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"And there's no bigger credit excess than in China".
He is obsessed with sound money, which he considers — along with the related phenomena of credit excess, bubbles and uncollateralized assets of all kinds — a "sleeper issue".
"What we have is gross credit excess" on both the personal and national levels, he continued, and credit excesses fuel speculative manias.
"What we have is gross credit excess" on both the personal and national levels, he said, and credit excesses fuel the speculative manias of classic boom-bust cycles.
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"Credit excesses are always going to risk generating bubbles.
"Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC.
As the economics professor Nouriel Roubini wrote earlier this year, in Foreign Policy, "The credit excesses that created this disaster were global.
But since China's credit excesses added little to GDP, unwinding them need not subtract greatly from GDP.
For a while investors thought the credit markets were ignoring the reality of strong economic growth; in fact, that growth was the result of previous credit excesses.
The likes of Countrywide and Wachovia were "narrow" banks but still created a lot of trouble.In my view, it is better to concentrate on the credit excesses that the banks created; head off the problem before it gets critical.
After all, Japan had none of the credit excesses of America and much of Europe: rather than borrow in recent years, Japan's companies have paid off debts, while households sit on a pile of savings.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com