I’ll start off by saying Carmen Reinhart was much easier to
understand compared to Stockman. It was also a much shorter article, I think
mostly because Stockman got a little too involved in his views. Reinhart talks
about the financial crisis and its connection to the Chinese market and
economy. And basically how everything connects to China’s economy. She also
kept a pretty neutral ground throughout the article, while still getting to the
same conclusion as Stockman: we are in big trouble.
One useful and notable thing she mentions: financial crises
tend to share the following, “significant slowdown in economic growth and
exports, unwinding of asset-price booms, growing current-account and fiscal
deficits, rising leverage, and a reduction or outright reversal in capital inflows.”
Not all of it makes sense, but it’s not too difficult to put together, and she
goes on to explain how debt is playing a large in all of this. The big
question: where is it coming from? She doesn’t provide an answer, but clarifies
that the massive growth of depth isn’t being sourced right; underlying factors
are taking place and right now, we have some we need to uncover. The rest of
the article gave examples of her points, but kept it minimal, straight to the
point and moving on, which, after Stockman, was quite refreshing.
No comments:
Post a Comment