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Interview with Zhu Min, Bank of China Vice President:
Q. Is overconfidence the biggest risk to the recovery?
A. It's not only overconfidence, it's overmyopic: Wall Street feels the crisis never happened. It seems to me the financial crisis is not over yet, but it has stabilized from a cliff drop. That's one thing. The real economic crisis is just starting.
(Fast forward to the last 40 seconds of the clip).
Here for the full clip.
Sept. 10 (Bloomberg) -- Bankers on Wall Street are suffering from “over confidence” and are “myopic” in the face of a continuing financial crisis, Bank of China Ltd. Vice President Zhu Min said.
“You go to Wall Street, the people feel the crisis never happened,” Zhu said in a Bloomberg Television interview today in Dalian, China. “It’s not only over-confidence, it’s over- myopic. This is too much.”
Zhu’s criticism reflects the growing confidence of China, set to overtake Japan to become the world’s No. 2 economy, in scolding the U.S. for missteps that led to the financial crisis and mounting federal debt. In March, Premier Wen Jiabao said he was “worried” about China’s investment in U.S. Treasuries, now at $776.4 billion, and wanted assurances that they were safe.
Zhu’s comments come after the Standard & Poor’s 500 Index rose more than 50 percent from a March low. The rally has pushed valuations in the S&P 500 to about 19 times the reported earnings of its companies, the highest level since June 2004, according to weekly data compiled by Bloomberg.
Zhu said that the financial crisis, which intensified last year after the bankruptcy in September of Lehman Brothers Holdings Inc., seems “not over yet.”
“It’s sort of stabilized from cliff drop,” Zhu said. “But the real economic crisis has just started.”
Originally posted by D.E.M.
No takers? Alright, I'll bite.
It is unsurprising that this news is coming out of china, in my opinion. Of all the wealthy and powerful countries of the world, China is the only remaining country that has not been thoroughly "westernized" and brought into the umbrella of the global culture. China's economy is growing by leaps and bounds, but the great firewall has served to always keep them just that tiny bit separated from the rest of the world, a holdover from their communist roots and cultural roots before that.
As such, China is most likely the single most reliable source for opinion regarding the global economy. It depends on it, but it is detached enough that it can say what it wants without the others coming down on China's throat.
Given China's massive investment in all things USA, to the point that they essentially own the pieces of the American economy that are not pure fabrication, I would take this news very, very seriously. In conjunction with the other thread regarding China's possible backing out on derivatives, it would seem that they are very concerned indeed with the state of the world economy, and the role that the American sector is set to play in its eventual recovery, or perhaps collapse.
To summarize, it appears to be another piece of the puzzle, and one that continues the trend of pointing towards this fall being considerably more severe economically than last year. After all, this is coming from the vice president of what is essentially the second most powerful bank in the world at this point.