It’s beginning to sink in that rising inflation is much more than a transitory phenomenon.
It was a rather glaring warning. Yet it was, of course, taken as just another buying opportunity – a rather easy one at that. It seems to only get easier.
Evergrande owes over $300 billion – to banks and non-bank financial institutions, domestic and international bond holders, suppliers and apartment buyers. It has bank borrowings of $90 billion, including to Agricultural Bank of China, China Minsheng Banking Corp and China CITIC Bank Corp. (reports have 128 banks with exposure). Thousands of suppliers are on the hook for $100 billion.
These types of situations generally prove worse than even the more bearish analysts fear. Assume ugly and messy.
The Wall Street Journal ran with the headline “What if China’s Property Crackdown Goes Overboard Too?” for its Tuesday’s “Heard of the Street” article. A Bloomberg piece went with “China Property Crackdown Alarms Analysts as Economic Risks Grow.”Septe…
Beijing has been bustling with activity. Communist leadership has clearly turned against Capitalism,
August 27, 2021: Bloomberg Wall Street Week’s David Westin: “Larry, you saw, you read what Jay Powell said [in his Jackson Hole speech]. What was your reaction?”Larry Summers: “I was glad to see him moving towards beginning tapering this fall. I still…
“Bubbles go to unimaginable extremes – then double.” “Quadruple” seems more applicable these days.
Markets are said to hate Uncertainty. Yet stock prices rise to unprecedented heights in the face of myriad extraordinary uncertainties. The current course of experimental monetary inflation and fiscal stimulus creates epic Uncertainty. The course of China’s historic Bubble is similarly unsettled. The geopolitical backdrop points to alarming instability. Yet global climate change poses the greatest threat to all aspects of human life, starting with economic, social, political and geopolitical stability.
To believe the Fed can simply accommodate the financial markets with the most gradual and transparent “taper” and everything will magically normalize is more than wishful thinking.
We’ve witnessed since March 2020 a QE program that, rather than accommodating deleveraging, actually spurred further, dangerous, speculative leverage.
