China going to bust?
Citigroup (NYSE:C) analyst Willem Buiter has joined a chorus of others who have predicted China is set for a bust, and Buiter claims it could last for a period of three years, and doesn't believe it can be avoided, even if China tightens its monetary policies, which it has said it was going to do, but hasn't yet.
Like others, Buiter largely bases his assertion on the residential and commercial real estate markets in China, which could end up creating a domino effect.
The one problem I have with Buiter is the idea is also based on whether or not the Chinese government is doing anything.
“What is policy in China doing about the threat of overheating in the financial and real economy?” Buiter said. “The short answer is: not much, and not enough to prevent the creation of what could become a major asset boom, bubble and bust.”
Obviously this is a Keynesian thought, and economists like this think the world is falling if the government isn't interfering.
China for its part says they've seen nothing to indicate their economy is in a state of recovery. I think the West could take a lesson from that observation as well. Everywhere you read the mainstream media makes it sound like we're really in a big recovery, when data shows we're far form that being a reality.
Showing posts with label China Monetary Policy. Show all posts
Showing posts with label China Monetary Policy. Show all posts
Wednesday, March 24, 2010
Monday, March 22, 2010
Marc Faber: Chinese Economy Will Slow, Not Crash
Marc Faber on Chinese Economy
Investment expert Marc Faber said the Chinese economy, which a number of economists and analysts have said could crash sometime soon, won't crash, but it will definitely slow down in the second half of 2010.
Some feel even if the Chinese economy does slow down, it'll still grow at a rate of 8 to 9 percent; solid growth by almost any standard.
Some American politicians, along with the increasingly irrelevant Paul Krugman, have been publicly blasting China for its monetary policy, a type of action that has never worked with Asian people, and is not the best way to gain cooperation.
China will eventually change its monetary policy, but these types of populist actions are just plain stupid and bad strategy.
The Chinese would win the battle if they simply decided not to acquire any more U.S. Treasury instruments, and could do more damage if they decided to sell them as well, as the Fed would then have to print hundreds of billions to purchase them, which would drive down the value of the U.S. dollar even more, which would bring a lot of consequences to the country.
Investment expert Marc Faber said the Chinese economy, which a number of economists and analysts have said could crash sometime soon, won't crash, but it will definitely slow down in the second half of 2010.
Some feel even if the Chinese economy does slow down, it'll still grow at a rate of 8 to 9 percent; solid growth by almost any standard.
Some American politicians, along with the increasingly irrelevant Paul Krugman, have been publicly blasting China for its monetary policy, a type of action that has never worked with Asian people, and is not the best way to gain cooperation.
China will eventually change its monetary policy, but these types of populist actions are just plain stupid and bad strategy.
The Chinese would win the battle if they simply decided not to acquire any more U.S. Treasury instruments, and could do more damage if they decided to sell them as well, as the Fed would then have to print hundreds of billions to purchase them, which would drive down the value of the U.S. dollar even more, which would bring a lot of consequences to the country.
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