Did China Cause the Financial Crisis?
Interesting new paper here by Heleen Mees of ERIM. She theorizes that China actually caused the entire financial crisis. It’s essentially the global savings glut story which I am not entirely sold on. China accumulates reserves because the USA likes to buy cheaper goods and services. It’s not just a desire to save in dollars. It’s a demand function as well. China just so happens to be the primary place of cheap production. So they end up with the dollars as a matter of necessity. Anyhow, it’s an interesting perspective and I’d be interested in readers views here:
“At the onset of the financial crisis, in 2007 and 2008, the main worry among commentators and economists was the growing purchasing power of sovereign wealth funds of authoritarian states like China and the United Arab Emirates. In a column in NRC Handelsblad in July 2007 I reckoned that, if China would keep accumulating foreign reserves the way it did, within 10 years China would be able to acquire all publicly listed companies in Europe. In June 2008 Laurence Kotlikoff predicted that ChinaHs foreign reserves, which amounted already to $2 trillion at the time, would multiply within a matter of years. But Kotlikoff had a very benign view of ChinaHs hoarding. He predicted that, by becoming the world’s saver, China would also become the developed world’s savoir, with respect to its long-run supply of capital and long-run general equilibrium prospects (Kotlikoff et al., 2005). Ben Bernanke, who was Fed Governor at the time, had an equally sanguine reading of the global saving glut. In his by now infamous 2005 Sandridge lecture, Bernanke boasted about the “depth and sophistication of U.S. financial markets, which (U ) allowed households easy access to housing wealth.”
In September 2008 it all started to unravel quickly. Government sponsored enterprises Fannie Mae
and Freddie Mac, created in 1938 and 1970 in order to promote homeownership, were placed into
conservatorship by the U.S. federal government, and little more than a week later the investment bank
Lehman Brothers collapsed. In order to prevent a full domino effect, the U.S. Treasury bailed out insurance behemoth AIG a few days after that. As stock markets tanked, the Dow Jones dropped more than 500 points on September 15, U.S. Congress consented to the Troubled Asset Relief Program (TARP) that authorized expenditures in the order of $700 billion for the purchase of assets and equity from financial institutions to strengthen the financial sector. Images of foreclosed properties and displaced homeowners flooded the TV screens. Before that faithful September month, most people had never heard of credit default swaps, collateralized debt obligations or subprime mortgages.So it may not come as a surprise that Wall Street has been singled out as the villain in the prevalent
narrative of the financial crisis and the ensuing Great Recession. I show, however, that there were even larger forces at work. The build-up of savings in China and oil-exporting nations, which were heavily skewed towards fixed income assets, depressed interest rates worldwide from 2004 on. By the time the Federal Reserve (Fed) wanted to put the brakes on the economy and started to raise its policy rate again in July 2004, it was too late. Long-term interest rates in the United States remained stubbornly low, in spite of the Fed raising the fed funds rate from 1 percent in July 2004 to 5.25 percent in June 2006, adding further fuel to the housing bubble. While the subprime mortgages with exotic features did not help either, my research shows that long-term interest rates are the most important factor driving housing demand (Chapter 2).”
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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Isn’t this essentially a recap of Greenspan’s excuse — blaming the ensuing financial crisis on a savings glut originating in “Asia,” while he as chief regulator let the boyz on Wall Street run wild? The opposite of Post Keynesian analysis of the crisis based on Minsky’s financial instability hypothesis, which should now accede to the status of a law.
But the excessive external saving in USD corresponding to the US CAD did play a role as Wynne Godley’s SFC sectoral balance approach shows. Based this approach Godley’s analysis was able to successfully predict the crisis, while the mainstream missed and is still looking for an explanation in things like too low interest rates, too long. Godley’s analysis is still the best analytically explanation, and when coupled with Minsky, show quite well the internal dynamics of the situation. Godley’s analysis shows that the GFC originating in Wall Street and reverberating globally was neither due to an external shock nor a “black swan” event.
Right, Tom. But I’d say, like most economic phenomenons, the GFC was demand driven. I know it’s easy to target bankers, but you’re kind of making a supply side argument. As if the banks supplied the loans and the customers were unwitting fools in taking on more than they could afford. Of course, there was an element of fraud involved in some of these loans, but most of them were just flat out greed based demand for the American dream.
A good Keynesian likes to say it’s all about demand in the recovery phase, but hates to blame demand during the boom phase. At least that seems to be the issue during the GFC. What we really seem to have in the USA is a crisis in accountability. There’s plenty of blame to go around here….
