Michael Pettis – Concerned Capital flowing out of China [Interview]

Published on Apr 5, 2016
Michael Pettis Blog http://blog.mpettis.com/
Huge debt adjustment impending in China
Debt problems lead to slow growth
Under fiat currency, debt gets out of control


RMB has strengthened

3:05conversation that added the flavor and spice to that beer Michael Pettis the
3:09conversation continues what I’m curious about is what is market volatility
3:15telling us here in 2016 more than the actual price levels it depends on which
3:21market volatility you’re talking about
3:23market go to the within each other is indeed domestic stock markets reflects
3:29the start the Chinese markets are primarily specular the males have been
3:34really happen in 2015
3:38really sort of the summer of 2014 elizalde Ali is that not only is it
3:43primarily a speculative market for all top of it has been a real convergence of
3:48speculative strategies news basically one strategy and that is if you would
3:53ask most people going to be a rally why they were by Chinese stocks didn’t they
3:59know that the economy was slowing and profitability is coming down their
4:02attorney yes yes we know that but the government is more or less guaranteed
4:07that the stock markets are going to go up but we know the best can’t go on
4:10forever but we’re going to write this incredible and so what’s happened is the
4:17credibility of that guarantee weaken as you would expect to get the complete
4:21collapse the market until the government is able to get it going again but I
4:25really don’t think you can expect any sustained rally in the market because
4:30it’s part 2 jittery and 42 focused on any sort of government signaling in kind
4:35of an intense in the external markets are you think what’s really happening is
4:41not so much that foreigners are correctly interpreting the data coming
4:46out of China because the chinese adjustment is going to be much less
4:51painful for the world that many people expect this to terms with who was
4:55speaking about of course metal producers that have been very badly
4:59will compete to be hurt badly but in general the united states are going to
5:04be but not only affected by the Chinese are just as long as it’s not chaotic and
5:08disruptive but what’s happening there is that there’s sort of this rapid catch up
5:13to the kind of things that you live with discussing for many years it’s taking
5:17awhile I think for people to recognize just how difficult the Chinese
5:21adjustment was going to be and I would certainly lost your so pretty much
5:25everyone is sort of caught up towards china really is there is this issue
5:31massive indebtedness in China and I wonder if it’s possible to avoid the
5:37negative implications of over indebtedness including an increase in
5:40non-performing loans when the financial sector in China is largely guaranteed by
5:47the central bank
5:48well there’s no way to get around it have not been able to find any country
5:53in which debt levels to become high you know that they’ve closed the level of
5:56concern in China and in which the country was ultimately able to grow its
6:01where the historical precedent suggests that China’s not going to grow
6:07significantly it’s certainly not going to grow its way out of its debt until I
6:11get some kind of partial forgiveness on the debt whether this explicit or
6:15implicit and explicit way of course the defaulting to restructure the debt with
6:19a haircut that’s probably not going to happen it’s much more likely is the debt
6:24servicing costs are going to be allocated somehow the other through the
6:28state sector and that it’s mostly the provincial state sector because it’s
6:32really the only group that’s able to absorb the cost of the debt without
6:37significantly negative economic implications bill normally when you have
6:42a problem with the household sector because the school sectors politically
6:47not strong enough to protect themselves and I’m not just talking about china
6:50this would happen USA and Europe and everywhere else but in China that’s how
6:55they sold the last about ten fifteen years ago and during that period
7:01consumption as a share of GDP which started already quite low folder
7:06dramatically the most makes the house will start to clean up dead you can’t
7:11really ask for a surge in house
7:13salt consumption to drive growth so they’re not going to be able to
7:16allocated to the household sector and that pretty much means that they don’t
7:20have to allocated to the state sector that’s politically really tough to do
7:24when we were promised
7:26Beijing would make re-balancing a priority which people forget was all the
7:31way back in 2007 and Premier Wen Jiabao the imbalance was worse than it was
7:36during the period that the phrase vested interests became widely used in the
7:41Chinese cross because it was as they attempted to rebalance but they first
7:46realize the tremendous opposition but would emerge from the provincial the
7:50group referred to here as the US interests so that’s really the issue
7:55about the debt it’s going to be allocated to the provincial elites to
8:00the provincial states are to one or the other but when that happens very hard to
8:04say because it’s politically very difficult to do so what can we do know
8:08is that the longer it takes to do so the more costly the overall just work is
8:12going to be for charter in a recent article in Project Syndicate mention hey
8:18describes the speed and energy on display in the anticorruption
8:21campaigning for the current administration is this president disease
8:26consolidating power enough to sort of overcome the opposition of vested
