Apr 6th, 2010
Since this is a very long post, it may make sense first to provide a quick summary of what I am going to argue. As I have discussed often in earlier posts, pessimists are starting to worry about excessive debt levels in China, about which they are very right to worry, and many are predicting [...]
I usually don’t post a new entry so soon after the last post, but there was an interesting article in today’s Wall Street Journal by Andrew Batson. China is center stage when it comes to fears that buyers will one day spurn U.S. Treasurys. The bond market has been the source of much political theater [...]
“China’s overall surge in credit in the first half of 2009,” an article in yesterday’s People’s Daily assures us, “is normal and healthy; however problems still exist in the structure, quality and flow of credit. China should continue to optimize credit structure and guard against potential risks.” Credible rumors suggest that new loans in June [...]
I am still working on my piece on the global savings adjustment and will probably post it in the next week or so. The main point is to discuss what the implications are for China if we see simultaneously over the next few years an increase in US savings and a reduction in global investment. [...]
The US loses the most jobs since 1945, the Financial Times headline blared out yesterday. According to the article: The US economy lost more than half a million jobs in December for the second month running, figures showed on Friday, making 2008 the worst year for job losses since 1945 and intensifying pressure on Congress [...]
Oct 9th, 2008
Yesterday’s 27 bp rate cut and 50 bp reduction in minimum reserve requirements by the PBoC had the expected impact on the stock market: None. The SSE Composite declined 0.8% today to close at 2075. Another day like yesterday and we’ll be testing 2000 once again. Of course it is unrealistic to expect that [...]
Apr 22nd, 2008
In my January 17 posting I wondered whether China might experience stagflation in the near future. In my piece I defined the stagnation part of stagflation a little differently than its normal definition. Specifically: In China a “stagnant” economy is not one in that is recession. It is one in which employment growth fails [...]
Feb 13th, 2008
Yesterday at an investor meeting someone made the point that the lack of transparency in Chinese accounting may actually act to reduce the riskiness of the system. If this is true, it is pretty good news for investors banking on government credit. What’s the total amount of central government debt in China and how is [...]