To Richard Vague, the world's biggest credit card banker before he fell out with JPMorgan boss Jamie Dimon and grew up to be, many deals later, a Philadelphia venture investor, political donor, and backer of good causes, the cure for China's stagnant economy and America's still-weak growth is clear, even biblical:
Forgive them their debts
Partly. Strategically. Decisively. The blueprint is in his book, The Next Economic Disaster, which I reviewed last year.
Listening to America's top bank CEO-turned-policy scholar over rabbit food at the Parc as the stock market was laying eggs last week, I realized that debt forgiveness was also key to how the wildly popular Donald Trump had conducted his affairs.
The solution Vague favors for overextended Chinese industries and still-underwater U.S. homeowners goes like this: Prod lenders to write down bad debts a bit, get the authorities to forgive banks' resulting capital gaps, and then send banks and borrowers back to hire more Americans.
Those steps recall how Trump sprinkled bankruptcy restructurings throughout his career as a casino-hotel magnate. He had four of them, from 1991 to 2009. When he believed that he'd promised investors too much, he stopped paying, and dared them to fight.
Could Trump be a model for the world's debt hangover and its potential solution? I asked Vague.
He's not a fan - but Trump "definitely knows and has benefited from restructurings," Vague told me.
Vague said he preferred my other theory - that a percentage of voters will always be attracted to the loudest, strongest-sounding candidates. No matter what loopy ideas they might be peddling.
So what's wrong with China? Once a practitioner, Vague has become a scholar of debt: Since Chinese exports collapsed in the Great Recession and government-guided banks accelerated big projects to keep the country growing, "China's private debt has grown by $15 trillion. They amassed overcapacity, across the board. They have 50 million empty houses. And way too much iron, steel, aluminum," Vague said. "They built too much stuff."
He's among those skeptical that China is really growing by the official 7 percent a year. More like "zero," Vague says.
Analysts say auto, smartphone, and other key sales in China are down, and commodity prices "will be down for years." American "consumers are winners," with gas headed below $2 a gallon and beef below $3 a pound.
China will manage - it has trillions in foreign exchange - and it has bailed out banks before.
China's suppliers in Asia, Latin America, Africa, and Australia will have a tougher time. Oil, coal, copper, and other commodity suppliers "are in a near-crisis environment," Vague said. BMW 500s will pile up unsold.
Are American banks in danger? "We don't have a rapid buildup of private debt in the U.S. The Fed reports that business debt, compared with GDP, has been flat."
Despite spikes in student and auto loans and losses, commercial, mortgage, and credit-card debt are flattish, too.
"Things like this show, once again, that relatively speaking we have a more solid, durable system than anyone else in the world," Vague added. "I think it can be parlayed into beneficial trade, as long as we can refrain from being overly bellicose."
Vague has long questioned the effectiveness of U.S. land wars in Asia. He says it's better to cultivate better business and academic ties, isolating terrorist and extremist groups.
Obama's Iran treaty, though "difficult," leaves Vague hopeful about relations with "a country full of talented young people."
That's not what we are hearing from a lot of the presidential candidates, who sound like they want more bombing, or from U.S. Sen. Pat Toomey (R., Pa.), whose campaign chest Vague helped fill, I pointed out. "Right now, folks are wary of all our entanglements," Vague agreed. "And the political dialogue is very Manichean": you're either with them, or against them.
Where is China headed? "Decelerating population growth is not good for GDP growth," Vague said. "Our greatest periods of per capita economic growth came when our population growth was high. China with that one-child policy is tipping toward that period when they will have more retirees than any country in the world." So expect more slowdown.
In the United States, young couples aren't forming households as they used to. Three percent GDP growth, once considered "terrible," is now "a good year," Vague said, shaking his head. If banks forgave more debt - if the politicians could get it together - the U.S. economy would grow a lot faster, he projects.
Has that ever worked? When Paul Volcker was Fed chairman in the late 1970s and U.S. banks were suffocating from bad foreign loans, he "had a better idea: He believed you could put that write-down into a special budget and [spread the loss] over, say, 30 years. That is magic," Vague said.
Could the Fed get away with such a discreet set-up today? "No! It would get tweeted out in 30 seconds," provoking Congress to fury, Vague says, laughing.