Staying on Track
The past month in financial-land was dominated by two combustible fears: that Greece would default on its debts and plunge the euro zone into chaos; and that China would hit the brakes and bring much of global economic activity down with it.
The Greek crisis has subsided for now, but China fears remain, especially as recent data from the Chinese government has shown a moderate decline in the rate of expansion. These fears are overblown. At every point in the past decade, there have been warnings of an imminent China slowdown, of an im- pending hard or soft landing that will leave many people holding worthless assets, making the mandarins in Beijing tremble and the population of China angry. Yet the idea that there might be neither a hard nor soft landing of the Chinese economy but instead no landing, that China will maintain an elevated level of growth and activity that will continue to bolster the global economic system — that possibility is dismissed as undue bullishness, excessive optimism or outright starry-eyed naiveté. Read more…