The China bomb keeps getting bigger

Tuesday, February 16, 2016
By Paul Martin

Linette Lopez
Feb. 16, 2016

China dropped a few bits of economic data over the weekend suggesting things will get much worse before they get better.

The most important piece of data is total social financing, or TSF.

It’s a figure the Chinese government made up back in 2011 to track all the money in the system. That includes credit out to borrowers and even parts of the country’s opaque shadow banking system.

So you can imagine why tracking this is important. As Business Insider’s Julia La Roche reported, this is what hedge fund land considers “a ticking time bomb.”

And the bomb is just getting bigger, according to last month’s tally.

New TSF in January came in at a whopping $522 billion. That’s up from $276 billion in December, and it beat expectations of $337 billion. Outstanding credit grew by 12.1% from the same time a year before.

In other words, credit is still expanding at an eyepopping rate in China.

That’s not all, folks

And that may not even be the whole load either, as Bloomberg economist Tom Orlik writes:

That acceleration might even understate the pace of credit expansion. Taking account of local government bond issuance — which isn’t included in the official data — outstanding credit accelerated to 15.1%, according to Bloomberg Intelligence Economics’ calculations.

The Rest…HERE

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