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China Bubble No. 3 Could Be About To Burst


China’s credit bubble could be about to burst, after both its property and stock market bubbles have done so over the past year.

Corporate credit has exploded in China, up 21% from 2014 to 2015. The country now has a bunch of debt-laden zombie companies—ones which helped create the property bubble—that now can’t turn a profit.

Credit got a huge boost when refugees from China’s first two bubbles looked to the credit sector as a safe place to park their cash, Business Insider reports.

The oversupply of debt has far outstripped demand for the bonds, creating a bubble that hedge fund manager J. Kyle Bass has said could cause four times the damage of the 2008 housing crisis—which Bass also happened to predict. [BI]