China: Bank Shares Priced as Options

Tom Holland had an interesting piece in the South China Morning Post three weeks ago in which he discusses the low valuations of Chinese banks. About a decade ago, if I remember correctly, Chinese banks were trading between three and four times book.

Bottom Line: China Rebalancing is about Handling Bad Debt

I got a lot of feedback from my January 5 blog entry because of my argument that the implementation of the reforms proposed in the Third Plenum all but guarantees that growth rates in China will slow down.

China: Will Reforms Speed Growth?

Although still vague on the specifics, China’s Third Plenum November partially clarified the nature of the reforms that Beijing is proposing for China over the coming year. Of course very little was said in any of the related releases about the difficulties,

Monetary Policy Under Financial Repression

by Michael Pettis, China Financial Markets Following Paul Krugman’s lead I guess I can refer to this post as being “wonkish”.  Much of it is based on my recent book  Avoiding the Fall (Carnegie Endowment, September 2013).

When are Markets “Rational”?

Last month’s award of the Nobel Price in economics set off a great deal of chortling because one of the three recipients, Eugene Fama, received the award for saying that markets are efficient at capital allocation and another, Robert Schiller, received the award for saying they are not.