The Next Global Economic Recession Will Be Made-In-China
In the past, global economic recessions were Made-In-The-USA. The next one will be Made-In-China. That is something I am willing to bet on. The reason: China's credit growth, including off-balance-sheet credit, and shadow banking has grown way out of proportion compared with the growth of its real economy. Ruchir Sharma, author of 2012 non-fiction bestseller "Breakout Nations"and now Head of Global Macro at Morgan Stanley Investment Manager says that every time a nation goes on a credit binge in excess of its real economic growth, an economic slowdown inevitably follows. He cites historical instances ranging from the Tulip Mania and South Seas Bubble of the 19th century, to the 1994 Asian Financial crisis, and Japan's decades-long recession as well as the 2008 US sub-prime mortgage crisis. . What is "excessive" to him? He say's if credit as a proportion of GDP grows 14 % over 5-years, that is one standard deviation above the...