Michael Pettis arrives at the Austrian solution

In my opinion, for what it is worth, it probably makes sense for the Chinese government just to assume the next several months are going to be disastrous, and rather than try to hold things off, which will only make it worse in the longer run because it will distort the adjustment process, they should try to accelerate the contraction of those industries that are destined to contract anyway with the collapse in global demand, and work on providing aid for workers who are going to pay the cost. I admit I may not be the brightest guy in the world in making political judgments, but it seems to me that a disastrous six months – which can and anyway will be blamed fully on the US and other foreigners – followed by two or three years of good news trickling in would be much better for political credibility than two or three years in which expectations are constantly disappointed.
Every nation should follow this advice. As far as I know, only one nation has chosen the hard road, Singapore.

Here's Rothbard in America's Great Depression, pg.22:
In sum, the proper governmental policy in a depression is strict laissez-faire, including stringent budget slashing, and coupled perhaps with positive encouragement for credit contraction. For decades such a program has been labeled “ignorant,” “reactionary,” or “Neanderthal” by conventional economists. On the contrary, it is the policy clearly dictated by economic science to those who wish to end the depression as quickly and as cleanly as possible.
Governments only need to stand back and allow the contraction to take place. Since everyone currently expects failed industries to be propped up, removing government support will cause a rapid contraction in the market. There's no need to pile on and force a contraction, it will occur naturally. I wouldn't be surprised, due to the massive imbalances created in recent years, that it will take more than 6 months to find a bottom in the economy, perhaps 1 year or even 18 months. Chinese stocks would reach a bottom in less than a year though, if the government also stopped supporting stock prices.

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