Agreed. Every party had a role in the GFC. In a democracy, we deem voters sufficiently intelligent to pick their government, and yet there has been the tendency to depict them as guillable cretins when it come to managing their own finances. This takes nothing away from Wall Street’s blame. However, part of a reason why the current oligarchy is in place is because the ‘people’ have shown a great deal of apathy, plus they did benefit indirectly from Wall Street excesses via easy credit dope.
It is time to grow up, I guess.
No doubt, Cullen. But many demand-side people point out that the demand was rather artificially enabled by people that 1) were supposed to know better (prudent lenders) and 2) regulators charged with supervision and enforcement of the law and regs.
As Bill Black points out, without the complicity of mortgage brokers, appraisers, primary lending institutions, and ratings agencies, the control frauds run by the big banks, which was magnified by securitization, MERS, proliferating derivatives, and SIVs, could not have occurred. This was a Ponzi finance stage of the financial cycle on steroids. Yves Smith and Janet Tavakoli have laid it out in their work, Yves Smith’s Econned in particular.
This was not a crisis caused by low rates, CRA, a savings glut, or any of the other possibly contributory factors. And the demand was driven not only by irrational exuberance but also enticement by supposedly professional players the Greenspan expected to be acing responsibly. He later admitted that the possibility that professional might act irresponsibly and crash the system was not in his paradigm. He clearly was unfamiliar with Minsky’s work.
Tom… I just added a lengthy comment (that seems to have disappeared) saying pretty much the same thing. Bill Black (William K. Black) whom you refer to is excellent on this. He goes through the formula for bank fraud by the management and how it’s a sure thing for the management (i.e. it results in large bonuses) but is almost certain to destroy the bank in the process. Only back then (in the S&L days… when Dr. Black was a prosecutor for the government) the management at least had to fear going to prison (they put over 3000 people, 1000 of which were top management in prison) whereas today the Justice Dept. and the regulators have completely given up and have refused to go after the fraudsters… plus we did bailouts instead of receivership like we did back in the S&L days. It’s a disgrace! We’ve decriminalized fraud by the banks.
I agree that many consumers were foolhardy in believing that housing prices would always continue to rise (exactly as they were being told by the mortgage brokers… and probably all their friends, family, co-workers, acquaintances, and late-night infomercials). This tended to make them think they’d better get in on the action before they were completely priced out of the market… the rising prices being their ace-in-the-hole against the risky loans. Foolish? Of course. But there was a lot of fraud from people that should know better… uh, I’d say did know better. The interests of a bank and the CEOs and CFOs that run it are not the same thing. Read anything by William K. Black, a former federal prosecutor during the S&L debacle. He gives a formula for sure fire success (no risk involved!) to boost a bank manager’s bonus with fraud:
1) Grow like crazy by…
2) Making as many terrible loans (“high yield” liars loans) as possible by
3) Leveraging as much as possible and
4) Making no allowances for possible defaults
This ensures the bank will fail but your bonus will be maximized. No risk involved… it’s a sure thing! Back in 1991 when Mr. Black was prosecuting frauds there was at least the risk that you’d be indicted, but no longer! Back then the Office of Thrift Supervision (OTS) alone (amongst several regulatory agencies) made over 30,000 criminal referrals resulting in 3000 trials for fraud, 1000 of which were for senior management. They got a 90% conviction rate in spite of the “Keating 5″ senators running cover for the S&L management. That same OTS make zero criminal referrals for 2008 (The FBI doesn’t act until it gets a criminal referral from a regulator). Dr. Black estimates that 2008 was about 70 times larger a crisis that the S&L crisis. Basically we’ve decriminalized fraud at the biggest banks. Instead of putting the banks in receivership and firing and then prosecuting the management, we now bail the banks out so the management don’t lose their jobs or their bonuses. We also let the banks limp along with fraudulent balance sheets. Look at what AG Holder has done about it… practically nothing! Read anything by Matt Taibbi recently regarding how the Justice Department has basically given up on prosecuting ANY fraud cases against the big players.
Until we change the way compensation is structured, management will take the risks for short-term gains to get the huge bonus payoffs.
What was originally setup to align CEOs’ interests with the company’s interests, is doing just the opposite. We need longer time frames and clawback provisions.