8:30interests and thus be able to move forward towards that assignment of
8:36losses that you’re describing what he hopes to once again this work presents a
8:40pretty clear the only countries that are able to implement these types of reforms
8:44successfully tend either to be democracy for barry centralized to talk about
8:49these very much like China the 1980 so season centralized power to that point
8:56it’s simply not going to be possible to implement the necessary reforms or is he
9:01there yet I don’t really know and people like we are not going to others are
9:06really limited number of people who have a really good sense of that and all we
9:09can really do is after the fact whether or not the reforms will have said for a
9:15while though classroom particular that this was really the pier 2016 for me was
9:20the key in which we would see the real credible steps implemented by Beijing
9:26process if we don’t see them 2016 I get a lot more nervous would you say that a
9:32signing those losses is easier in an economy like China’s where there’s not
9:37the same democratically driven feedback loop as we have in the USA Europe well
9:42tell you what the historical precedent suggests somebody democracy come to be
9:47pretty good at adjusting in a highly centralized autocracies tend to be
9:51pretty good adjusting the intuition by that’s what makes sense but we do know
9:56is that countries that are sort of in the middle of always fail to implement
10:00these types of jobs or they done so with tremendous political ability to us so
10:06we’re still waiting to see how it turns out in a few years ago the Chinese
10:10economy was held to be superior economic model exhibiting a faster return to
10:15growth following the global financial crisis and it seems the Chinese playbook
10:20then was to drive demand massive government spending now the emphasis is
10:26shifting to the supply-side reagan would believe they were talking about china
10:33experimenting with some version of supply-side economics is there a reagan
10:38revolution happening in Beijing I think what’s happened is that the reforms that
10:44they’ve been working on it allows for five years have been recognized as local
10:48chain anything really because the keys to get growth under control and that
10:53hasn’t happened so I wonder of supply-side reforms represent something
10:57real or whether it represents nothing more than their goals but the first set
11:03of reforms that will work
11:04know if supply siders any media role I don’t see how it can be useful in China
11:09because supply-side reforms really focus on cutting taxes and taking steps to
11:15promote savings on the grounds that productive investment has been
11:19constrained by the lack of safety in addition supply-side economics tend to
11:24look distortion
11:26corporate production caused by taxes to change the tax structure but it’s really
11:31hard for me to see that those are the problems of China faces certainly we
11:35don’t have a problem with insufficient savings there but with way too much
11:38savings and the idea
11:40we gotta cut corporate tax rates corporate tax rates in China really have
11:44been quite negative for a long time recording artist subsidies especially
11:49the interest rate subsidy until about two or three years ago so it’s hard for
11:53me to imagine why we think we have a supply-side problem China I don’t think
11:57we do I think we continue inside it’s really not institution it’s really the
12:03structure of them and that’s been the problem in China so the fact that
12:06directive switch you explored relating to the implementation of the supply-side
12:12policies to me it seems that only one of them has an immediate and measurable
12:17effect reducing the real estate inventories essentially filling the
12:23empty sixty to seventy million apartments thereby improving household
12:27net worth by I think you penciled it out as anywhere from one and a half to three
12:32trillion dollars
12:33you know that’s the spirit because I would imagine that can be extremely hard
12:38to do that but it gives you a sense of the type of challenges facing the other
12:42big sort of reforms that they’re talking about that also makes production
12:46capacity and they specifically spoke about steel and coal
12:51China’s producing way too much of both of our timing of inventory so it’s going
12:56to be very interesting to see how seriously they take this reduction of
13:00capacity because if you cut back and capacity you are sold in one of the big
13:05problems that we have here in China you are resolving the debt issue because
13:09that’s a rise in order to fund all of this continued production rising
13:13inventories got the problem in china is that is you constrain the growth in the
13:19consequences going to be a rising unemployment and obviously you can see
13:23how that works if you close out all of these factories you by the fire the
13:26workers and if you don’t want to do that they need consumption prize and the only
13:31way to get consumption to lies when her closing factories and firing workers is
13:35increasing household income by some other armies the movie only other means
13:41involves transfers from the state sector or filling up the apartment but I just
13:46think doing it the empty apartment politically going to be very very
13:49difficult win
13:51we see a drop in foreign currency reserves in the run rate on a monthly
13:58basis is close to a hundred billion dollars a month it’s easy to sort of
14:02assume a slippery slope that you know next time frame
14:06they’re going to be running out the Chinese are going to be running out of
