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> (email exchange)
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> Attached is an interesting article from the FT discussing the investment slowdown in China.
> While the official picture remains one of a gradual slowdown, more anecdotal data on
> electricity production and bank loans suggests that the slowdown is much more severe – this
> is likely to negatively impact the EM and the Asian suppliers to China such as Australia and
> Korea.
>
Full article: China Investment Boom Starts to Unravel
51% Predict U.S. Government Will Go Bankrupt Before Budget Is Balanced
Just over half of U.S. voters are still skeptical that their elected officials will get the federal budget under control before it’s too late.
A new Rasmussen Reports national telephone survey finds that 51% of Likely Voters believe the federal government will go bankrupt and be unable to pay its debt before the federal budget is balanced. Thirty-six percent (36%) disagree and think it’s more likely that the federal budget will be balanced first. Thirteen percent (13%) are not sure. (To see survey question wording, click here.)
Venice video link here.
Also, Trichet Friday, the German elections, and G8 reports seem to be setting the tone for the euro zone to do something about the solvency issue. This is very good for equities and the rest of the credit stack.
At the same time it does not seem likely that any growth proposals will include fiscal relaxation, so the euro zone will have to get by the best it can with the deficits it has, which I’d guess should mean flat GDP, +/- 1% or so.
The US should also continue to muddle through with modest top line growth, and inflation low enough and the output gap wide enough to keep this Fed from hiking any time soon.