China debt and some other things

SCMP:

The head of the International Monetary Fund said on Wednesday that global debt, including that of China, had soared to 220 per cent of global output, a staggering level that did not bode well for member economies. The Bank of International Settlements, which serves as a central bank to the world’s central banks, last month included China and Hong Kong on a list of economies whose debt-to-GDP ratios had raised “red flags”.

The IMF, which employs different numbers to measure indebtedness, was urging its members to pare their debt to serviceable levels to sustain them through the next economic downturn, IMF Managing Director Christine Lagarde said in an interview with the South China Morning Post after giving a speech at the University of Hong Kong. “There’s a saying in French that we should fix the roof while the sun is shining,” she said.

She said that the world, including Beijing, needed to tackle its debt problems, adding that 40% of the global debt added since 2007 had come from China.

In the world economy, the debt problem was casting a shadow over future growth prospects, she said. “This is a potential risk that is looming on the horizon of the otherwise quite sunny sky of the global economy,” she said.

From 10 years ago re Lehman Brothers, Lagarde: “dubbed Mr Paulson’s decision to let the bank go under ‘horrendous’ as it triggered panic in markets and banks to the brink of a 1929-style financial meltdown.” It should be noted that she was quite correct in her judgment.

From there we’ll move on. First stop is humorous, with 86 year old Harvard Professor Harvey Mansfield saying that the Democratic Party is a coalition of PhDs and morons. Sharp as a tack at 86. Next, we’ll move on to common sense itself being the illegal thing these days, in VDH’s discussion of immigration. Finally, we’ll take note of an odd Gordon Chang piece about NK starting WWIII; don’t know what to make of that one.

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