14:09foreign currency reserves are reaching a critical threshold what prevents that
14:14continued diminution of foreign currency reserves from happening
14:18well one of the things they’re trying to figure out is whether or not there is a
14:22current coltie that will reduce the outflow and I would say the answer to
14:27that question did opposing what’s guiding post some people seem to believe
14:31that what’s driving the outflows perception of overvaluation the rugby
14:35and if that’s the case then some form of depreciation whether it’s called simply
14:41creation 464 a maxi developed 10 percent followed by a peg or even if they stop
14:48intervening and left the current value that would work because of the current
14:53flows will debate that some point to get some kind of stable currency but I don’t
15:00think that that’s why capital leaving the country to the extent the capital’s
15:04leaving the country for other reasons
15:05concerns about financial risk political supporter but it seems to me that a
15:10weakening women being may actually out in which case there really isn’t the
15:15currency policies that will slow the outflow so my guess is what we’re going
15:20to see that we’re going to continue to see stability in the rather be than
15:24probable may be surprising as they continue to see stability because
15:27there’s also a but the remedy has been depreciating do it’ll be really hasn’t
15:31been depreciating dollar has been appreciated so against the dollar
15:36depreciated against a basket of currencies that really has a fairly
15:41stable and I think the governor of the Central Bank of a joke made it very
15:45clear that he’s going to continue that policy my guess who’s going to commit a
15:50policy for a few more months but if capital outflows will be very high that
15:55I think beijing has been a question house so so bad policies likely to be
15:58they’re going to look at other things it already started the other thing they’re
16:03not going to implement new capital to cool off for a while but they are going
16:08to implement just a couple of holes much more harshly and we’re seeing that
16:13there’s a lot of talk about some of the government related or government driven
16:17outflows them abroad that’s probably going to go down to the variety of
16:24measures aimed at cornell be open and if they don’t work there we really have a
16:29problem because as you know declining reserves of ability and credibility is
16:35undermined there’s a tendency for the outflows to increment through Colorado’s
16:39positive feedback loops looking to really be able i so we need to see what
16:44they do over the next three to four months and whether they can stop these
16:47least reduce these are for significant enough can be quite tough to a large
16:52extent it also depends on the external environment tus those things like that
16:57here the dead against the R&B is a trade that as you said earlier assumes the
17:02Army is overvalued and it assumes the current outflows are driven by that
17:06conclusion that the R&B is overvalued while there are few elements similar to
17:12the exchange rate mechanism that in 1992 it seems that Soros and druckenmiller
17:19knew where the line of defense was and pushed hard against that line maybe you
17:24could comment on this doesn’t seem as wise to bet against a nondescript line
17:28of demarcation yeah you know there’s different types of but if there’s the
17:34company with the tremendous amount of external like Mexico in 94
17:38it’s a pretty safe but once great because the depreciation will be very
17:45very violently pro-cyclical because the currency the dollar debt increases blow
17:50to the local currency assets but that puts pressure on everyone to buy dollars
17:55for what happened to England but in england you also had a pretty clear
17:59strategy in the sense that the german bundesbank was not going to lower
18:04interest rates they made that very clear those high interest rates was stifling
18:09the British economy the stock market had come down a little bit was
18:14so sorry but in the sense that it was almost impossible but starting to rise
18:18against the deutsche mark so you had a one-way bet it made sense to pile on
18:24them they could break it but in China I don’t think either will I know the
18:27former and latter condition of a place so we’ll see what happens when you look
18:33at the PBOC and the possibility of evaluation if the PBOC were to allow for
18:39some devaluation what is the biggest risk implicit to that the risk for whom
18:46he BRC I think both of the global markets and the perception of what that
18:52implies or what it means
18:54well for China the biggest risk is that some kind of depreciation program
18:59actually causes an acceleration of outflows and then we get caught up in
19:04that we passed the point at which you can pull it back you know some people
19:08call the tipping point but its point at which the depreciation causes further
19:13depreciation because of the outflows for the rest of the world the risk i think
19:17is really on the trade front because I don’t think china has been depreciating
19:22in an attempt to struggle the export sector in fact China’s export sector
19:26who’s done pretty well
19:27exports are down but experts across the world down the Chinese share of exports
19:32was actually expected the reason we’ve been seeing these are photos of the
19:37reason we’ve been seeing what looks like currency weakened includes within the
19:41country is really for domestic purposes they have to experiment domestically
19:45supplied but it’s not being interpreted that way abroad so three-time there’s
