Blog: China's Minsky Moment?
Would a Minsky Moment in China spread to the rest of the world making Global Financial Crisis 2, or would it remain local?
The developing banking crisis in China is looking more and more like a classic Minsky Moment. That is, a financial crisis, similar to the US in 2008. The financial crisis became global in the end, but its epicenter was the US as the world's financial center and also the world's largest economy.
The question is, would a Minsky Moment in China also spread to the rest of the world making Global Financial Crisis 2, or would it remain local? Will it be like the US 2008 (a Lehman moment) or Russia 1998 (a government default)? And lastly, how will China react to a crisis if one occurs, and what will be the aftermath. China, after all, is an authoritarian, not democratic government. So the reaction can go many ways.