Comments from Credit Suisse research saying China has a 'triple bubble';
- Combining the third biggest credit bubble
- The biggest investment bubble
- & the second biggest real estate bubble of all time
And these are the single biggest risk to the global economy
Goes on:
- China's private sector debt-to-GDP stands at 196%
- 40% above its long-term trend
- More extended than the US at the peak of its credit bubble
- "Historically, a financial crisis has been preceded by credit being more than 10 per cent above trend"
- Also, the investment share of GDP in China was higher than any other country in history
- China is in the middle of a transition from investment to consumption-led growth, which historically leads to a halving of the growth rate
- "China has consumed more cement in the past three years than the US did in the entire 20th century"
- China has a "clear cut" housing bubble
- Real estate as a share of GDP at about 23% is triple that of the US at its peak
- Housing inventories in its third- and fourth-tier cities holding the equivalent of five years' demand
- "Our concern is that a triple bubble in housing, credit and investment comes with the significant risk of a hard landing"
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I'm not so pessimistic ... but I'm wary that a triple bubble trumps a double rainbow
