No Time to Die: China Banks Edition

Marc Rubinstein has over 25 years experience as an analyst and investor in the financials sector whi


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Comments

  1. An Excellent review & history of the Chinese banking/ financial/government system.
    Thank you

    I was expecting a more conclusive ending however.

    My “free market/capitalism is the best form of economic growth” and “ government led policy eventually screw it up” instinct is telling me that this will end badly for China. That either a

    1. Lehman Moment occurs ( downplayed by many very smart people) or
    2. A Semi-Permanent reduction in growth for China ( as their primary source of growth and funding for local government is gone)

    And the recent rapid increase in hostilities toward the West is the standard modus operandi for governments that know their economy is in trouble and want to distract the people to blame the “outsiders” ( the West)

  2. Avatar for Zenzei Zenzei says:

    An efficient resource allocation system for an economy is the best way to foster economic growth,

    “free market/capitalism” is our brand of resource allocation and it seems to be failing the “efficient’ requirement given where capital is going these days (“i am looking at you junk-bond market!”)

    China is dealing with a new set of variables and tools (robotics, AI, high bandwidth comms) that should cause us to question our assumptions about the efficiencies inherent in centrally planned economies.

    In other words - I am not sure that China is destined to fail simply because the approach they have taken hans;t worked in the past.

  3. To clarify, I do not think the USA is currently operating in a pure free market/ capitalism system . Probably never has.
    But probably we are farther away, in peacetime, of free market principles than we ever have been.
    I happen to lay the bulk of this misfortune at the feet of the Mandarins at the Federal Reserve but there is plenty of blame to go around.

    I am of the belief that a Command and Control, Autocratic , No Democracy system like seen in China is destined to ultimately fail.
    Central Planning simply does not work, no individual or group can possibly make resource allocation decisions as well as a decentralized approach, even as flawed as our system currently is.

  4. Bumping this as another August is filled with Chinese Property developers making headlines. Country Garden missed a coupon and is mulitiples of the size of the Evergrande failure (2021 vintage stress). The stock has been in freefall, with typical bouts of short covering on rumors of state support. Most importantly, the bonds I just saw flash across Bloomberg were quoted at sub 10 cents and another at 13 cents. In spite of Western hopes that these developers would get a state bailout, not a single one has gotten support since Evergrande.

    Poor Chinese data was part of the upset US markets faced at the open today. This not only never healed it is getting worse.

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