China Experts Ignoring the Elephant in the Room

George Magnus writes about a Chinese economic conference where no one is worried about the debt accumulation.

This reminds me of what far too many people said in the West in 2006-07, such as ‘It’s only the housing sector that’s overextended’, or ‘subprime loans are a miniscule proportion of bank assets’, or ‘it’s just sector-specific’. Yeah, right. What they missed was the rest of the iceberg of leverage and indebtedness, and how a a sudden interruption in funding, asset prices and growth exposed something that was systemic, not sector-specific.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s