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China’s Subprime Crisis Is Already Here—-Bad Loans Soaring
Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
davidstockmanscontracorner.com / By Christopher Langner at Bloomberg /
Sorry, Kyle Bass, you’re a bit late to the game. The debt problem in China has already reached the proportions of the U.S. subprime mortgage debacle. Don’t worry, though: Chinese authorities are on the case — discussing reducing the required coverage for bad loans so that banks can keep booking profits and lending.
Including “special-mention” loans, which are those showing signs of future repayment risk, the industry’s total troubled advances swelled to 4.2 trillion yuan ($645 billion) as of December, representing 5.46 percent of total lending. That number is already higher than the $600 billion total subprime mortgages in the U.S. as of 2006, just before that asset class toppled the world into the worst financial crisis since 1929.
Law of Large Numbers
The bad-loan ratio in China may look to be in check, but the absolute amount is growing.
The amount of loans classed as nonperforming at Chinese commercial banks jumped 51 percent from a year earlier to 1.27 trillion yuan by December, the highest level since June 2006, data from the China Banking Regulatory Commission showed on Monday. The ratio of soured debt climbed to 1.67 percent from 1.25 percent, while the industry’s bad-loan coverage ratio, a measure of its ability to absorb potential losses, weakened to 181 percent from more than 200 percent a year earlier.
The post China’s Subprime Crisis Is Already Here—-Bad Loans Soaring appeared first on Silver For The People.
Thanks to BrotherJohnF
Source: http://silveristhenew.com/2016/02/18/chinas-subprime-crisis-is-already-here-bad-loans-soaring/
