Via Zero Hedge
Zero Hedge interpretation
Zero Hedge interpretation
Yellen then highlights some of the critical flaws in the economic model and makes a full circle to what Hugh Hendry was discussing yesterday about substantial Chinese overcapacity (and why he took some not so friendly jabs at Jim O'Neill):
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Bottom line - China is screwed, and every false move performed by the Fed, whose actions by implication reflect in China's broader monetary policy, will be amplified and make the bubble increasingly worse, as the right move here, which is for China to cut down on its stimulus and to focus on the growth of its own economy, will likely not occur before it is far too late. One should just look to the US to see how eager politicians are to step away from a tenuous and ultimately destructive status quo and proceed to do the right things needed to fix a broken system, which however would result in significant popular revolt and most likely a near-certain loss in any future political elections/referendum. This is precisely why the economic system, from a physical system perspective, is teetering on the balance and is about to break.
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Bottom line - China is screwed, and every false move performed by the Fed, whose actions by implication reflect in China's broader monetary policy, will be amplified and make the bubble increasingly worse, as the right move here, which is for China to cut down on its stimulus and to focus on the growth of its own economy, will likely not occur before it is far too late. One should just look to the US to see how eager politicians are to step away from a tenuous and ultimately destructive status quo and proceed to do the right things needed to fix a broken system, which however would result in significant popular revolt and most likely a near-certain loss in any future political elections/referendum. This is precisely why the economic system, from a physical system perspective, is teetering on the balance and is about to break.
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