China’s Debt Bomb: No One Really Knows the Payload

[tyz]

China’s Debt Bomb: No One Really Knows the Payload

NO ONE KNOWS IF ITS A HAND GRENADE OR A NUCLEAR EXPLOSION
The ramp up in Chinese debt accumulation has been a leading concern of investors for years. The average total debt of emerging market economies is 175% of GDP, and skyrocketing corporate non-financial debt has launched China far beyond that number.

The real question is: by how far?

The answer is disconcerting, because nobody really knows.


Source: http://www.visualcapitalist.com/chinas-debt-bomb/

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1715370834

[mindrust]

http://www.nationaldebtclocks.org/debtclock/china

I don't know if this number on that website is true. It says China's debt is $5,407,988,889,359 right now and of course it is going only one way. Up.

And that's not a bubble. Like OP said, it is a goddamn nuclear bomb.

[Boosterious]

http://www.nationaldebtclocks.org/debtclock/china

I don't know if this number on that website is true. It says China's debt is $5,407,988,889,359 right now and of course it is going only one way. Up.

And that's not a bubble. Like OP said, it is a goddamn nuclear bomb.

that was massive amount of money,really big debt! crap.. i never see that amount of money. Lol
nowdays we getting hard to believe media,and site like that always wondering the truth,let people from china get official china debt from their goverment.

[pitham1]

This doesn't even include the so called 'shadow economy'.
I would expect panic in the shadow economy before there are defaults in traditional debt.

[yayayo]

This doesn't even include the so called 'shadow economy'.
I would expect panic in the shadow economy before there are defaults in traditional debt.

Since the two are not directly dependent, it's also possible that the opposite happens, only one collapses, or both collapse at the same time. The last option seems most likely to me, because debt bubbles tend to collapse if there is a general loss in confidence that often spreads extremely fast across all potentially weak financial constructs.

The exact estimate of China's payload doesn't matter. We all know that debts have risen far beyond the point of being manageable. It's not only China, it's almost the whole western hemisphere, including quite a few emerging market economies. The debt bomb may also be ignited by a rather small country (for example Greece) which might cause a sudden change in the mindset of investors around the globe.

ya.ya.yo!

[tyz]

That makes it not reassuring. It is known that the shadowing banking and economy sector in China is much higher that the regulated sector.
So the problem is indeed much more serious as the image in the opening thread is actual depicting 

This doesn't even include the so called 'shadow economy'.
I would expect panic in the shadow economy before there are defaults in traditional debt.

[classicsucks]

Well the article is misleading in several ways - it lumps government, corporate, banking, and household debts TOGETHER, but each type of debt has a different effect on the economy. Household debt increases productivity, corporate and bank debt increase bailouts and defaults, and government debt is essentially irrelevant, because there is no possibility of default (except in a stage-managed way, as an excuse to cut programs or raise taxes). Also notice the graph of Debt-to-GDP ratios: China seems to have the most debt. However, USA total debt was 60 TRILLION (according to https://www.rt.com/usa/166352-us-total-debt-sixty-trillion/) in 2014!

Most of these debts will NEVER be paid - this is how modern capitalism is structured. It's all about INTEREST: institutions survive by collecting it, and people work their whole lives to pay it. Every time somebody defaults on a debt to a large institution, the central bank prints more money. Then everyone else's money is devalued a little more...