Newsmakers

Hersh Shefrin, the Mario L. Belotti Professor of Finance, published an article for Forbes discussing Moody’s recent downgrade of China’s debt. Shefrin pointed out that the one notch downgrade, though seemingly little, is the first downgrade of Chinese debt in nearly 30 years. He mentions that the danger signals in China’s economy are clear to see and simply undeniable at this point.

An excerpt from the article:

To be sure, the late economist Hyman Minsky laid out the general warning signs in a framework he called the financial instability hypothesis (FIH). However, most ignored Minsky’s messages until it was too late. It was only after the global financial crisis erupted that the phrase “Minsky moment” became fashionable.

Coverage of Moody’s downgrade by The Wall Street Journal and The New York Times has nicely conveyed the key facts of what led Moody’s to downgrade China’s debt. But the coverage could do more by linking those facts to the FIH, in order to help readers connect the dots of how the worrisome pieces of the China puzzle fit together.

The article was also a top feature in the section covering China on the World Economic Forum's site. 

Read the full article Learn more about Professor Hersh Shefrin