John Bogle, the founder of the Vanguard family of mutual funds (now retired) is also a great source for information about what has gone wrong with corporate governance. He seems to think a big part of the problem is the institutional investors themselves, who have become the dominant shareholders (i.e. pension funds, etc.). They do not approach investing like the individual owners of the past did. He also likes to draw a clear distinction between investing and speculating, and he’s a strong advocate for the former over the latter.
… also a good source on this is Chris Whalen. He’s in the business of analyzing banks, and he has a lot of insights on the industry, fraud, what investors can do to protect themselves, etc. I would guess that philosophically he’s probably in the “sound money” camp (quasi-Austrian?)… but he has some really good and timely information to share about banking. Even David Stockman (Reagan’s budget director from 1981-1986) readily admits that deregulation led to the S&L crisis and was part of the problem in 2008. Stockman is also a “sound money” libertarian, and doesn’t like the idea of government involvement… (e.g. the FDIC) but he admits that if you have FDIC then deregulation is a bad idea. Mish Shedlock is another in this school.
FYI, the writer makes some mistakes trying to apply US culture to Asian/Eastern European culture (I used to live in China & have friends/relatives still in China & EAstern Europe)
In pre-1990s China, Russia, Eastern Europe (former Soviet Union), there was NO banking industry & NO money creation, no fractional reserve banking.
This is why their economies were stagnant & collapsed because they were basically on a gold-standard & limited thier money creation so they didn’t grow their money supply enough to fund various projects, enterprises, infrastructure.
The legacy of which is that in China, Russia, & Eastern Europe(former Soviet Union), MOST people PAY CASH & DO NOT USE LOANS NOR CREDIT.. most homes, cars, etc are bought with CASH, which is why the savings rate is so high because they purchase their homes,cars etc IN FULL, IN CASH.
In most of China & Eastern Europe, 80%-90% of home sales, cars, etc are bought IN FULL CASH, NO loans.
In contrast, 80%+ of home sales in the US are bought with loan mortgages & only about 50%-60% have homes that are paid off.
In China, even in instances when some do use loans, the mortgage is small (about $5k to $20k).
more about China -mandatory reading from Stephan Roach Chairman of Morgan Stanley Asia and the firm’s Chief Economist, and currently is a senior fellow at Yale University’s Jackson Institute of Global Affairs and a senior lecturer:
from
http://www.project-syndicate.org/commentary/china-is-okay-by-stephen-s–roach
linked from:
http://mikenormaneconomics.blogspot.com/2012/08/stephen-roach-china-is-okay.html
the descent has been far milder. From a peak of 11.9% in the first quarter of 2010, China’s annual GDP growth slowed to 7.6% in the second quarter of 2012 – only about half the outsize 8.2-percentage-point deceleration experienced during the Great Recession.
Barring a disorderly breakup of the eurozone, which seems unlikely, the International Monetary Fund’s baseline forecast of 4% annual growth in world trade for 2012 seems reasonable. That would be subpar relative to the 6.4% growth trend from 1994 to 2011, but nowhere near the collapse recorded during 2008-2009.
With the Chinese economy far less threatened by export-led weakening than it was three and a half years ago, a hard landing is unlikely.
CommentsTo be sure, the economy faces other headwinds, especially from the policy-induced cooling of an overheated housing market.
But construction of so-called social housing for lower-income families, reinforced by recent investment announcements in key metropolitan areas such as Tianjin, Chongqing, and Changsha, as well as in Guizhou and Guangdong Provinces, should more than offset the decline.
Moreover, unlike the bank-funded initiatives of 3-4 years ago, which led to a worrisome overhang of local-government debt, the central government seems likely to play a much greater role in financing the current round of projects.
Reports of ghost cities, bridges to nowhere, and empty new airports are fueling concern among Western analysts that an unbalanced Chinese economy cannot rebound as it did in the second half of 2009.
With fixed investment nearing the unprecedented threshold of 50% of GDP, they fear that another investment-led fiscal stimulus will only hasten the inevitable China-collapse scenario.
But the pessimists’ hype overlooks one of the most important drivers of China’s modernization: the greatest urbanization story the world has ever seen.
In 2011, the urban share of the Chinese population surpassed 50% for the first time, reaching 51.3%, compared to less than 20% in 1980. Moreover, according to OECD projections, China’s already burgeoning urban population should expand by more than 300 million by 2030
– an increment almost equal to the current population of the United States. With rural-to-urban migration averaging 15 to 20 million people per year, today’s so-called ghost cities quickly become tomorrow’s thriving metropolitan areas.
