As Growth Picture Darkens, Goldilocks Makes Every Asset Win https://www.bloomberg.com/markets/fixed-income
As a side note: Hyman Minsky's work influenced the development of Modern Money Theory, lately in the news, through one of his students, L. Randall Wray, who has become a singularly important U.S. contributor to MMT. Abba Lerner, another mid 20th century economist, also made important contributions to what in the late Twentieth Century became known as Modern Money Theory.
https://sbr.com.sg/financial-servic...avy-losses-delinquencies-hit-1788b-in-january Using debt to build railways and highways seems to be Beijing’s way out of recessions. After the 2008 global financial crisis, a 4 trillion yuan stimulus saved the economy. In 2012, the country turned to infrastructure spending again, mainly with the help of LGFV borrowing. That spending came at great cost. China has stacked up almost 30 trillion yuan of LGFV debt, according to HSBC Holdings Plc, or roughly 30 percent of GDP. Once LGFV debt and special purpose bonds are accounted for, Beijing year after year is racking up a fiscal deficit in the neighborhood of 8 percent of GDP, more than twice the official figure, the bank estimates. The time it takes for an infrastructure binge to spur a recovery is lengthening, though. In 2008, it took China's economy only three months to bounce back. In 2012, it was six months. The question is whether Beijing will be able to use its magic wand this time, and how long it will take. They loaned out 4.64 Trillion Yuan in January 2019, and imports/consumption are still tanking... In 08 year end collapse, they printed 4 Trillion Yuan and bounced back within three months!! The dynamic most do not understand, the majority of companies in China act as collateral to each other's debt... When one defaults, the bank goes to the next company who vouched as collateral, which they can't pay, then default themselves, forming a vicious default wave in recessions, which is happening at the moment I think China will have it's Minsky moment in 2019, Corporate defaults will likely reach 50 % of outstanding maturity, putting it around 250-260 Billion US of company defaults for 2019. China does not have Personal Bankruptcy courts, which will make recovery for consumption GDP not possible in the severe economic downturn currently happening
They can pay off those debt with their US $ reserves and trade surplus. So to get out of debt, they simply have to export more to the US. The US just need to start our printing press and print more US $ to pay for our Chinese export. There must be a catch somewhere. It is too easy.
Hasn't it been a Minsky Moment for the past 5-10 years ? Maybe someday. BTW ... we have a Minsky's Pizza near us ... awesome ! https://minskys.com/
https://www.bloomberg.com/opinion/a...p-s-trade-war-may-spark-a-chinese-debt-crisis Excellent article, rare honesty in mainstream articles... And this is from July 2018