Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog, [9]
Most directly on the topic, read "When the Story Breaks [10]". It's a quick read and introduces an Epsilon Theory perspective for how to think about China.Most recently on the topic, and why the Chinese currency devaluation kicks US equity markets right in the teeth, read "Storm Warning [10]".Most fundamentally on the topic, and why the Chinese currency devaluation is an existential issue for the Beijing regime, read "The Dude Abides: China in the Golden Age of Central Bankers" [11].There are other notes on China if you're so inclined, including: "The Donkey of Guizhou [12]", "Rosebud [13]", and "The Power of Why, Exhibit 4,512 in a Continuing Series [14]".For a related note on the overall Emerging Market story, read "It Was Barzini All Along [15]". For an Epsilon Theory perspective on oil prices, read "The Unbearable Over-Determination of Oil [16]".
"This is a completely different Narrative than the growth story, and it’s the story that one-party States rely on to prevent even the thought of a viable political opposition. In highly authoritarian one-party nations – like Saddam's Iraq or the Shah’s Iran – you’ll typically see the competence Narrative focused on the omnipresent secret police apparatus. In less authoritarian one-party nations – like Lee Kuan Yew’s Singapore or Deng Xiaoping’s China – the competence Narrative is more often based on delivering positive economic outcomes to a wide swath of citizens (not that these regimes are a slouch in the secret police department, of course). From a political perspective, this competence Narrative is THE source of legitimacy and stability for a one-party State. In a multi-party system, you can vote the incompetents (or far more likely, the perceived incompetents) out of office and replace them peacefully with another regime. That’s not an option in a one-party State, and if the competency story breaks the result is always a very dicey and usually a violent power transition."
