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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (63823)	6/15/2006 3:02:58 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Thu Jun 15 2006 10:07 trotsky (@China) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "China clamps down China's central bank today said that it would curb the country's money supply to keep the economy from overheating. The announcement came after an unexpected 30 percent jump in manufacturing and real estate investment. "We will remove the firewood from under the cauldron," said central bank Vice Governor Wu Xiaoling, "so that banks do not have the money to lend." The government has to start deflating the investment bubble now so it won't pop on its own in 2007 or 2008, said economist Julian Jessop of Capital Economics in London." if they live up to that promise ( which is far from certain ) , demand for commodities will decline. a major factor ( probably THE major factor ) in demand for commodities at the margin is the combination of soaring money supply with a fixed exchange rate in China. note also, 'tightening to avert a crash' is an exercise in futility once the boom has become so extreme. the tightening may well precipitate the crash ( in fact, that's what usually happens - since booms are always a monetary phenomenon ) . otoh, there is little choice. if the monetary authorities do NOT attempt to intervene again in an attempt to rectify the effects of their previous interventions, a so-called crack-up boom may appear and get so out of hand that the subsequent bust threatens the entire system and destroys the currency ( see Argentina for a fairly recent example ) .