Juggling Dynamite

I am always intrigued by the human story behind historical icons. The evolution of Ghandi from being an ineffective lawyer with all the prejudice of his upbringing, through 21 years of diversity training in South Africa, to becoming an influential writer, leader, conflicted individual, “disastrous father” and world changing force for peaceful resistance to oppression, is a fascinating study in humanity in all our strength and weakness.

Ramachandra Guha on his new book: “India Before Gandhi.” Here is a direct video link.

A good wide ranging discussion on some key issues facing the economy and investment capital today.

Jeffrey Gundlach, chief executive officer of DoubleLine Capital, discusses investor activism, interest rates, Apple’s future, and high-yield bonds. Here is a direct video link.

During the Great Recession of 2008, China pumped more stimulus and issued more layers of debt to do so, than any other country in the world. This helped to revive some global demand and contributed to the economic rebound into 2011. After that however, gobs of Central Bank liquidity has been ineffective in reviving global sales, jobs or wage growth. Necessarily mean reverting, the credit cycle now contracting in China is one of the largest shock risks to global growth. This clip offers some interesting discussion comparing China with Japan’s challenges as well as ramifications for China near term.

Dong Tao, chief regional economist at Credit Suisse Group AG, talks about China’s economy and local government debt. Here is a direct video link.

The debts that are coming due and need rolling over here are no small issue: “For 2014 China has about 3.5 trillion of Renminbi of local debts maturing, that’s by far the largest in the history of China.”

First China lent its cash reserves as a form of vendor-take-back financing to fuel unsustainable western consumption of Chinese exports during the 2002-2007 global credit bubble expansion. Then China re-pledged those reserves multiple times over to liquify its banking system and build out infrastructure in its domestic economy as export income fell. Now that exports are still weakening, extreme leverage through all layers of companies and governments have led China full circle back to a credit crunch; this time more severe than in 2008–and with no quick fixes in sight.