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rffrydr
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rffrydr
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 Posted: Sat Dec 27, 2008 11:11 am Post subject: |
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The "Prelapsarian Era" no more:
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China’s economy
Published: December 23 2008 10:20 | Last updated: December 23 2008 19:01
China this year gave the lie to several myths of the prelapsarian era. Decoupling is bunkum and even turbo-charged engines can lose steam.
By December, conventional wisdom – and Chinese growth data – were exploding fast. Exports fell 2 per cent year-on-year in November, or by 10 per cent if you strip out currency appreciation. Industrial production growth plunged. Deflation is speeding round the corner: the consumer price index has fallen from 8.7 to 2.4 per cent in under 10 months, and factory gate prices increased a thin 2 per cent in the year to November. None of these readings are a blip. With virtually all the developed world in recession – the main end-buyers of Chinese goods – tumbling exports are not going to reverse any time soon. Excess capacity in the manufacturing sector, meantime, suggests deflation could be about more than cheaper food bills.
On the plus side, no one can pull off a government-engineered expansion like the Chinese. Beijing has room for fiscal manoeuvre and, should it need to issue debt, is in the happy position of being able to flog it to the banks. Restrictions put on one-time bubble sectors, such as real estate and the stock market, are being reversed at the flick of a switch. After a modest rate cut on Monday, the central bank has scythed more than 200 basis points off interest rates since September and freed up more money for lending. Unlike their overseas peers, state-controlled Chinese banks jumped to action: last month loan growth increased 15.4 per cent year-on-year, a full percentage point higher than October.
With ammunition like this, China should be able to avert recession on technical definitions at least. Preventing economic growth from decelerating sharply this quarter and next will be tougher, as will job creation. If that spills into social instability, China’s problems next year will make 2008 look like a tea party. |
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rffrydr
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rffrydr
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| Posted: Tue Dec 09, 2008 8:56 am Post subject: |
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Govt. pushed a restocking program for raw materials last week...and the markets yawned.
When things get back on track you'll see it in the trash. Pulp and scap waste paper prices off 75%:
http://www.latimes.com/business/la-fi-noexports9-2008dec09,0,4545014.story
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rffrydr
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rffrydr
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HenryTo
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| Posted: Thu Sep 25, 2008 8:05 am Post subject: |
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If the US defaults from agency debt, then it is "good bye" to the modern global financial system.
On the other hand, if they are going to invest in US IOUs thay may default anyway, why not invest in US equities or corporate debt?  |
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rffrydr
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| Posted: Thu Sep 25, 2008 8:03 am Post subject: |
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Could Yu repeat that? 
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anZHfo6tQi60
| Quote: | The U.S. financial crisis had taught China a lesson and that was: ``Why are we piling up these IOUs if they may default?'' China's economic expansion strategy, which emphasizes export growth that has led to trade surpluses and the accumulation of $1.81 trillion in foreign-exchange reserves, is the main problem, said Yu.
``Our export-growth strategy has run its natural course,'' he said. ``We should change course.''
China should stop intervening in the foreign currency markets and thus allow rapid appreciation of the yuan, he said. While this would cause pain for exporters, China could ease the transition by using its strong fiscal position to aid those who lose their jobs. It also should stimulate domestic demand to offset lower income from overseas sales.
Without yuan appreciation, China will continue to accumulate foreign reserves, which means further accumulating ``IOUs from the U.S.,'' said Yu. ``This is paper and it may default and it will not increase China's national welfare.'' |
I think we've seen the best from these SWF.
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rffrydr
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