China’s Bad Timing, Debts
China sure picked the wrong time to have a massive debt problem.
The most-read story on the Bloomberg Terminal today is about how two big Chinese companies apparently failed to make key debt payments this month, as bond defaults and corporate failures surge across the country. This is happening while trade negotiators are in Beijing trying to hammer out a deal to avert big U.S. tariffs on Chinese goods starting next month. J. Kyle Bass and Daniel Babich of Hayman Capital Management – the hedge fund that made big, correct bets on subprime mortgages ahead of the crisis – write this is a golden opportunity for President Donald Trump to wring concessions from China.
The trick, though, is for Trump to get the right concessions; if China simply agrees to buy more American stuff, then that might give Trump a short-term “win” and calm the stock market, but it won’t make a lasting difference, Kyle and Daniel write. What’s really needed are substantive changes in how China does business, particularly its preferential treatment of its own companies and hostility toward foreigners, they write. Does Trump realize this?
In an effort to bolster its economy, China has opened the door wider to foreign investment. But this is a sign of desperation and won’t help, writes Christopher Balding. Capital is fleeing China because it’s a structurally dicey place to invest, not because of any artificial caps (which aren’t being met anyway), he writes. China needs real market reforms before it can attract foreign capital again, Chris writes.
Warren Pays the Price of Progress
Not long ago, it wasn’t all that odd for white people to claim Native American ancestry; Bill Clinton, for example, claimed to be one-eighth Cherokee, and nobody batted an eye, notes Francis Wilkinson. It was a form of white privilege we now understand to actually be cultural appropriation. That is progress, Frank writes, but this new standard might also cost the Democrats one of their most talented politicians in Elizabeth Warren.
Telltale Charts
Emirates tied its fate to the ginormous A380, a plane whose time seems to have passed, writes David Fickling.
Oil supply seems to be tightening dramatically, but the price effect could be swamped by sinking demand, writes Julian Lee.
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