Thu, Nov 27, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Stanley Druckenmiller: Expansion in credit during slower GDP growth is a problem for China

Tuesday, June 25, 2013

amb
Stanley Druckenmiller
Benedicte Gravrand, Opalesque Geneva: - In its latest Equity Research report, Goldman Sachs examines the rising cost of growth in China and Asia, which is hurting profits and returns. The authors, Hugo Scott-Gall and Sumana Manohar, ask two questions, namely, who does China need, and who needs China. "The answer to the first is solutions providers to the rising costs and constraints (e.g. energy efficiency, food science, shale expertise)", the report states. "Second, for those who need China, for either low-cost goods or capital (i.e. debt heavy, consumption-driven economies) or to buy hard commodities, the future maybe tougher, while those who rely on China as a source of export growth need to ensure that domestic competition won’t undermine them."

Stanley Druckenmiller, chairman and CEO of Duquesne Family Office (which used to be Duquesne Capital Management from 1981 to 2010), tells Goldman Sachs in an interview that the problem in China is in its expansion in credit just when the GDP growth is slowing down. He believes it is all due to the 2009-11 stimulus, which slowed down future growth by crowding out more productive investments.

"The system’s building enough leverage and misallocation of resources to warrant risks of a financial crisis," he adds, although the timing of such an event is uncertain. The credit growth outpacing economic growth that we see in China sinc......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - George Soros puts $500m of his money on Bill Gross, Soros, Paulson backed Hispania Activos mulls Realia takeover, Ex-Credit Suisse trader’s hedge fund sees yen shorts as crowded, Hedge hunters double default-swaps as views split, Large hedge fund positions come under pressure, Vikram Pandit's fund picks 50% stake in JM Financial's realty lending arm for $87m[more]

    George Soros puts $500m of his money on Bill Gross From WSJ.com: Before Bill Gross was fully settled in at his new firm, Janus Capital Group Inc., he received an unlikely visit from the chief investment officer of famed investor George Soros ’s firm, according to a person familiar with t

  2. Unlucky Paulson & Co. rebrands $1.6bn Recovery Fund after 13% drop[more]

    From Businessweek.com: A maturing U.S. economic recovery is prompting Paulson & Co. to change course. The $19 billion hedge fund firm, led by billionaire John Paulson, told investors on a conference call this month that the Paulson Recovery Fund will be renamed Paulson Special Situations Fund on Jan

  3. Europe - Hedge funds face exit tax as Iceland central bank discusses plan[more]

    From Bloomberg.com: Hedge funds and other creditors with claims against Iceland’s failed banks face an exit tax as the island looks for ways to unwind capital controls without hurting the economy. The government targets having a plan it can present by year-end that would map out how Iceland will sca

  4. Opalesque Exclusive: Risk management emerges as a competitive focus area for hedge funds[more]

    Bailey McCann, Opalesque New York: Risk management has always been a core component of any trading strategy, as well as a critical part of business management. However, as macreconomic weakness persists, and alpha becomes increasingly hard to generate, risk management as emerged as a more promin

  5. Gross: Inflation is required to pay for prior inflation[more]

    Benedicte Gravrand, Opalesque Geneva: As inflation rises, every dollar will buy a smaller percentage of a good. While deflation will mean a decrease in the general price level of goods and services. These two economic conditions are both in the waiting room. The consensus would like the former to