Yes, you read that right. Amid a tumbling stock market, plunging trade data, weakening Yuan, and soaring volatility, China's aggregate debt (so-called total social financing) rose a stunning CNY3.42 trillion (or an even more insane-sounding $520 billion) in January alone.
In fact, since October, China has added over 1 trillion dollars of credit... and has nothing but margin calls, ghost-er cities, and over-supplied commodity-warehouses to show for it... oh and even-record-er debt-to-GDP ratio.
This is what the unprecedented addition of half-a-trillion dollars in one month looks like - Hyman Minsky called, he wants his chart back.
For context, consider this...
China did half a QE3 in one month
— zerohedge (@zerohedge) February 16, 2016
In the process of this gargantuan debt creation, China has smashed its recently record debt/GDP of 346% pushing it to even more ridiculous levels.
Why is China doing this? Because as we showed three years ago, China needs ever greater stimuli to achieve the same effect:
This is what else we said back in April 2013 which by now seems painfully (and plainfully) obvious:
What should become obvious is that in order to maintain its unprecedented (if declining) growth rate, China has to inject ever greater amounts of credit into its economy, amounts which will push its total credit pile ever higher into the stratosphere, until one day it pulls a Europe and finds itself in a situation where there are no further encumberable assets (for secured loans), and where ever-deteriorating cash flows are no longer sufficient to satisfy the interest payments on unsecured debt, leading to what the Chinese government has been desperate to avoid: mass corporate defaults.
This could be the end as the last bubble standing (in China corporate debt) has begun to burst amid the over-supply of credit.
What happens next?