 The Belt and Road Initiative is a Chinese initiative to build infrastructure basically from China all the way into Europe, all the way really to Western Europe, part of the Belt Initiative. The Belt and Road Initiative was Italy with the idea of building a primarily transportation infrastructure, but infrastructure more broadly so that Chinese goods can be exported easily and cheaply all over South Asia and ultimately into Europe and the rest of the world. It also was a way for China to gain influence in places like Africa and some less developed areas in Asia and in Europe. A lot of being written about the Belt and Road Initiative and a lot of panic and I think exaggeration have been applied to it. This is a way for the Chinese to get everybody in debt and then they all owe money to China but then they won't be able to pay it but then they'll be in China's debt forever and then China will be able to control them all and this is a way for China to gain more influence around the world. I mean yes and a big no to all of that. No question that this enhances China's lending all this money all over the world and this is the Chinese government. It's all funneled through Chinese state enterprises. It's very in through state banks. None of this is really private companies. This is all Chinese state. There's no question that this has enhanced the reputation, enhanced the influence of China all over the world and indeed it has worked in that sense but it has also been a massive failure and a massive failure is exactly this issue around the debt and the fact that the fact that this debt could not be ultimately paid back. Many of these projects were non-economical. Many of these projects were dreams that were unrealistic. Many of the projects involved projections about the future that had no relation to reality. Not all of them. Some of them turned out to be very profitable and very good like the ports in Greece which the Chinese built which turned out to be incredibly profitable but much of this has turned out to be bad and there's a lot mountains of bad debt out there and it's only going to increase. There's only going to be more of this bad debt in the I'd say years and decades to come from all the debt that these countries have taken on from China but this idea that this this debt is good for China is just plain wrong. They're lending these countries real money and they're not getting paid back and it's not like there are assets everywhere that are worthy of taking control in instead of this debt in some places they are but in many places they are not and it's not like Chinese leverage over these countries is that valuable. It's not. Many of these countries have very little to offer China ultimately. This is a much more complicated game and it's ultimately a lose lose game. China is losing and China in its current economic situation cannot afford suddenly to have lend so much money out and not be able to recoup much of it. Now the funny thing about all of this is that many of these countries are turning to the IMF the International Monetary Fund to ask for a bailout. Now much of the money that the IMF is going to provide in order to bail these countries out comes from places like the United States and then it's given to these countries who then going to use it to pay off Chinese debt. Well the IMF is bulking at this of course. The IMF doesn't want its funds to be used to pay off the debt of China without China taking a significant haircut off of this money off of these debts. China is a member of the IMF. It sits on the board of the IMF so there's a slight conflict of interest there but it is you know the IMF is going to now have a lot of leverage over China in terms of which debts get repaid and which debts don't under what terms they get paid. And this is going to be something that the IMF and the United States in particular are going to have to do because the United States is the largest member of the IMF and it's a lot of U.S. money that is being devoted to this. Now look I don't believe the IMF should exist. I don't believe countries state should be giving loans to anybody. I don't think that the state should be in the business of lending money. I don't think the United States should be bailing other countries out. Never mind shouldn't even be bailing U.S. banks out never mind other countries. So none of this should even exist but the great irony is that it appears that it looks that the United States is going to be bailing out China through the IMF. Now this is not a good scenario for anybody. It's ultimately not good for China. China is going to be squeezed and China is not going to get its money back and China is not going to have the kind of leverage that some people thought it had over these countries because that leverage is going to shift to the IMF. The IMF will have that leverage but it's not good for the IMF to bail out the Chinese even partially. So the United States is really going to have to figure out what role it wants to play and how much it wants to support the IMF in what it's going to be doing. It is already starting to do. How tough it wants to be with China. How many of these projects does it want to see collapse and one of the great tragedies here is that many of these countries are very poor countries. Many of these countries should have never, never devoted the resources to the kind of projects that China is funding but instead should have been devoting these resources to building property rights infrastructure, to building legal infrastructure, to building a market economy. Instead they're building railroads all over the place. They're building ports. They're building all kinds of things and yet there's very little to transport. There's very, there's no benefits to all this massive infrastructure when there's no economy. There's no industry. There's no movement. So the real tragedy is you're going to get half-built railroads in countries that can't really afford anything, that in countries that can't afford to build these things, that can't afford the debt payments, that can't afford and what these countries should be doing is investing heavily, maybe in education, arguably if the government is going to invest in anything, but certainly in the infrastructure to sustain, to create and sustain a market economy. And now you're going to get poor countries in Africa primarily becoming poorer or places like Sri Lanka becoming poorer. Argentina owes a lot of money to China. It's not like China is going to get any real leverage over Argentina. Maybe because of all this debt we'll get a libertarian president of Argentina and that'll be fun to watch. Montenegro in Europe owes a lot of money. Why? Because the Chinese built a highway from which I drove on actually driving this highway or maybe I drove on the Albanian version of the highway. But there's a magnificent highway that goes from a port in Montenegro towards into Serbia. This has increased debt. Montenegro's, I'm going to be in Montenegro soon, but this is going to increase the debt of the Montenegro government by gazillions of dollars. For what exactly? What is the benefit exactly? I'll be in Montenegro. I'll ask them when I'm there. I'm giving a talk in Montenegro in October. Anyway, again, something to watch could have profound impact on the global economy as this debt collapses. As these economies go into recession, well, worse than a recession, depressions. Maybe they're already, in a sense, these economies are already depressed. They get worse. Puts a lot of pressure on their own populations, increases migration pressure, but also just decreases economic growth in the world. A lot of this debt doesn't get paid back to China. That is more negative impact on the Chinese economy. China's already weak, going to get weaker. If the IMF starts lending money here, that brings in the west into this crisis, the west is already part of it. A lot is going to have to happen with this debt crisis that China has instigated by lending money to projects that cannot sustain the debt. There's a whole domino effect here and it's not the domino effect that China wanted. A lot of these countries resent China now. A lot of these countries view China very negatively now because China's put them in this situation. So it does not work to China's benefit at all in any dimension, but it's not nobody's benefiting here. This is a lose, lose, lose situation as most losing transactions happen to be. The only people who benefited would be my guess. The only people who walk away from these deals better off than they started are local politicians. The local politicians and a lot of these are autocrats who funneled a lot of that Chinese money into their own pockets. That money is now sitting in Swiss or Cayman Islands Singapore bank accounts. And yeah, the countries can't pay off the debt. Tough. They're not going to dip into that money. They've already put their share aside. And the rest of the countries themselves, they are doomed as is the rest of the global economy in terms of dealing with this. So massive, massive failure of Chinese central planning, Chinese central planning of country to country debt, which shouldn't that shouldn't exist. Period. Shouldn't be lending money to other countries. If China lends a lot of money to the US, but it does so in very liquid markets. It does so by buying US treasuries the least offensive way. Pretty distorted, pretty, pretty something again to watch in terms of global economics.