Tag Archives | credit bubble

China lendNov11.png

China’s debt problems multiply

It seems increasingly clear that China’s economic policy took a wrong turning 10 years ago, when it joined the World Trade Organisation. 2001 was also the year when the Western BabyBoomers (those born between 1946-70), began to leave the peak consumption age group of 25-54 years. As they entered the 55+ age range, and the […]

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China lendSept11.png

China’s lending continues to tighten

Financial bubbles are like balloons. Only instead of air, they need to be constantly pumped up with new lending. Otherwise they begin to deflate, and the Minsky Moment occurs. The above chart of China’s bank lending shows, as discussed last month, that the Minsky Moment is getting close. August’s lending (red square) was exactly the […]

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China’s power consumption hits new record

China’s growth in electricity consumption is a much better guide to its economic growth than the published GDP figures. This was confirmed by likely next premier, Li Keqiang. It has been a major reason for the blog’s long-standing focus on this key area. The problem with GDP is that it is a target for local […]

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China lend Aug11.png

China’s bank lending nears its Minsky Moment

China’s credit bubble is one of the largest the world has ever seen. This is true not only of its total size, but also in relation to GDP. The history of credit bubbles is very clear about what happens next. Anyone who has followed the US subprime lending disaster will know the script already. But […]

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China’s inflation at new high, bank lending slows

The blog continues to worry about signs of a slowdown in China. Major commodity trader, Glencore, said this week “we see a pullback in China and it will continue“. This challenges the views of Dow CEO Andrew Liveris last month, and Rhodia CEO Jean-Pierre Clamadieu – who said last week he saw “no material signs […]

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US Fed’s QE2 programme hits consumer confidence, raises mortgage rates

Last November, the Chairman of the US Federal Reserve justified his $600bn QE2 programme to boost financial markets by claiming “higher stock prices will boost consumer wealth and help increase confidence“, whilst also leading to “lower mortgage rates“. And stock prices have indeed risen. As the above chart from PetroMatrix shows, there has been an […]

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China’s women believe housing essential for marriage

70% of China’s women regard “housing, a stable income and some savings” as vital for any man wanting to get married. And they probably don’t regard architect Dai Haifei’s $300 Beijing ‘egg house’ (pictured) as their ideal. The data comes from the “2010 China Marital Status Report“, which adds that the man’s personality and morals […]

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China lendApr10.png

China’s bank lending falls 43% in Q1

There are increasing signs that China is getting serious about tightening its lending policies. The above chart, from China’s central bank, shows how lending has fallen since January. Then, it was 14% down versus 2009. But by the end of Q1, lending was down 43% versus Q1 2009. In addition, the government has begun to […]

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China’s housing market “a wild tiger”

More evidence is emerging of the real estate bubble that China’s easy money policy has created over the past year. Wen Jiabao, China’s premier, has described property markets in some cities as now being like a “wild tiger“. And new figures explain his concern, with the government reporting property sales rose an astonishing 80% last […]

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China lendFeb10.png

China’s lending causes central bank headache

No wonder alarm bells were ringing in China’s central bank last week. The above chart (from China Daily) shows how total lending rebounded to $204bn in January, only 14% below the 2009 level. Total lending doubled during 2009 to $1.4bn, an astonishing amount for a country with total GDP of $4.3trn. Of course, this enabled […]

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