring and tumbling since that date. I have a suspicion that plenty of those 10x salary loans from the Chinese shadow banking system lie behind the "cash" purchases of umpteen empty London homes at unfeasible prices. |
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Mid-2014 figures for China debt to GDP ratios:
G'ment 55% Banks etc. 65% Non-financial corporate 125% Household 38% ________________ Total 282% It's the colossal "non-financial corporate" debt which illustrates the flimsiness of the Chinese miracle. In countries such as the US and Germany this accounts for a quarter of total debt: it's the gearing, bonds and credit lines companies use to do commerce. In China, on the other hand, it seems to have gone way beyond that and accounts for nearly half the total debt. You have to wonder how much corporate profit is in fact just corporate debt. |
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Cheers, SFBTW. I had just drafted a post asking for that sort of breakdown!
How concerned are you about the whole debt situation? I hadn't even considered China before today, but I'm hugely pessimistic about, say, the UK's situation. I just feel that as soon as we reduce the deficit to zero, we'll just go back into recession, shortly to be followed by a pensions crisis. |
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"Prediction is very difficult, especially if it's about the future." --Nils Bohr
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Sorry. Being flippant.
Pensions - if I get any state pension, I'll treat it as a bonus. The current system, whereby oldies spend all their National Insurance contributions on paying themselves working-age benefits, then use young people's NI contributions to pay their own pensions, will have to cease at some point. I've never paid a penny into any private pension scheme, as I've made my living backing horses for the last 25 years, so haven't paid any income tax. That means there's no tax advantage in paying into a pension rather than just sticking the money in National Savings. All the rest is just a matter of political policy rather than economics imo, hence the difficulty predicting the future. For instance, every government spending problem could be solved at a stroke if money wasted on bidding up the price of houses via 35-year 5xjoint-salary mortgages were instead diverted to taxes. But then a psychopathic chancellor like Osborne might just use that money on Help To Buy schemes to raise the cost of housing once more. |
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Flippancy is fine!
I kind of agree, although it's obvious that you know more about this than I do. I've been saying for a while that the economic problems currently faced by the developed world are solvable if humanity can show the maturity required to make the necessary adjustments to the current capitalistic model. Unfortunately, the recent Greece fiasco would appear to suggest that we have no desire to do so, and the most likely scenario in my view is that the whole system slowly collapses under debt and increasingly ridiculous efforts to achieve growth: the holy grail that has the minor downside of ultimately depleting all of our planet's resources and probably leading to war. But when you throw in all the variables and unknowns over the next few decades (technology being the leading wild card imv), you just end up with "I don't know". |
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and the most likely scenario in my view is that the whole system slowly collapses under debt and increasingly ridiculous efforts to achieve growth: the holy grail that has the minor downside of ultimately depleting all of our planet's resources and probably leading to war.
..agree wholeheartedly. |