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The China Shock Is Coming With Michael Pettis

Lead-Lag Live

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Is a Crisis a Good Thing?

China's balance sheets look horribly mismatch. We should have a crisis tomorrow, but they're not because the government is able to come in and restructure liabilities at will. The advantage of a crisis is that it's a very rapid resolution of misallocated capital or bad debt structures. In the short term, it's politically and socially very, very painful.

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