I’ve always thought that Shirley Yam of the South China Morning Post has a great nose for financial risk, and this shows in an article she published last week on mainland real estate. For anyone knowledgeable about the history of financial bubbles and crises, much of the following story will seem extremely familiar. The point […]
Read More…Category: Balance sheet fragility
Rebalancing, wealth transfers, and the growth of Chinese debt
For the past ten years much of what I have written about debt in China was aimed mainly at trying to convince analysts and policymakers that the Chinese economy was structurally dependent on an unsustainable increase in debt in order to generate GDP growth rates above some level. This level might have been around 5-6% […]
Read More…How Much Investment is Optimal
A few years ago I wrote an essay on my blog that received a lot of attention and in which I tried to explain what the underlying assumption was for analysts who considered that China’s low level of investment relative to that of, troche say, help the US proved that China could not possibly have […]
Read More…Will China’s new “supply-side” reforms help China?
It wasn’t enough that we started 2016 with one of the worst weeks in the recent history of Chinese and global markets, but the panic continued into the following weeks and wreaked a great deal of damage to confidence. A lot of the reflexive China bulls are cautioning against misinterpreting the implications of the stock […]
Read More…If we don’t understand both sides of China’s balance sheet, we understand neither
With so much happening in China in the past month it seems that there are a number of very specific topics that any essay on China should focus. I worry, however, that we get so caught up staring at strange clumps of trees that we risk losing sight of the forest. What happened in July […]
Read More…Do markets determine the value of the RMB?
Last Tuesday the PBoC surprised the markets with a partial deregulation of the currency regime, order prompting a great deal of discussion and debate about the value of the RMB. Part of the discussion was informed by a consensus developing in one part of the market that the RMB is no longer undervalued but is […]
Read More…What multiple should we give China’s GDP growth?
Last week Derek Scissors, a think tank analysts at the American Enterprise Institute, published an article in which he referred to an October, 2014, study by Credit Suisse that attempts to measure total household wealth by region and by country. Scissors argues that in the interminable debate about whether or not China will overtake the […]
Read More…When do we decide that Europe must restructure much of its debt?
It is hard to watch the Greek drama unfold without a sense of foreboding. If it is possible for the Greek economy partially to revive in spite of its tremendous debt burden, with a lot of hard work and even more good luck we can posit scenarios that don’t involve a painful social and political […]
Read More…Can monetary policy turn Argentina into Japan?
Monetary policy is as much about politics as it is economics. It affects the ways in which wealth is created, allocated, and retained and it determines the balance of power between providers of capital and users of capital. In January one of my readers kindly passed on to me a link to an interesting report […]
Read More…Interview on Chinese CPI and PPI data for December
The National Bureau of Statistics released today CPI and PPI data for December 2014. People’s Daily summarizes the CPI data, which came in pretty close to market expectations: China’s consumer prices grew 2 percent in 2014 from one year earlier, well below the government’s 3.5 percent target set for the year, official data showed on […]
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