China could easily emerge as the great winner if the Chinese leaders handle the situation well. On the other hand, they could also turn out to be the biggest losers if they handle it poorly. If the management turns out be wrong, this could lead to a political crisis in China.

However, you have to recognize that regulations will never be completely successful and they will always be full of holes. You must constantly be ready to fill new holes. Actually regulation should be kept to a minimum, but there has to be some cooperation between market participants and authorities - as was the case in the early postwar years. The Bank of England was a very successful regulator by cooperating with market participants. This cooperative spirit was broken by the market fundamentalists.

Discount the obvious, bet on the unexpected

Sometimes time actually works against you if you refuse to face the relevant issues and explain to the public what is at stake.

When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.

The prevailing wisdom is that markets are always right. I take the opposite position. I assume that markets are always wrong.

Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test.