{"id":12306,"date":"2015-09-01T20:19:27","date_gmt":"2015-09-02T00:19:27","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=12306"},"modified":"2015-09-01T20:19:27","modified_gmt":"2015-09-02T00:19:27","slug":"if-we-dont-understand-both-sides-of-chinas-balance-sheet-we-understand-neither-michael-pettis","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2015\/09\/01\/if-we-dont-understand-both-sides-of-chinas-balance-sheet-we-understand-neither-michael-pettis\/","title":{"rendered":"If we don\u2019t understand both sides of China\u2019s balance sheet, we understand neither | Michael Pettis"},"content":{"rendered":"

From Michael Pettis’ OpEd in the Wall St Journal:<\/p>\n

History suggests that developing countries that have experienced growth \u201cmiracles\u201d tend to develop risky financial systems and unstable national balance sheets. The longer the miracle, the greater the tendency. That\u2019s because in periods of rapid growth, riskier institutions do well. Soon balance sheets across the economy incorporate similar types of risk.<\/p>\n

….Over time, this means the entire financial system is built around the same set of optimistic expectations. But when growth slows, balance sheets that did well during expansionary phases will now systematically fall short of expectations, and their disappointing performance will further reinforce the economic deceleration. This is when it suddenly becomes costlier to refinance the gap, and the practice of mismatching assets and liabilities causes debt, not profits, to rise.<\/p><\/blockquote>\n

Read more at If we don\u2019t understand both sides of China\u2019s balance sheet, we understand neither | Michael Pettis’ CHINA FINANCIAL MARKETS<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

From Michael Pettis’ OpEd in the Wall St Journal: History suggests that developing countries that have experienced growth \u201cmiracles\u201d tend to develop risky financial systems and unstable national balance sheets. The longer the miracle, the greater the tendency. That\u2019s because in periods of rapid growth, riskier institutions do well. Soon balance sheets across the economy … <\/p>\n

Continue reading “If we don\u2019t understand both sides of China\u2019s balance sheet, we understand neither | Michael Pettis”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[41,45],"tags":[663,956,1624,2877],"class_list":["post-12306","post","type-post","status-publish","format-standard","hentry","category-china-hk","category-debt-levels","tag-china","tag-debt","tag-growth","tag-rebalancing"],"yoast_head":"\nIf we don\u2019t understand both sides of China\u2019s balance sheet, we understand neither | Michael Pettis - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If we don\u2019t understand both sides of China\u2019s balance sheet, we understand neither | Michael Pettis - the patient investor\" \/>\n<meta property=\"og:description\" content=\"From Michael Pettis’ OpEd in the Wall St Journal: History suggests that developing countries that have experienced growth \u201cmiracles\u201d tend to develop risky financial systems and unstable national balance sheets. The longer the miracle, the greater the tendency. That\u2019s because in periods of rapid growth, riskier institutions do well. 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There is no way Beijing can address the debt without a sharp drop in GDP growth, but as unwilling as Beijing may be to see much lower growth, it doesn\u2019t have any other option. It must\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8980,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/01\/19\/shanghai-selling-pressure\/","url_meta":{"origin":12306,"position":1},"title":"Shanghai selling pressure","author":"ColinTwiggs","date":"January 19, 2014","format":false,"excerpt":"A sharp fall below zero on 13-week Twiggs Money Flow warns of selling pressure on China's Shanghai Composite Index. Breach of support at 1950 is likely and would offer a target of 1800*. * Target calculation: 1950 - ( 2100 - 1950 ) = 1800 Michael Pettis summarizes the four\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"Shanghai Composite Index","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-01-20-ssec.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-01-20-ssec.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-01-20-ssec.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":36826,"url":"https:\/\/thepatientinvestor.com\/index.php\/2022\/08\/30\/chinas-real-estate-dilemma\/","url_meta":{"origin":12306,"position":2},"title":"China’s real estate dilemma","author":"Colin Twiggs","date":"August 30, 2022","format":false,"excerpt":"China's three decades of unprecedented growth has led to an accumulation of imbalances in the real estate sector that now threaten financial stability. As Hyman Minsky explained, extended periods of stability lead to instability. Participants take on increasing amounts of risk, assuming that stability will continue, making the economy increasingly\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9311,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/02\/26\/china-faces-challenges\/","url_meta":{"origin":12306,"position":3},"title":"China faces challenges","author":"ColinTwiggs","date":"February 26, 2014","format":false,"excerpt":"I have kept Michael Pettis January summary of the four challenges facing China: China is over-reliant on credit to generate growth; Attempts to boost consumption will reverse the long-standing subsidy of new investment; Attempts to resolve excess capacity also slow growth; and Unrecognized bad debt on bank balance sheets means\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"Shanghai Composite Index","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-02-27-ssec.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-02-27-ssec.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-02-27-ssec.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":27410,"url":"https:\/\/thepatientinvestor.com\/index.php\/2021\/08\/16\/michael-pettis-china-faces-an-impossible-challenge\/","url_meta":{"origin":12306,"position":4},"title":"Michael Pettis: China faces an impossible challenge","author":"Colin Twiggs","date":"August 16, 2021","format":false,"excerpt":"When it comes to the challenges facing the Chinese economy, Michael Pettis' insights are in a class of their own: \"The Chinese growth model has relied very heavily on investment which in turn has relied very heavily on debt. As China began to over-invest in nonproductive projects, as it has\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":40639,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/01\/30\/michael-pettis-the-china-shock-is-coming\/","url_meta":{"origin":12306,"position":5},"title":"Michael Pettis: The China Shock is Coming","author":"Colin Twiggs","date":"January 30, 2023","format":false,"excerpt":"https:\/\/youtu.be\/QcdPMOMS7N8 Michael Pettis is a professor of finance at Peking University in Beijing and one of the foremost Western experts on China, having lived there for almost two decades. He explains the Chinese growth model, why it no longer works, and the hard choices ahead. China's Growth Model China's growth\u2026","rel":"","context":"In "China & HK"","block_context":{"text":"China & HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"China Non-Financial Credit\/GDP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/12306","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=12306"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/12306\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=12306"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=12306"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=12306"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}