The sovereign debt crisis in Europe has garnered most of our attention as of late. But should Europe really be our main concern? For several months now, many economists (including myself) have been casting a nervous eye over to China. Paul Krugman summarizes these concerns nicely in his NYT article today: Will China Break? Mark Gongloff earlier asked the million dollar question here: China's Shadow Banking System: The Next Subprime? Hmm...
P.S. And what's with these stories I keep hearing about China's missing bosses? (e.g., China's Vanishing Factory Bosses). Sounds ominous, if true. We truly do live in interesting times.
P.S. And what's with these stories I keep hearing about China's missing bosses? (e.g., China's Vanishing Factory Bosses). Sounds ominous, if true. We truly do live in interesting times.
China's banking situation is potentially a big problem. BIG.
ReplyDeleteSo is Europe.
Hard to say which is worse.
And the US might be the worst of all unless we reduce the growth rate of spending. But I think that we will.
The question for China is whether PBOC easing can reverse the slide in house prices. This is doubtful: once housing speculators begin to lose money, the adverse feedback loop of defaults/increased inventory/lower prices/tainted collateral/tighter lending/more defaults begins to take hold. Reducing the RRR arguably does little to arrest it.
ReplyDeleteMaybe they've been secretly hiding out at the North Pole?
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ReplyDeleteEurope has garnered most of our attention as of late. But should Europe really be our main concern? For several months now, many economists (including myself) have been casting a nervous eye over to China. buy from china
ReplyDelete