Michael Pettis on Capital Flows and Debt Crises

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Today, we resume our conversation with Michael Pettis where he discusses how large concentrations of capital into a single market—as we see in the US today—often resolve with an eventual debt crisis and soaring unemployment. Michael explains why this makes a large infrastructure investment so necessary, both in Europe and the US, and how this relates back to his outlook for the industrial commodity sector, which many believe has finally seen a major bottom after years of declines. Michael disagrees and explains why he thinks commodities like iron ore and steel, for example, will eventually see even lower prices than where they are today.

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