RE:The Debt MarketCredit Bubble Bulletin : Weekly Commentary: Inflation Watch My Comment : China's credit bubble is even worse than the US credit bubble
Excerpts:
From The Institute of International Finance’s Q2 Debt Monitor:
“Global debt soared to a new record in Q2 2021. Following a slight decline in Q1 2021, the global debt pile increased by some $4.8 trillion in Q2 2021. At a fresh all-time high of $296 trillion, global debt is now more than $36 trillion above the pre-pandemic level… Mature market debt heading higher again – albeit more slowly… The debt buildup was most substantial in the Euro Area. Largely driven by Germany and France, the USD value of total debt in the Euro Area increased by $1.3 trillion to over $56 trillion in Q2… Total debt across emerging markets rose by some $3.5 trillion in Q2 2021, and now stands at nearly $92 trillion – over $15 trillion higher than pre-pandemic level.” “
China’s debt levels rising rapidly: With total sectoral debt up by an estimated $2.3 trillion in Q2 to reach an all-time high of over $44 trillion, the pace of China’s debt buildup has been much steeper than in other countries.”
Expanding at a blistering (“Terminal Phase of Bubble Excess”) 23% annualized rate, China ended Q2 with a debt-to-GDP ratio of 329% (led by the Non-Financial Corporate sector’s 158%). The U.S. ended Q2 with a debt-to-GDP ratio of 367%, with global debt at 353%. All-Embracing
Higher inflation is in the process of being sustained – and it should today be a serious concern – yet few believe the Fed will actually use their “tools” to suppress it. To begin with, inflation dynamics are not under the Fed’s control. More today than ever before, inflation is a global phenomenon. What's more, a strong case can be made that China has supplanted the U.S.'s traditional commanding role in global inflationary dynamics.