The CPC will soon tame the Evergrande collapse without much problem, says Ed Yardeni.
Also, he says how the central bankers learnt a lot in 2008, so were able to keep the economy going during this pandemic.
Ed Yardeni, Research President and Chief Investment Strategist, talks the implications of China Evergrande's potential collapse
CHINA is about to bail out, or directly fund a managed buyout of a fraudulent and overleveraged housing conglomerate. This would be similar to the Blackrock bailout, the US bailouts of large holders of mortgage-backed securities. In Kaivey world, this kind of behavior is criminal and corrupt when the US and UK do it, but good economic management when China does it. DESPITE the endemic corruption far be it from me to criticize state intervention to stabilize the economy -- Randy Wray pointed to Chinese interventionism as a contributor to its "soft landing." SO be it. BUT let us equally recognize the deep structural corruption in China. More important, based on that, let us acknowledge the falsehood of virtually all Government of China economic and social data --see for example https://www.aljazeera.com/amp/economy/2021/9/17/probe-finds-world-bank-changed-data-to-boost-china-ranking
ReplyDeleteThe difference is that the US gave a lot of lip service to reform after the bailouts for a variety of factors but essentially to preserve the profitability of the financial system.
ReplyDeleteLet's see how China handles it. They may choose to take a different tack. The financial sector doesn't have the same political clout there as it does the in the US. Recall Sen. Dick Durbin about Congress, "the banks own the place." In China, the government essentially owns the banks, if not directly then by controlling them indirectly. China gets that socialism is not about owning all the means of production but rather controlling the commanding heights of the economy.