In Case You're Missing This: The China Fun Begins
We read two comments on China over the last week worth noting. An otherwise intelligent analyst noted that negative views on China were overdone. After all, their GDP, recently announced at 6.9%, was still far above the GDP of the U.S., the Euro nations, indeed most other countries. He admitted 6.9% was lower than the 7% - 10% GDP touted during the last 15 years or so, but still, it's quite robust and tells us that talk of trouble in China should be ignored. In fact, he hinted we might start looking at an opportunity to invest, although he wouldn't right now.
One has to wonder: This otherwise intelligent gent takes the announced Chinese GDP figure at face value? He believes the Chinese government when they say their economy is growing at 6.9%? Do you? You shouldn't.
The other comment was a shared assessment by a group of four "experts" that talk of a Chinese "hard landing" was exaggerated. China's economy had slowed but the government just lowered interest rates and loosened reserve requirements for Chinese banks. And, of course, there's that 6.9% GDP. Hard landing? Rather China has "stabilized." What else could account for the bounce in their stock market, right?
C'mon man. The massive loss of wealth (now estimated at $5 trillion) from the Chinese stock market collapse has not and will not effect the economy? Seen another way, a loss of value equivalent to 40% of China's GDP will not have a negative impact on the economy? We're to believe that the latest reduction in interest rates will be a boon? This in light of the fact that, despite the previous 5 interest rate reductions, their stock market crashed, as in CRASHED. Oh, right, they did goose the market into a bubble before the crash. But it nevertheless did crash. So #6 will be the charm? It'll not only cause the stock market to rise (which it might), but it will prove to be a tonic for the Chinese economy, which is simply hitting a few bumps on the road to prosperity.
Pulleeze!
So what's really going on here? Well, it's not in the interest of the financial services industry to report that China may might now be into a hard landing. It's too big of a negative. It threatens the story of a continuing bull market. It feeds into all those naysayers who have begun noticing that economic activity around the world is slowing, with some countries entering recession.
And so the fun begins with reporting on China. The push will be to continue pumping out good news. It will become aggressive in asserting all's well. And as the stock markets around the world continue with their year-end rally, many an unsuspecting soul will buy this hook, line, and sinker.
One has to wonder: This otherwise intelligent gent takes the announced Chinese GDP figure at face value? He believes the Chinese government when they say their economy is growing at 6.9%? Do you? You shouldn't.
The other comment was a shared assessment by a group of four "experts" that talk of a Chinese "hard landing" was exaggerated. China's economy had slowed but the government just lowered interest rates and loosened reserve requirements for Chinese banks. And, of course, there's that 6.9% GDP. Hard landing? Rather China has "stabilized." What else could account for the bounce in their stock market, right?
C'mon man. The massive loss of wealth (now estimated at $5 trillion) from the Chinese stock market collapse has not and will not effect the economy? Seen another way, a loss of value equivalent to 40% of China's GDP will not have a negative impact on the economy? We're to believe that the latest reduction in interest rates will be a boon? This in light of the fact that, despite the previous 5 interest rate reductions, their stock market crashed, as in CRASHED. Oh, right, they did goose the market into a bubble before the crash. But it nevertheless did crash. So #6 will be the charm? It'll not only cause the stock market to rise (which it might), but it will prove to be a tonic for the Chinese economy, which is simply hitting a few bumps on the road to prosperity.
Pulleeze!
So what's really going on here? Well, it's not in the interest of the financial services industry to report that China may might now be into a hard landing. It's too big of a negative. It threatens the story of a continuing bull market. It feeds into all those naysayers who have begun noticing that economic activity around the world is slowing, with some countries entering recession.
And so the fun begins with reporting on China. The push will be to continue pumping out good news. It will become aggressive in asserting all's well. And as the stock markets around the world continue with their year-end rally, many an unsuspecting soul will buy this hook, line, and sinker.
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