Does China need a recession?

Crispin Odey

Odey Asset Management

It is getting interesting. Attention has been focused since August 11 on the unsustainable nature of the Chinese problem. What China needs, given the over-investment in non-productive assets estimated at $1.7 trillion a year for several years, is a deep recession, the writing off of several trillion dollars of debt and the refinancing of the banking system. You cannot do all that without interest rates at almost zero and a weak exchange rate. Equally, the United States has a different problem. Since 2014, consumer lending in all its forms – credit card, auto loans, new housing – has been picking up and is now averaging some 9% growth in real terms. Given these loans are typically 2x GNP, it means some 18% more dollars are in the economy and makes estimates of 4% nominal GNP growth look unlikely. (VIEW LINK)


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Founder | Chief Investment Officer
Odey Asset Management

Crispin is one of Europe's most respected investors having delivered exceptional returns for his clients. Since he established Odey Asset Management in 1991, his flagship long-short strategy has compounded at almost 14% per annum net of all fees...

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