Amid ‘Lehman Moment’ Debate, Evergrande Faces Ponzi Innuendo

Amid ‘Lehman Moment’ Debate, Evergrande Faces Ponzi Innuendo

Equities looked to stabilize Tuesday after a somewhat harrowing day on Wall Street, where stocks kicked off a crucial week with steep losses tied to Evergrande concerns and exacerbated by mechanical selling flows. Opinions vary on how the end game will unfold for Evergrande. Although the consensus is that this isn't a "Lehman moment," that's a pretty high bar -- or a pretty low bar, depending on how you want to look at it. Irrespective of projected recoveries (or not) and related losses, there
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7 thoughts on “Amid ‘Lehman Moment’ Debate, Evergrande Faces Ponzi Innuendo

    1. Takeaway: Abundant cheap credit fuels speculative behavior and encourages ostensibly rational parties to act irrationally, leading to bubble valuations in various asset classes. Attempts to regulate irrational behavior inevitably lead to the bursting of those bubbles, resulting in economic disaster (deep recession, or worse). Having absorbed that lesson, regulatory authorities over the last decade have studiously avoided doing their jobs, preferring, as the saying goes, to kick the can down the road. The Carnegie piece argues that the CCP, despite its declared intentions, has no choice but to follow suit, and that it and CBs in the US, UK, and Eurozone will continue to kick the can down the road as long as they can. Again, the alternative is economic disaster.

        1. If the outlook is some version of stagflation – slower growth and higher inflation relative to pre-pandemic, let’s say for sake of argument the US is 0% real GDP and 3% inflation – what do we like for investment approach? Equities, fixed income, “real assets”, other?

  1. Why is there such confidence in China’s government to pull just the right puppet strings. The road to hell is paved with good intentions. There is a lot of hubris that the govt can get this right. That may turned out to be true. But has they say “things happen.”

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