The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

China

Posted by WARREN MOSLER on May 26th, 2011

RBS: China: Where is the slowdown?

Very good, tends to support some of my ongoing themes:

China will produce more of its own resources.

Higher rates don’t bring down demand, and probably increase it.
It’s the fiscal tightening, directly or indirectly, proactive or via auto stabilizers, that ultimately cause the tree to fall. (US budget went into small surplus in 1979, for example)

The inflation problem is severe enough for them to be using export unfriendly currency appreciation to fight it.

Hopefully it doesn’t all come apart in Q2!

One Response to “China”

  1. art Says:

    Thanks for posting. Seems like they’re taking an awfully Polyannish view of the data in their exhibits, eg:

    1 – Long-term IP momentum is sideways if not down
    2 – Housing bubbles were associated with rosy-looking starts data, weren’t they?
    3 – Utility demand has rolled over of late
    4 – Retail sales look a bit like the IP chart

    And some or much of the significant rise in raw material inventory accumulation mentioned on page 3 could be related to the credit shenanigans that the FT has been covering; if so, it’s certainly not a real domestic demand story!

    Reply

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>