8 Reasons Why China Resembles The USA Prior To The Great Depression


I wanted to pass along some excellent thoughts from Mark Lapolla of Knight Capital.  He was in the latest [email protected] and had some excellent thoughts on the overall economic environment.

He touches on a variety of topics including some MMT, but the most interesting portion was his belief that China now resembles pre-depression USA or 1990′s Japan.

Lapolla is astounded at how the world has come to rely so heavily on a “repressive, communist regime employing command and control economic management while violating trade protections and human rights everywhere”.

Attached are the 8 reasons why Lapolla sees similarities between China and USA prior to the Great Depression:

1) Massive disparity of wealth, income and education

2)  Rapid industrialisation and displacement of labour

3)  Opaque and misleading economic and financial data

4)  Massive build-up of leverage across the “rising class”

5)  Bubbles in both residential real estate and fixed asset/infrastructure development

6)  Accelerating and uncontrolled growth in disintermediated credit

7)  Expected transference of economic growth to domestic demand.

8)  An accelerating price/wage spiral

I highly recommend reading the piece in its entirety.

This post was published at Pragmatic Capitalism.