Authord by Alastair Crooke via The Automatic Earth blog,
Robert Kagan first called attention to the fact that America would need to awake from its ‘dream’ a decade ago in End of Dreams: The Return of History, and would have to manage the rise of ‘other’ powers, (some greater than others), with adroitness, if it were to avoid a bad road-crash as emerging competitors clashed with the waning dominant power.
Have you heard the one about the priest, the rabbi and China's deleveraging? We forget how it goes, but it's pretty damn funny, especially the last part after a Reuters report that following China's repeated vows by Beijing it would reduce the country's unprecedented sovereign, municipal, corporate and household leverage, China's debt is not only rising, but growing at the fastest pace in four years.
China announced it is slashing import tariffs on 187 consumer products starting next month.
Zhou Xiaochuan’s long reign as PBoC Governor is drawing to a close. He signaled his impending retirement last month and will be seventy years old In January 2018. Zhou has headed up China’s central bank from the early days of China’s “growth miracle” in 2002 and successfully – thanks to massive credit creation - steered China’s economy through the 2008 crisis.
Since then, he’s kept China’s horrendous credit bubble on the rails, while warning of the risk of a “Minsky moment” at the recent Party Congress.
Following the market lockdown during October’s Party Congress, many commentators were disturbed by the continued rise in Chinese government bond yields as we returned to “business as usual”, with the 10-year rising to 4%. At the beginning of this month, we discussed the sell-off (see “China: Shadow Bank Inflows Are Critical To Sustain The Ponzi…But They’re Falling”) and noted a useful insight from the Wall Street Journal.