HONG KONG – During three decades of favorable global economic conditions, China created an integrated global production system unprecedented…
Shanghai Pudong is the classic example of how an “empty” urban construction project in the late 1990’s quickly became a fully occupied urban center, with a population today of roughly 5.5 million.
A McKinsey study estimates that by 2025 China will have more than 220 cities with populations in excess of one million, versus 125 in 2010, and that 23 mega-cities will have a population of at least five million.
China cannot afford to wait to build its new cities. Instead, investment and construction must be aligned with the future influx of urban dwellers.
The “ghost city” critique misses this point entirely.
All of this is part of China’s grand plan.
The producer model, which worked brilliantly for 30 years, cannot take China to the promised land of prosperity. The Chinese leadership has long known this, as Premier Wen Jiabao signaled with his famous 2007 “Four ‘Uns’” critique – warning of an “unstable, unbalanced, uncoordinated, and ultimately unsustainable” economy.
Two external shocks – first from the US, and now from Europe – have transformed the Four Uns into an action plan.
Overly dependent on external demand from crisis-battered developed economies, China has adopted the pro-consumption 12th Five-Year Plan, which lays out a powerful rebalancing strategy that should drive development for decades.
The investment and construction requirements of large-scale urbanization are a key pillar of this strategy. Urban per capita income is more than triple the average in rural areas.
As long as urbanization is coupled with job creation – a strategy underscored by China’s concomitant push into services-led development – labor income and consumer purchasing power will benefit.
Contrary to the China doubters, urbanization is not phony growth. It is an essential ingredient of the “next China,” for it provides China with both cyclical and structural options.
When faced with a shortfall of demand – whether owing to an external shock or to an internal adjustment, such as the housing-market correction – China can tweak its urbanization-led investment requirements accordingly.
With a large reservoir of surplus savings and a budget deficit of less than 2% of GDP, it has the wherewithal to fund such efforts. There is also ample scope for monetary easing; unlike central banks in the West, the People’s Bank of China has plenty of ammunition in reserve.
A growth slowdown is hardly shocking for an export-led economy. But China is in much better shape than the rest of the world. A powerful rebalancing strategy offers the structural and cyclical support that will allow it to avoid a hard landing.
Starting in about 1995 China implemented a financial/economic growth model that was guaranteed to generate spectacular economic growth and large trade surplusses. And that allowed the US to run giant Current Account and Budget deficits. And allowed the US to live way above its means. But this chinese economic policy has led to distortions in both China and the US. And these distortions are now reverting back to the mean. And that “reverting back to the mean” means pain for both the US and China.
Michael Pettis has written extensively about this.
So, yes China was a MAJOR reason the world (including the US) was able to kick the (debt) can down the road. But now that road has come to an end.
China is no longer on the gold-standard & thus China & US now use fiat currency that they control.
The Chinese central bank is directly controlled by the Chinese gov & it’s largest banks (China has the 7 largest & most profitable banks in the world, all gov owned) operate under the dictates of the gov –when the gov says, “lend to spur economic growth”, they do! And vice versa.
The secret to Chinese propserity as well as US/European prosperity is that they created tons money to fund tons of businesses, enterprises, technology, innovation, etc — the Soviet Union & pre-1990s China had no banking industry to create money to fund those projects/technology/innovation/businesses.
–both US & China can kick the debt can down the road forever perpetually since they can create as much money forever perpetually as they want, without the stupidity of the deficit hawks in the US Congress.
If those junky mortgage bonds didn’t have AAA stamped on them China would not have bought them. The rating agencies were the really bad guys. And no one cares.
No, it’s not really that the Chinese bought so many AAA mortgage bonds, it’s that by devaluing the Yuan and buying dollars, they drove down US interest rates overall.
And in the same way that easy money from Germany/France promoted malinvestment in the PIGS, easy money from China promoted malinvestment here. Whether it was by buying dollar-denominated treasuries or bonds, China has been manipulating the price of the dollar in order to increase Chinese employment and production.
Interest rates were not the primary reason for the housing bubble. Many people were taking out high LTV loans they had no chance to repay if housing prices stopped going up. A 100bps or so on long term rates would have made little difference. If we simply had a regulation that forced banks to use a loan to income criterion instead of LTV for mortgage lending, then the bubble would have never happened. China and other countries accumulated savings because of the CAD, but if the CAD were eliminated those saving would simply be domestic savings instead.
