by John Rubino
When historians sort out this era of once-a-decade financial bubbles, they’ll marvel at how dissimilar the drivers of each boom were. The junk bonds of the 1980s were essentially leveraged tools for extracting wealth from companies. The dot-coms of the 1990s were vehicles for exotic new technologies and untested business models. The sub-prime mortgages and credit default swaps of the 2000s were semi-fraudulent fee-generation schemes.
All, in retrospect, were strange, unsteady foundations on which to build a global economy. But they look positively sane compared to the pillars of the current expansion: China and fracking.
As the true extent of China’s debt binge becomes apparent, the only reasonable reaction is awe. To cook the story down to its essence, the world’s biggest developing country decided to become developed in the space of a few years, borrowing nearly as much money as the entire rest of the world and using the proceeds to buy up every conceivable kind of industrial commodity.