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So since I am really trying to dedicate my energies to the Huawei stuff I got cooking rather than Belt and Road nonsense, I don't want to spend too much time on this but since I've been asked to explain why total lack of finance knowledge is important writing about BRI 1/n
Let's start off by ignoring in the NYT oped that the only problem cited was in Sri Lanka (yea, that's the only problem). Let's further ignore that the author writes BRI isn't about Chinese foreign policy but suddenly no one can find Xinjiang on a map. Ignore those for now 2/n
Let's focus on a more mundane piece that BRI people now use constantly as proof that China is not the problem but is really an astoundingly misleading fact. China only comprises ___% of total debt so it really is not China's fault this country now has financial problems. 3/n
I'm going to use a simplified stylized example to demonstrate why this is a bogus argument. Assume a home owner makes $100k per year and has a $500k mortgage (round numbers don't judge). They can't save a lot but things are fine with a 4% mortgage. Now assume ... 4/n
That homeowner goes out and gets a bunch of credit cards and run up $50k in credit card debt. This causes the borrower financial distress and they have to file bankruptcy. The credit card company says, our $50k liability is less than 10% of the total debt owed by the borrower 5/n
Technically, the credit card company is right that they accounted for less than 10% of the debt total but it is wrong to say the mortgage caused the financial distress. The problem is you have so many people writing about BRI that have so little understanding of finance 6/n
and they end up making ridiculous arguments (that are conveniently the talking points Beijing uses) that no one in finance would ever make. This is just the tip of the ice berg but maybe geopolitical experts should learn a wee bit about finance and how it actually works. 7/n
As a final point, we could talk technical finance issues all day long to demonstrate how wrong wrong wrong BRI defenders are when they spout their nonsense about finance but I have other fish to fry.
