Posted on 07/15/2009 8:01:59 PM PDT by maccaca
Monetary policy only works if banks lend, and a surefire way to make that happen is to make banking heads part of the body politic as is done in China. Loan growth continues at a rapid-fire pace, suggesting that U.S. domestic demand matters little to the growth trajectory of China’s economy in the near term. Authorities said “lend!” and bankers said “how much?” and then blew through those figures. Bank lending in China doubled in the first half of the year over the same period in 2008. Construction activity has rebounded after authorities wrung the excesses from the property market in 2008, which was an unfortunately timed bout of monetary tightening leading up to the global credit crisis. Housing inventories have declined substantially from over 20 months of supply at the end of 2008 to a mere two months of supply, according to Agnes Deng, Investment Director, Barings Asset Management in Hong Kong. As a result, construction starts, comprised more than 80% of housing, are up 11.9% in June over the previous year after being down 18.2% in May, according to Macquarie research. That type of change in one month is massive given that these are year-over-year comparisons. Any chance for a rebound in exports to the United States, Europe, and Japan will add marginally to the growth story that seems to be firmly in place. The wave of liquidity that is washing over the economy will continue to support an earnings rebound and the stock market.
(Excerpt) Read more at network.nationalpost.com ...
It could be that China wants to debase its currency at an equal pace with the dollar.
Sure, inflation... In a command economy where prices, supply, and demand can be controlled by the government domestic lending can be as liberal as they wish. They also have a massive undeveloped geographic and demographic that can and will absorb much of the excess cash much of the money that trickles out of the urban areas will be used to build up farms, homes, and etc, thus adding value to capital assets rather than contributing to inflation. (Or rather a smaller percent of the money will contribute to inflation initially as it is reinvested rather than spent on consumer goods.)
But I thought the road to recovery was blowing trillions of dollars on government make work projects?
China has a whole new game plan.We are king of the hill and they are.
Man this is getting good! The greatest story ever told, and we get the good fortune (ironic words) of participating.
It’s getting easier and easier for me to predict the future with much greater accuracy as this debacle unfolds. Obvious conclusions are forming and it is sometimes laughable to watch as those who know and stand to benefit work to hide the truth...
China just started the decoupling process. She plans to fade away from the US dollar slowly. It is basically a business decision. With escalating federal deficits, it does not take a financial genius to figure out the US cannot pay back their debts. It would be foolish for China to hold onto US dollars. China will start by not buying long term US treasuries, but buy only short term treasuries. They cannot let the US collapse without hurting their T bill holdings. Second they use their huge cash reserve for the rainy day to keep her population reasonably employed by making more products usually reserved for export to meet the pent up consumer desires of their rural farmers. The boom is similar to the US boom after World War II as the pent up demands for consumer items (rationed during the war) are available. This rural consumer boom is temporary as China re orientates her export market to Brazil, India, the former Turkish Soviet republics and Russia as her alternative replacement markets of the US. China does not have to replace the US market completely, she needs to replace enough of it with alternative export markets to meet her minimum growth rate to keep most of her population employed. China will shed the economic ties with the US gradually. What is our big government politicians going to do, when China procurement of US T bills fade away slowly??? Inflation or high taxation. Either will kill the US economy. My advice to the feds is immediately stop immigration, and cut down the size of government to free up what is left of private capital for business, or else we will drown in taxes and escalating social welfare programs.
I heard that China was giving out vouchers for large screen TV's, etc. to get the populace back into the stores.
I heard that China was giving out vouchers for large screen TV's, etc. to get the populace back into the stores.
You are correct,a long time friend of mine “my partner” just moved to China in 2003 and his outsourcing business has hit record highs with no US taxes.
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