19:50weakness in Louisville be we see moves in all of the Asian currencies and in
19:55other currencies to weaken and that means that ultimately everyone’s got the
20:00same policies same sort of buried a neighbor policy and all of that ends up
20:04in the form of a rising you its current account deficit and I’m not sure the USA
20:09has a huge amount of appetite for that so the fear there’s that it’s awful
20:14world trade war looking at monetary easing that has been applied over the
20:20last several years is it possible that monetary easing may actually be causing
20:25deflation you look in china too PPI and its declined now for its forty seventh
20:30month in a row is it possible that again
20:33monetary easing could be causing deflation instead of curing the system
20:37either but very very possible and I think the reason most of us don’t think
20:43that that’s possible is because we implicitly assume every country is
20:49structured way to us’ or great britain or structured where monetary easing
20:54tends to increase consumption without lower to production but in China it’s
20:59the opposite in japan received the opposite and that is when you use
21:03monetarily most of the growth in credit flows into new factories new
21:08infrastructure etc
21:09modern steel consumption so we haven’t really seen this very very rapid body
21:15expansion and I was at a meeting yesterday with some of Colby that within
21:2010 two years depending on the definition of money you use fifty percent of the
21:25global money base might be Chinese is really extraordinary when you considered
21:29about 15 percent of global GDP by any money growth has been a very very rapid
21:36but we’re seeing pretty severe deflation in the manufacturing sector so I think
21:41it’s time to dust off some of these beliefs that we have dealing with debt
21:45capacity limits and I’m curious if you can only know what those debt capacity
21:50limits are in retrospect I think that that’s the only way this way too many
21:57moving parts including confidants husband no way to measure of confidence
22:02special places like China so unfortunately we all know that we’re
22:06approaching the limits but it’s too late and when you look at the Chinese economy
22:11today do you see more similarities with the USA in the nineteen twenties or are
22:19there some similarities with japan in that period of the nineteen eighties I
22:23think it’s closer to parity with the difference being of course that it’s
22:27very poor slow creates a different set of dynamics particularly on the tax side
22:31remember that the us-led just very quickly and very brutally Japan and
22:37didn’t apparent
22:38just in twenty-five years later and I suspect that china for political reasons
22:43is more likely to at least because I don’t think china can allow debt levels
22:50to grow to anywhere near that say they have it to crash so we’ll see what
22:55happens but I think the tendency curious to see of slow long drawn out of just
23:01would rather be a very quick Google work which speaks to the difference in
23:04character between how serious debt crises are solved and you might argue
23:10that not all of them are in an absolute or dramatic crisis it can be extended
23:15over a long period of time are we essentially witnessing that in China
23:20today where it’s a crisis but with the fireworks that some anticipate yeah I
23:26mean I think that’s an important point to many people think that a debt problem
23:30manifests itself in the form of crisis and no it doesn’t have to be usually it
23:36doesn’t and the problem emerges wall for you have an emergency program and it’s
23:43the debt itself I think that promotes the growth was being tried it seems to
23:49be an issue that almost universal having too much debt in the system and dealing
23:55with lower levels of growth and that this is both in China and Europe in the
24:01us- I wonder if we aren’t fascinated with this idea of perpetual growth as an
24:06implicit part of a healthy economy the growth dynamic is in fact at one point
24:12enabled or exaggerated by leveraged by high levels of debt how do you see
24:18policymakers coming to terms with the natural consequences of deleveraging a
24:24slow-growth no growth or negative growth environment with the expectation has
24:29become that we must have perpetual growth data politicians and policymakers
24:34deal with the social and political consequences
24:38well I think that we are able to have perpetual growth but what’s happened in
24:44recent years and the first time before in the nineteen twenties and eighteen
24:48seventies a number of times
24:50what’s happened is that when you have significant income inequality that
24:54consumption because of course the rich consume small for small share of their
25:01additional support and consumption is reduced private sector investment tends
25:07to be reduced so you get this reduction in total demand as this happens the
25:13first way to compensate for it tends to be with a surge in consumption among the
25:18middle class
25:19fueled by debt and once you catch the debt limits then the only way you can
25:24adjust to this reduced consumption caused by income inequality is in the
25:29form of rising unemployment a coincidence but that’s what we saw in
25:34the eighteen seventies that’s what we saw the late twenties and thirties and
25:37that’s what we’ve seen more recently so for me the key issue is we can’t
25:42continue to rely on debt to generate growth so one way or the other we’re
25:46going to have a redistribution of income downwards in the USA it’s usually
25:50occurred for political Jackson in the progressives
