Page 23 - September October 2018 Disruption Report Flip Book

MONETARY POLICY
SEJPATN.U-AORCYT.20210818
“It is the end of an era, and, in typical fashion, Merkel is hoping to end it on her own terms,” wrote Geopolitical Futures. “It’s unclear whether her announcement will be enough for her opponents to let her do so uncontested. What is clear is that Germany is tired of its political leaders but uncertain of who should replace them. This kind of political uncertainty might not matter in most countries, but in Germany, the beating heart of Europe, it has profound international implications. (The Economist, 10/29/18; Geopolitical Futures, 10/29/18)
China’s dire financial straits
China’s hidden $6 trillion debt “iceberg” poses “titanic risk”
CHINA
China’s dire financial straits
“The Chinese are in the worst financial situation they’ve been in in the last 17 years,” said hedge fund manager Kyle Bass. “They operate a domestic economy where they control the printing press, they control the press narrative, they control the price level and they control their people... They can change a lot of things domestically, but the arbiter of the Chinese plan is their exchange rate with the rest of the world. China Inc.’s working capital account is now going south because they’re running what we believe is a structural and more permanent deficit on the current account. So, their working capital—their dollar balance... is headed south.”
“The U.S. is in a very interesting negotiating position today. We are in our strongest negotiating position we’ve ever had against China to kind of level the playing field a little bit more with their subversion of WTO rules, their intellectual property theft—basically everything they’ve done to take advantage of the U.S. over the past 15, 17 years.”
“...They’ve recklessly built their credit system. Their banking system is now four times their GDP. They’ve got between $40 trillion and $50 trillion—no one knows—worth of credit in a system with only a couple of equity. China is running the largest financial experiment the world has ever seen. And the economic tides have turned negative for them.”
“...Whether you look at the Defense Department or U.S. Trade reps’ reports, the reports are [the Chinese] steal [between] $200 billion to $300 billion a year in intellectual property from the U.S. So, we’ve exported 5 million jobs since China ascended the WTO in 2001 with the hopes that they would one day open up their market to us. They haven’t. They haven’t lived up to their promises to us while they’ve been stealing intellectual property from us every year. I don’t know if the hollowing
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