{"id":27290,"date":"2017-10-26T16:43:41","date_gmt":"2017-10-26T21:43:41","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27290"},"modified":"2017-10-26T16:43:41","modified_gmt":"2017-10-26T21:43:41","slug":"chinas-minsky-moment","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27290","title":{"rendered":"China’s Minsky Moment"},"content":{"rendered":"

CHINA’S MINSKY MOMENT<\/strong><\/a><\/h3>\n

<\/a><\/p>\n

Sometimes you have to love the naivety of the markets. At this week\u2019s Communist Party Congress meeting in Beijing, the governor of the PBoC (People\u2019s Bank of China) said the following;<\/p>\n

\u201cIf we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a \u2018Minsky moment\u2019. That\u2019s what we should particularly defend against.\u201d<\/p><\/blockquote>\n

Yet instead of focusing on this dire warning, markets are busy trying to discount the chance of a Powell Fed or a Republican tax cut. Although both of these developments would be important, China is the tail that wags the dog. Full stop. Figure out China, and all the other financial market forecasts become that much easier.<\/p>\n

\n

Aren\u2019t Central Bank warnings cheap?<\/strong><\/h3>\n

Some might argue this \u201cMinsky moment\u201d warning is nothing more than a Central Bank whistling in the wind. Didn\u2019t Greenspan caution about a similar concern with his \u201cirrational exuberance\u201d speech? And didn\u2019t that end up being a complete non-event?<\/p>\n

Yet I would argue that China is not the same as other countries. Although there are market elements to their economy, to a large degree, China is still a command economy. If Chinese leadership wants a particular outcome, they can just demand it, and it will happen.<\/p>\n

So when the head of the PBoC warns about a \u201cMinsky moment\u201d, it\u2019s probably not a good idea to load up on financial assets. For the longest time, China exported goods and imported developed nation debt and other financial assets. They had already started down the road of re-balancing their economy away from this export driven model, but this recent development confirms that the old playbook should be thrown out the window. The global financial system is changing, and China is leading the way.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

CHINA’S MINSKY MOMENT Sometimes you have to love the naivety of the markets. At this week\u2019s Communist Party Congress meeting in Beijing, the governor of the PBoC (People\u2019s Bank of China) said the following; \u201cIf we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[952,124,130,16699,3018,2914,2615],"class_list":["post-27290","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alan-greenspan","tag-central-banks","tag-china","tag-communist-party-congress","tag-minsky-moment","tag-pboc","tag-peoples-bank-of-china"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27290"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27290\/revisions"}],"predecessor-version":[{"id":27291,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27290\/revisions\/27291"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}