Michael Pettis

michaelpettis.bsky.social

18 June 2025 11:06

1/4 Yicai: "Many of China’s small and medium-sized banks can no longer afford to offer interest rates that are higher than the big state-owned lenders, a strategy they used to adopt to attract more deposits." www.yicaiglobal.com/news/smaller...

Michael Pettis

michaelpettis.bsky.social

18 June 2025 11:06

1/7 Caixin: "Once limited to funding new infrastructure projects, local government special bonds are increasingly being used to supplement local government budgets, repay overdue private contractors, and even to support struggling legacy PPP projects." www.caixinglobal.com/2025-06-18/c...

Michael Pettis

michaelpettis.bsky.social

18 June 2025 11:05

6/6 It leads instead to lower savings elsewhere in the economy, either in the form of higher unemployment, as Marriner Eccles explained in the 1930s, or of higher household and fiscal debt, as Atif Mian, Ludwig Straub and Amir Sufi show. straub.scholars.harvard.edu/sites/g/file...

Michael Pettis

michaelpettis.bsky.social

18 June 2025 11:05

5/6 When the constraint is whether or not businesses can sell their products, however, income inequality, by reducing total demand, actually reduces investment needs. In that case pushing up the savings of the rich does not lead to more investment. carnegieendowment.org/china-financ...

Michael Pettis

michaelpettis.bsky.social

18 June 2025 11:04

1/6 Martin Wolf's “pluto-populism”: the rich receive most of the goodies; the poor become poorer; and the fiscal deficit stays huge. The "supply-side" argument in favor of income inequality is that because the rich save more of their income than do... www.ft.com/content/31f4...