Mega-policy decisions to boost demand. Now mega-consequences.
What’s left of the debt-fueled property speculation that drove growth is a huge explosive mess and an enormous amount of debt.
The property sector and its debts are possibly the biggest financial mess in China’s history.
China hasn’t bailed out its over-indebted property developers yet, to the shock of foreign investors who’d bought their dollar bonds. Could the forced deleveraging trigger a financial crisis?
Enough consumers, flush with free money, suddenly eager to pay those high prices, particularly for big-ticket items they didn’t have to buy. Magic Mix.
The Fed will trim back its stimulus, but it’s already too late, and it’ll be too little and too slow.
The total focus on the Fed. And then the Fed steps away.
This combo of massive QE, repressed interest rates, huge government stimulus with borrowed money, and raging inflation is new in recent history.
Get Used to Higher Inflation. My Thoughts on the Biggest Mess I’ve Seen in Decades.
It works until it doesn’t. Now all eyes are on housing.