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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (96987)	4/24/2009 9:12:02 AM
From: ajtj99	1 Recommendation Read Replies (1) \| Respond to of 116555

The stimulus in China will only have a short term effect. Without purchases from their export customers, they have no lifeline. The 1-way bet on the Remninbi is what powered the foreign direct investment, which in turn was about 50% of their growth, and that's dead with the RMB pegged to the USD now and huge overcapacity in everything from manufacturing to real estate. The stimulus in China was effected by lifting the lid on loan moratoriums. The government has a percentage they allow annually for expansion of loans, and loan expansions are basically shut off when the number is hit. In 2007 loans were frozen in October through December. In 2008 almost the entire year's increase was loaned out in the first month, January. This year, I believe they lifted the increase by something like 37% from prior increases of something like 15%, so that's where your stimulus is coming from in China. I think much of that loan increase has been drawn down already in the 1st quarter. That's most of the reason for the elevation in the Chinese stock markets. That money has found its way into speculation. I actually advised a Chinese state company on timing their investments last year. I suggested buy levels of 1800 SSEC and 1400 SSEC during early summer report and exits around 2800 SSEC. I also had advised them of the peak levels and timing back in 2007, but they did not believe it at the time.