"End of the End" For The Credit Bubble

It's not the beginning of the end, it is the end. The numbers are now reaching the point where the credit bubble cannot continue to expand, short of a inflationary surge in base money which would significantly devalue the yuan. The "Ponzi" phase of the credit bubble is growing rapidly and it signals the end. SMEs who pay extremely high financing costs are in the Ponzi stage, as are industries with access to bank credit, but collapsing fundamentals.

Bloomberg: China Has a $1.2 Trillion Ponzi Finance Problem
Chinese borrowers are taking on record amounts of debt to repay interest on their existing obligations, raising the risk of defaults and adding pressure on policy makers to keep financing costs low.

The amount of loans, bonds and shadow finance arranged to cover interest payments will probably rise 5 percent this year to a record 7.6 trillion yuan ($1.2 trillion), according to Beijing-based Hua Chuang Securities Co., whose lead fixed-income analyst was top-ranked by China’s New Fortune magazine in 2012 and 2013.
Related: SMEs Wonder Not How to Live, But How To Die As Borrowing Costs Spike

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