Look at this guy talking about China:
China is in big trouble. We’re not talking about some minor setback along the way, but something more fundamental. The country’s whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.
Start with the data, unreliable as they may be. What immediately jumps out at you when you compare China with almost any other economy, aside from its rapid growth, is the lopsided balance between consumption and investment….
But it also means that the Chinese economy is suddenly faced with the need for drastic “rebalancing” — the jargon phrase of the moment. Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does; consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump.
And the answer, increasingly, seems to be no. The need for rebalancing has been obvious for years, but China just kept putting off the necessary changes, instead boosting the economy by keeping the currency undervalued and flooding it with cheap credit….These measures postponed the day of reckoning, but also ensured that this day would be even harder when it finally came. And now it has arrived.
Sounds almost like Peter Schiff, doesn’t it?
Actually it was You Know Who.
(Also, I’m just being cute here, following Alex Tabarrok’s lead on Twitter when he said Krugman is using Austrian business cycle theory. Especially if you read the stuff I cut out with ellipses, it’s not totally ABCT, but it’s a kissing cousin.)