Jim Chanos,Founder and President of Kynikos Associates,describes the situation in Greece as being a mess.Almost no matter what Greece does,there's gonna be a lot of pain.Greece is between a rock and a hard place.The major holders of this sovereign debt are the European banks-and even the U.S. through the International Monetary Fund.It's the same bailout problem.No one in elected politics seems to live within their means.We can't bail ourselves out.
A property bubble is proportionally a bigger problem for the Chinese economy than it was for ours.Something is changing in China,but will the authorities have the fortitude to stay with it?This is a centrally planned economy.The history of such economies is not a good one.There are bad investments written off and outside speculators getting burned.
In capitalism,you generally have a market and prices to ensure efficiency;but there are agency risks in a market economy:managers and bureaucrats.The reality is,the markets are gonna end up wherever they're gonna go.We've been embarked on "extend and pretend" with regard to bad debts.We have an unwillingness to recognize losses.This is not really capitalism,but a market economy where losses get socialized,the American intellectual and hedge fund magnate Jim Chanos observed.
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