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Soros on China

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I just read the article today:




Pretty interesting stuff. I can't wrap my head around macro economics, too complicated. I hope the macro experts here could help me understand why it seems like every country in the world is issuing a lot of debt, and whether this a relatively recent phenomenon? Also, why are people borrowing so much and who is providing the credit?

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Soros of course has more credibility than either Chanos or Pettis.  However this story is commentary, not news.  The conclusion of this editorial is that Xi Jinping has plenty of time to make the needed changes, but asks if he will in fact do so?


I think that it is likely that he will, though the risk is far from de minimis that he won't.  That risk has become much more apparent in the last couple weeks.  So much so that I closed out my dry bulk positions over the last two days, in all likelihood reacting to the same news that William Pesek, the author of the piece is.  I have a much quicker trigger finger than most.  many would probably not act so quickly.


I do think its fair to say that the risks in China are greater right now than at any time since the talk of a possible hard landing a little over a year ago.  I'm guessing this time they will skate through once again, but the risks are large enough to the materials sector to defend against imo. 

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Even if they avoid a debt crisis -- pettis gives it a maximum until 2017 or 2018 -- there's still a "lost decade", at the minimum.


I'm a Pettis fan and his aggregate look at the world is fantastic, it seems quite accurate to me.


His latest book Avoiding the Fall is a good introduction to figuring things out. Recommended.



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