And in the past he’s called out China bears like Jim Chanos.
In today’s column he reveals the one “Big Short” he recommends: Short Chinese totalitarianism, and go long liberty on the grounds that for the country to get wealthier, it needs to give its people more freedom.
OK, fine. But because it’s Friedman he has to write something ludicrous, and in this case it’s the first paragraph:
There has been a lot of buzz lately about investors “shorting” China’s overheated real estate market, basically betting that it will go down. I say that’s peanuts. There is a much more interesting shorting opportunity in China today. It is truly “The Big Short,” and that is betting that China can’t continue to grow at this pace indefinitely by only permitting its people to have economic liberty without political liberty. I’m sure Goldman Sachs would write you a credit default swap on that, and the Chinese Communist Party would take the other side. Are you game? It seems that the Nobel Prize Committee is. I’d be, too.
OK… with regards to the bolded line: what on earth is he talking about?
In this scenario, is Goldman agreeing with Friedman on his “Big Short” because if it is, why is it writing a credit default swap? If Goldman is going short something, shouldn’t it be buying a credit default swap? And if Goldman is writing YOU the credit default swap, how is the communist party taking the other side.
It just doesn’t make sense. Now sure, you could dismiss this with, well, Friedman is just trying to sound dramatic here, and you know what he’s talking about. Except that actually this is really problematic because when you hear “Goldman” and “Credit Default Swap” in the same line, you immediately think of something nefarious (at least that’s how the average NYT-reader would think).
Or maybe we’re missing something. Anyone help?
(Via Wall Street Sheet)