I’ve heard individuals claim the Chinese engaged in a form of QE, creating a housing bubble from San Fransisco to London, but I never heard their (faulty?) reasoning. Thanks Cullen.
Cullen,
The article is a joke and the author should be ashamed. China didn’t hold any securitized debt products, only agency debt in the form of Fannie and Freddie mortgage securities. What a shill.
Maybe the word “caused” is too strong and “significantly contributed’ is more apt. I agree with Cullen, that given the size of the GFC, there is more than enough blame to go around.
Determining the cause of global imbalances is tricky. If I look at US real Personal Consumption Expenditures what I don’t see is a big increase in the rate of growth from 1997 to now. So we cannot explain the CAD with a surge in consumption. What we do see is consumption well below trend in China and other East Asian countries. This indicates to me that the under-consumers (savers) where more likely the cause of these imbalances. It seems like the issue of who gave out what loan at what LTV, allowed these imbalances to progress and grow, but they are far from necessary conditions for the scale of the bubble/imbalance that we have.
China is surely delaying the rebalancing process now. They need to increase the consumption share of their economy, but seem unwilling or unable to do so. The Fed’s only choice is to accommodate with little effect or force a rebalancing by reducing aggregate demand in the US through higher real rates. That is true now as well as then. The creditor nation holds the key to rebalancing (see Keynes’ Bancor).
Sorry, the financial industry is mostly responsible.
The old saying, “mutual funds are sold, not bought”, has been true for 40 years. Same with insurance, etc. My friends sister was a mortgage broker in Boston during the boom years. Mortgages are sold as well. The demand tends to be general (I need to invest, or I need a house). But, *specific* funds and mortgages are sold.
PS I don’t buy the China savings glut as well. They are just a currency manipulator. OPEC is sitting on a pile of Eurodollars for 40 years, why didn’t we have a financial crisis in 19xx?
Ha Ha, actually I contradicted my own statement since a lot of people point to the Latin American debt crisis as recycled OPEC money through US banks.
Cullen,
The author’s name is actually Heleen (two e’s) Mees. I notice that mistake on several different websites.
My apologies and thanks. I’ve fixed the error.
thanks cullen and others. this is one of the best pragcap
threads that I’ve read in a while. keep up the great work.
I searched the through the paper. There is no mention of “securitization” or “CDO’ in the entire apper. Given that this is her doctoral thesis, how is that possible? Her definition of “cause” seems a bit flimsy.
My view is that the financial crisis had multiple causes, lots of contribution factors. Securitization fraud was probably the leading contributing factor, followed by origination fraud. Those two combined probably explain more than 50% of the housing bubble/financial crisis. If the origination fraud had been fully disclosed to bond buyers, or if the originating banks had to keep the mortgages on their books, then the bubble wouldn’t have gotten nearly as big. Remember there were trillions of these dubious mortgage-backed securities sold.
China’s high savings rate is just a small contributing factor.
China’s high savings rate is just a small contributing factor.
Would there be a “savings glut” if China did not peg its currency to the US dollar at an undervalued rate? I think the answer is no.
If RMB can freely float and if China started with an undervalued currency, then subsequent/consequent trade surplus would have caused the RMB to appreciate, and all the subsequent economic variables in China and US would have re-balanced much more smoothly.
By pegging its currency, China’s international trade never reall “settled” — PBOC simply expanded its domestic money supply on the right hand side of the balance sheet and recycled the accumulated dollars on the left handside of the balance sheet back to US — in the process making US seemingly have no “cost” to running a huge trade deficit. But the attendant huge capital flows swishing and swashing around the globe have a huge impact on bubble formation in a variety of countries and markets.
So I agree with Heleen’s thesis.
And Ben Bernenke showed a woeful and tragic lack of understanding of how harmful currency pegging is by misreading the huge capital flows from China as a “savings glut.”
Exactly. China provided the fuel for the bubbles, and it was local conditions in the USA, UK, IE, Spain, etc… that made it possible for that money to inflate housing bubbles. The recycled dollars from the PRC simply flowed to wherever it could be used to bid up asset prices.
Of course the secular trend of US long term interest rates steadily dropping from 1981 to present probably had something to do with bubble formation as well. Could you say the reverse – that cash from Chinese (and other countries) mercantilism had something to do with the 30 year decline in US interest rates?
>>>>my research shows that long-term interest rates are the most important factor driving housing demand (Chapter 2).”<<<<
I wonder how she explains the collapse in demand over the last five years in spite of historically low long-term rates.
