THE GREATEST UNWIND IN ECONOMIC HISTORY 77China is not anticipating this bust, and even if they were,
they don’t know how to deal with it. The Chinese government
is very slow at making decisions. US policymakers are no bet-
ter at seeing coming crises ahead of time. Once they show up
at our doorstep, however, they are able to react quickly.
Query whether they had the right reaction, but Paulson,
Geithner and Bernanke were up night and day for days on end,
and patched the system together.
I’ve been through that. That’s certainly what we did when
LTCM collapsed. We were on the verge of destroying global
markets, and we patched something together in five days.
That involved fourteen equity banks; nineteen credit banks
and untold trillion of dollars. Fast response time is a good
American characteristic.
We have this can do attitude, work around the clock and
get the job done. In China, they’re just very slow. When the
crisis hits them, they may have the capacity to deal with it
but they don’t have much experience and they’re going to take
their time.
That means that things can get a lot worse and maybe get
away from them before they can put a lid on the crisis. That’s
when global contagion comes into play. China’s great unwind
is one big catalyst which I watch very closely.