by Summary:
China in not headed for a "crash" for the simple reason that the government controls the banking system.The question in any financial crisis is who is going to assume the losses. In market economies, it is generally "the little people" (h/t Alan Simpson), that is, those that do not count. But ultimately the Chinese government will absorb the losses instead of those now affected, the mortgage holders and bank depositors. And cowboy capitalism will be moderated more. The Chinese government has already been doing this lately, having recognized systemic risk increasing with the current liberalization policy.The problem arose from too much capitalism, as some of the leadership had been complaining. That is now likely to change in the direction of a more managed economy in which there is less
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
China in not headed for a "crash" for the simple reason that the government controls the banking system.China in not headed for a "crash" for the simple reason that the government controls the banking system.The question in any financial crisis is who is going to assume the losses. In market economies, it is generally "the little people" (h/t Alan Simpson), that is, those that do not count. But ultimately the Chinese government will absorb the losses instead of those now affected, the mortgage holders and bank depositors. And cowboy capitalism will be moderated more. The Chinese government has already been doing this lately, having recognized systemic risk increasing with the current liberalization policy.The problem arose from too much capitalism, as some of the leadership had been complaining. That is now likely to change in the direction of a more managed economy in which there is less
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
New Economics Foundation writes Moving forward
Dean Baker writes Health insurance killing: Economics does have something to say
NewDealdemocrat writes Retail Real Sales
Angry Bear writes Planned Tariffs, An Economy Argument with Political Implications
The question in any financial crisis is who is going to assume the losses. In market economies, it is generally "the little people" (h/t Alan Simpson), that is, those that do not count. But ultimately the Chinese government will absorb the losses instead of those now affected, the mortgage holders and bank depositors. And cowboy capitalism will be moderated more. The Chinese government has already been doing this lately, having recognized systemic risk increasing with the current liberalization policy.
The problem arose from too much capitalism, as some of the leadership had been complaining. That is now likely to change in the direction of a more managed economy in which there is less risk allowed.
Michael Roberts sees that as potentially limiting growth but China economy was expanding at a blistering rate and can afford to slow down the pace without significant economic contraction.
While this is not likely to be sorted out overnight, it is not the collapse that Western Cassandras are foreseeing.
Michael Roberts Blog — blogging from a marxist economist
Is China headed for a crash?
Michael Roberts