First I want
to express admiration for a summary broadcast on 7 January on Charlie Rose http://www.charlierose.com/ where Gillian Tett (FT) and Henry McVey (KKR)
provided a fast paced and comprehensive (with some humor) overview of the
current situation. They were diplomatically reserved in their views. I am not.
Chinese
decision makers do what they do very well – focus enormous scale with blunt and
clear results. The management of the industrial (probably bubbled) boom was
both brilliant and very successful, but that era ended quite some time
ago. The shifting of a billion people
from a totalitarian industrial regime to a mixed market economy will have many
speed bumps along the way. These speed
bumps are compounding.
The global
economy faces further and complicit volatility simultaneously. The Chinese are ill prepared to deal with
extreme volatility across currencies, commodities, economic growth, and above
all trade. The markets in Asia ex Japan and Hong Kong are thin, leading to
further volatility. The old guard in PRD
still believes they should ‘do something’.
The good news is that the governor of the PBOC, Zhou, is brilliant and
reliable. Personally I believe that in
the long term the macro environment will be favorable. Short term investment is a crap shoot.
Listen to
the shouting bloviators with a deaf ear --
these are long term phenomena working their way through the global
economy. Perhaps some intervention in
the political arena can help, but I doubt it.
