Five stars and falling stars. (2016)

“Hubris has a nasty habit of breeding disaster, particularly when combined with oodles of cheap debt.”

Gillian Tett,
Ft.com > FT Magazine, 8 April 2016

“…in 1990 the Japanese bubble burst, unleashing a financial crisis.

“…so far this year, Chinese companies have bid $100bn for overseas acquisitions, almost as much as they spent in all of 2015 (which was a record). And the fee-hungry American mergers and acquisition bankers who are eagerly arranging these deals say that the $100bn figure will double – if not treble or quadruple – over 2016 as a whole.

“This feels horribly familiar.

“…(is) China is doomed to repeat the next chapter of the Japanese tale – namely, a humiliating financial crunch? Unsurprisingly, Chinese officials say no. And there are hints that they have learnt some of the lessons from Japan’s past.

“But hubris has a nasty habit of breeding disaster, particularly when combined with oodles of cheap debt.”

“…China’s growth on the world stage has been impressive but its recent “success” in snapping up assets could end up hurting China more than the west.”

Access the full article here: Five Stars and Falling Stars