Broken China, More Deflation
Broken China, More Deflation
If you believe that the Chinese economy grew at the rate of 6.8 per cent in the December quarter, you'll believe anything.
It might have, but the idea that the Chinese statistical bureau can accurately measure the size of the national output in three weeks is laughable. The figure of 6.8 per cent probably has more to do with the fact that it exactly matches the median estimate of 12 economists surveyed by Bloomberg.
That said, China’s economy is clearly slowing rapidly. On some measures it is going backwards – for example, electricity production is falling; so is steel production and motor vehicle production.
Citigroup’s Shanghai-based economist, Ken Peng, estimates that after seasonal adjustment, China’s real GDP growth in the December quarter was -0.3 per cent annualised – the first contraction in at least 16 years.
Moreover China’s 2007 problem with inflation has very quickly turned into a problem with deflation: the December quarter was the third consecutive quarter of a falling CPI. Although food prices went up, the declines in other prices accelerated. Ken Peng expects 0.5 per cent deflation for the year.
http://www.businessspectator.com.au/bs.nsf/Article/Broken-China-$pd20090123-NJRJA?OpenDocument
wrong again....... A prudent
wrong again.......
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Yes this is precisely why I don't follow Schiff's advice
to the hilt. He's right. His analysis about what's wrong with America is spot on. He's also right about figuring out how to preserve your wealth outside of the dollar (be it domestically in other stores of wealth like metals or outside the country, so that you can deleverage and use your wealth to help America on the flipside)....
But China is not the place to go. Too many greedy liars at the top who will fake data and manipulate the markets.
Singapore, Hong Kong, maybe - but these are high-risk since their economies are small and tied to their success as gateways to bigger economies. Japan, possibly (though they show no signs of learning from their failed experiments with the Keynes, they at least have the saving grace of being a pathologically productive society).
South Korea. Koreans have an incredible ability to learn English. Koreans are extremely hard workers. The South Korean government did the right thing and didn't bail out companies during the asian crisis of the last decade. The biggest risk is war with the North, but the upside to the gamble is that if unification occurs, all those North Koreans will suddenly be productive members of the global economy. Stupid Kim Jong Il would be far wealthier and less hated in a functioning free market nation than a Kleptocratic Commune.
Sometime this month, I'm going to have a little chat with my South Korean coworker and figure out which companies to invest in.
China...psst...pay attention.
Firstly, what goes up must come down.
Secondly, sorry China, as you can see over here, central economic planning is doomed to fail.
donvino
Who sang that
"What goes up, must come down"
the spinners?? "When
the spinners??
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
B, S & T
Blood, Sweat and Tears
Good Point
Can we trust China to give real numbers, any more than we can trust our own? Much of China's economy is based on making stuff for American consumption. Two thirds of our economy is consumer spending and we've made a drastic cut-back in that area. American consumer confidence is at historic lows (rightly so) and those still working are spending as if they have already lost it. Same in Europe. Less spending, more lay-offs....then less spending and on it decends. China is left w/ a bag full of goodies that no one wants. (at least, right now).
Result: A downward deflationary spiral. How do you stop it? The sensible/classical/Austrian School answer is: You Don't!
And we shouldn't try to stop it and artificially "prop" up prices. The cure for recession is.....recession. Let prices fall to their natural equilibrium. Let supply and demand determine the fair market value and amount of goods needed. Of course the Government/Keynesian answer is: We need more money in the system and more gov't "make work" spending projects. OOPPSS. Twenty year Depression if we let them do that. (Which may be preceeded by hyper-inflation, that destroys the currency.)
Oh Joy! Will they never learn?
"..shall not be infringed."
"..shall not be infringed."
The main difference
China has a surplus...a huge one, loaded with Treasuries that it could theoretically monetize and bring this country to its knees. China is working rapidly to expand infrastructure to work toward domestic production...they are putting everything in place to get rid of their reliance on American consumption, and they are certainly in a decent position to do so.
http://federalfallacy.com
http://federalfallacy.com