It’s interesting we hear the terms “bail out” when connected with how the US managed major institutional collapse. However from what I experienced on the street during these “bail outs,” Lehman, Bear, SVB, First Republic no longer exist. Their assets were salvaged and remaining functional assets acquired. The fed, treasury, and other institutions involved in the bailout ended up making handsome profits from the reperformance of the distressed assets they pulled into their balance sheets.
The only bail out was for the global participants, not just banks but everyone with an asset that depends on the orderly function of the financial system even during periods of distress. “Tax payers” paid nothing, and benefited from the recovery from the disorderly Lehman collapse and the credit squeeze that caused. There’s a lot of speculation that the relatively mild inflation the US experienced post pandemic was due to all the QE and other moves the government and governmental bodies did, as well as pandemic stimulus. I’ve yet to see the effects clearly disentangled from the systemic breakdown of logistics during the pandemic which have only fairly recently ironed out. Certainly all the cheap cash caused some inflation, but what a small price to pay compared to what everyone faced.
I think the issue with the situation in China is the assets held by these investment vehicles are never going to reperform. They’re piles of paper and empty buildings rotting with no present or future purpose. They’ve sucked up immense amounts of public money passed through the system in various ways into fake investments, and their value will simply evaporate leaving behind a desperate situation - cities and town throughout China burdened with useless infrastructure. It’s been brewing since at least 2007. But it doesn’t start and end with real estate - there are enormous infrastructure projects and bad international loans sprawling the planet that under scrutiny won’t stand up. Chinese credit spreads, where they are priceable, will have to blow up, and where they aren’t the opaque risks will sew structural and systemic lack of confidence.
I hope China can navigate whatever unwinding has to happen, and I sincerely hope it doesn’t devolve into political and social instability fueling geopolitical strawman conflicts to distract from domestic problems. While I really wish China could find a way to let its people be actually free, I don’t think a multipolar world is necessarily a bad thing. An ascendant China as more than a factory floor for the west provides a good opportunity for trade and competition, spurring growth and innovation everywhere.