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Blood & Treasure

For many years, critics of China who identify with this mythical phoenix like creature called `the markets' have been telling China that it needs to do something about its debt problem. Eventually Beijing, says `Oh, OK' and deliberately stages - not allows to happen, but deliberately stages - a Lehman event across its banking system. This was not a response to a crisis: the PBOC could have pumped more money into the system this time just as it had done before. It's an act of will.

And `the markets' promptly crap themselves, though I don't know if this is actually serious or that `granny just saw a flasher' response that you seem to get a lot of. Actually, what the folk on the trading desks have been exposed to is something that people in China have known for a long time: this is how China solves its problems, with brutal and ruthless fixes. Ok, we have a problem. We also have absolute power. HULK SMASH. Think of this as being in the tradition of the One Child Policy.

This approach is sometimes characterised as Maoism, but it's really Dengism; the adaptation of all the tools in the Leninist box away from ideological mobilization and towards real world problems. Who cares whether the cat is black or white so long as it's a fucking huge apex predator?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Sun Jun 23rd, 2013 at 03:43:44 AM EST

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