25:55thirties we all saw that happen if it doesn’t happen that way it has to happen
26:00in the form of massive bomb defaults and will probably going to get that or in
26:05the fall of inflation because bond defaults and inflation both you will the
26:10savings of the wealthy
26:11their wealth so one way or the other we’re going to have to get this
26:14redistribution and we always do the question is do we do it in a way that’s
26:19groups hold and non-disruptive or do we do it in the form of Miller collapse in
26:25the market right away inflation one of these other things because only a
26:29limited number of ways
26:31history shows that for this redistribution of wealth back down
26:34towards the group that needs to spend it you know it’s like murder echols the
26:39problem is that those who have been money don’t want to spend it and those
26:43who want to spend don’t have the money right back to the public political
26:49conflict between progressives at both ends of the spectrum here in the United
26:54States
26:55are giving I think so anecdotal support for what you say we have Sanders and
27:01Trump who are surprisingly popular both of them headed to suggest that this
27:06issue of income inequality is alive and well and some form of redistribution
27:12whether it’s a market leveling or a top-down leveling of the playing field
27:20is in the process of happening I wonder if you could speculate on a different
27:25issue I would if you could speculate or guess what is the official chinese view
27:31of American foreign policy in Asia that’s not really something I can
27:35discuss partly because it’s politically sensitive and partly because my area of
27:40expertise but what I can say is that there was a very sort of mixed reaction
27:46to the USA little more goodwill child thinks it does but the same time there’s
27:51also a lot of suspicion of China’s sort of the way americans think about china
27:55you’ve got a lot of people who are very favorable towards china lot of people
27:59who are extremely paranoid towards it and that’s replicated Europe China but I
28:03think we should expect that geopolitical tensions are likely to get worse not
28:09just between China and the United States but more generally I’m very worried
28:13about Europe were you saying that strong anti-foreigner feeling of literature and
28:19these are things I think we should have normally expected as part of this
28:22process whatever you have these great big global crises you always see an
28:27increase in geopolitical tensions to see a reduction in international trade but
28:33you know we’re following the pattern pretty closely so at the time that I
28:36think we all have to be extra concerned about the possibility of things getting
28:41out of hand but it’s going to be an issue for a few more years and you
28:45mention this issue of Trump insiders I’m actually working on a paper right now it
28:50seems to me that the followers of problems this is a pretty permanent
28:56factual in American history it comes and goes but I sort of think of the Droid
29:00the Jacksonian function to include spree Andrew Jackson I think it was your tea
29:05partiers are a lot like this
29:08their group tend to get really wild by income inequality but the domination of
29:16the banking system by a number of things I think they’re right to get riled up
29:20about the problems we also have a history of those leaders
29:26proceeding that replicated again but it is interesting because they do tend to
29:32emerge when income inequality becomes a big problem in the united states and so
29:37I think it’s not surprising that we’re starting to see things but seems so
29:41unexpected to us you know that period of Jacksonian revolt against central
29:47planning you had the first and second central bank ultimately the second
29:53central bank allowed to just go away now we have this said the third iteration of
29:58a central bank in the United States and this changes that seem to be occurring
30:04at the level of money what is money is a question that is still difficult for
30:10many to answer and I thought it was very interesting as we sort of consider
30:15changes in the role of central bankers and a certain protest perhaps you know
30:20the Audit the Fed cries then getting louder and louder here in the United
30:24States we go back to the february fifteenth speech there in China the
30:29interview with soot he talks about the implementation of it digital currency
30:35exploring the benefits and drawbacks and wonder if moving towards digital
30:41currency doesn’t radically change the commercial banking space and in the
30:46process of changing the commercial banking space and to some degree the
30:50nature of money also the role that central banks play what are your
30:54thoughts about digital currencies the benefits to monetary policy the
30:59drawbacks negative rates and the greater likelihood of implementation in the
31:04environment of a digital currency any thoughts would go back a little bit
31:08further because I think one of the great mistakes that we made probably beginning
31:13in the 73rd maybe even the sixties was to start believing that monetary policy
31:18central banking is some sort of
31:21technical malfunction when in fact it’s highly political and americans have
31:26known this for most of our history
31:28you mentioned the fight over the Second Bank of the United States that was one
31:32of the most vicious political fights we have ever had in american political
31:37history only probs civil war and water to other things were worse we had in the
31:42eighties and nineties the food movement we had in the nineteen twenties and