The China factor disappeared, of course. Of course not.
It’s because banks could no longer securitize their loans and they were so frightened by the crash that they stopped originating loans, too.
Its all the Chinese fault. They save too much, and work too hard. Their Chinese Yuan is pegged with our dollar and coming to US to ruin our lives.
By the way, did you see any Chinese Yuan floating around the corner on your street in the massage parlor?
The study was coming out of renowned academic centers, but that doesn’t stop it from being totally and utterly stupid. Capital can flow, and they always do, but people cannot. Money went to China in the past two decades, so did jobs. Its not Chinese who took the money to China. What happened? those US dollars will have to come back, since they don’t accept that for their pound of chicken in China. Those money come back in the treasury market and wall street. It’s Wall street bankers who push the money out in the real estate market.
Who will still remember what happened. Its just remote memory by now. Blame, scare, and shift the issue to others.
lol, pretty much!
I think Hank Paulson is the smartest man in the entire history of mankind. he managed to save all the bankers with everyone’s money, and directed blames to everyone except bankers.
Yep, the article/writer is lying & preying on the ignorance of those who never lived in nor understand China.
1) the Chinese gov STRICTLY CONTROLS THE FLOW OF CAPITAL OUT OF THE COUNTRY & PREVENTS & MAKES IT ILLEGAL for Chinese to INVEST IN NON-CHINESE markets/stock exchanges except with explicit prior gov approval.
Capital/Money is NOT ALLOWED TO FLOW OUT OF CHINA by private Chinese consumers/businesses/investors except with specific gov approval akin to getting a visa.
http://www.china-briefing.com/news/2012/08/17/chinese-currency-controls-and-the-liberalization-of-the-renminbi.html
2) As I wrote earlier, the Chinese HAVE HIGH SAVINGS RATES BECAUSE MOST THINGS (80%-90%) are BOUGHT IN FULL, IN CASH. It is the opposite of the US where 80% of US houses are bought with mortgages (and only half are paid off) & over 50% of US new car sales are bought with autoloans.
Like most of Russia/Eastern Europe/pre-1990 China, China had no banking industry that created money to fund businesses, innovation, technology, consumer demand (which is their economies stagnated & had slow growth, slow innovation, slow technology since not enough money creation to fund those enterprises! This is a warning for all those who want to go back to a gold standard or 1:1 fractional reserve system).
It has been slow to catch on in the consumer marketplace
but most Chinese real estate/construction/manufacturing businesses use gov money creation from gov-owned banks (about $1-2 TRILLION per year, huge chunk of their economy) to fund their startup & operating costs.
This is similar to Cullen’s good idea of gov monetary fund that funds businesses/enterprises/technolgy/innovation put on steroids of $1-2 trillion per year (huge chunk of their GDP).
More so, it’s on a grander scale than FDR’s Small Business Admin which used to make direct loans to small businesses & farmers (it became so successful that the banks lobbied to have it shut down & loan creation transferred to the banks instead for more profits for the banks instead of competition w/ lower interest rates ala student loans)
The private market has something smaller similar to Kickstarter.com
In any event, there’s tons of great business ideas & products/innnovation/technology.. they just need funding to do (just like gov funded/invented antibiotics, internet, genetic engineering, radar, GPS)… just keep in mind that the standard rate for private business/product failures in the private sector is about 80%
As in evolution where animals create lots of offspring(products) with hundreds of eggs/young –only a few minority survive successfully— competition is harsh & there will always be more dead/killed than survivors.
Mrs. Heleen Mees also thinks that China’s giant savings were the root cause for the falling interest rates in Spain. Complete garbage.
Is this supposed to be a joke? I was about rolling on the floor laughing at the thought that China’s savings was the problem. Steve Keen’s private debt analysis is far far more convincing…
Not everything is as simple as cause and effect. Besides, even if that was true, every cause has a preceding cause anyways. Then it all originates back to Adam and Eve or the Big Bang, or whatever else may have caused this dimensional plane of existance and whatever caused that and so on. Yes, certain things like soverign debt markets goods services, costs, supply, demand, etc play a role… But I don’t think blaming others is going to help get us out of the problem. People that point fingers are looking for an excuse or giving one to others towards not fixing their own situation. It’s why life-time criminals always blame and say “others made me do it”.
But there are complexities. Synergy where two things working together produces a different output than the sum of those independently.