31:47thirties ferocious debates about banking because back then it seems that we
31:52understood that banking policies to global policy was not moved from it in
31:57fact involve significant redistribution of wealth to one group to another also a
32:02lot of our political fighting was about how that distribution worker I wonder
32:08what is happening is that first quarter of rediscovering what we always used to
32:13though that is that it really does matter what kind of policy from the
32:17banks of figuring out what is the right policy for the economy at this point
32:23because there really isn’t a right policy is a series of policies and all
32:29the little different types of global distribution among different sectors and
32:33we’re returning to the days when that becomes part of the political atmosphere
32:37properly part of the political ads because it’s just as important fact
32:42maybe it’s even more important than the tax structure in determining who benefit
32:46from the case so maybe that’s what we’re going back to where we were we learning
32:51social policy matters a great deal and not just with technical purpose to
32:56probably a good thing is that cast any late again back into the shadows of our
33:01past where money and international trade relationships there is a greater degree
33:07of automaticity under the gold standard and less of a need for central planning
33:14and the potential for central bank policies not remaining neutral gold has
33:20less of a personality and maybe the period of 1862 1914
33:26gives an example of that growth in global trade currency that is universal
33:31in nature but is to some degree on autopilot yeah I think we’ve got to be
33:36very careful about remote area it was a very very difficult period we had
33:42bubbles those bubbles growth very pretty brutal in fact Barry Eichengreen makes a
33:47very colorful argument that one of the main reasons we can’t go back to go is
33:52because the adjustment mechanism of gold standard involved with terrible cost to
33:57workers and as long as workers with disenfranchised and as long as what
34:01caused worth of food you could get away with it seemed more like an active major
34:05I think that is no longer the case I think the kinds of gold standard
34:11adjustments that we used to experience the Little People Tree we simply cannot
34:16experience anymore certainly that and democracies because the brutalities deal
34:20just with its no longer to be accepted politically know that workers around the
34:25franchise so we don’t overestimate only certainly don’t wanna roll made to cope
34:30but we do have to recognize the one of the great difference between Baghdad is
34:37that in a period of credible fiat currency there isn’t automatic
34:42adjustments it is possible for debt levels to get much much further than
34:48they would have under tougher received so we certainly need to recoup after the
34:54global monetary regime will probably be a new blood and would but I don’t think
34:59that means returning to something like gold I think it means understanding the
35:03weaknesses of a fiat currency system adjusting for those weaknesses among
35:10other things also I think we need to dust off caves proposals during broken
35:15words because I think having the dollar as the dominant reserve currency was the
35:21cost of the United States could bear in the nineteen fifties when it was 43% of
35:26global economy but it will cost that I don’t think you know barry longer and it
35:31should we need to find some other way of managing that process to one of the
35:36things are definitely going to come out of a global crisis is
35:39a significant relief thinking of monetary policy of global currencies and
35:45it’s actually very interesting be part of this process but it’s also going to
35:48be very difficult as we’ve noted stumble towards a solution we are done with
35:53maybe digital curves be kind of solution but we have to be very aware that we
36:00don’t have constraints on the ability of debt to grow at least we don’t have
36:04automatic could have that means that can grow still it can grow along with you
36:10have a really really painful adjustments adjustments who have been talking about
36:14that are possible in China and other parts of the world as well
36:20appreciate you sharing some light on this and look forward to publishing your
36:25next book do you have a time frame for Win that’ll be through the Edit process
36:31and we can enjoy conversing about it I’ve written bits and pieces of it but I
36:37haven’t really sat down and started the book which I was last year because it’s
36:41been so incredibly busy I’m really going to me about it will focus is going to be
36:47on why actual biology lot of so much for the dead country that’s finished with
36:54your which we come out early next year but that’s what I said last year so
36:58we’ll see I will certainly let you go good with sounds like you building
37:03conceptually on the framework that you set out in the volatility machine kind
37:08of a crossover between corporate finance and macroeconomic policies is that
37:13fairly accurate yes that’s the point I think in corporate finance we have a
37:16pretty good understanding of debt balance sheet and shockingly we have no
37:20such understanding of microeconomics but I hope to be able to do this book is
37:25sort of create a bridge between four to it thank you for joining us from beijing
37:29a wonderful evening she time goes very well as you’ve been listening to the
37:34local daily weekly commentary along with David McElhaney and our guest today
37:39Michael Pettis you can find us at McIlvaine a.com see a movie