Richard Rhodes wrote in The Rhodes Report on Nov. 11:
What we find ironic about this situation where all markets are higher except for China is that the reason the markets are higher is Chinese industrial production and retail-sales figures. To wit, Chinese factories rose to a 19-month high in October, which isn’t surprising, given the massive stimulus that remains in place. This coincides with other figures that show a still-large number of investment projects in the pipeline, rising real-estate spending and a very large increase in loan issuance. If there was a weak spot, it was clearly that exports and imports fell from year-earlier levels for the [12th] month in a row. Obviously, the stimulus is doing its job, but it is doing very little to stimulate the world economy as exports remain weak, as do imports.
That’s right, and backed up by this September comment from Premier Wen Jiabao: “China’s economic rebound is unstable, unbalanced and not yet solid. We cannot and will not change the direction of our policies when the conditions aren’t appropriate.”
That sentiment was confirmed this morning when we received news that China’s massive stimulus may not have been enough to save its banks yet. That sent the Shanghai index crashing 3.5% to 3224, its biggest swoon in three months. From Bloomberg:
China’s five biggest banks, including Industrial & Commercial Bank of China Ltd., the nation’s largest, submitted capital-raising plans to regulators, according to four people with knowledge of the matter. International Monetary Fund Managing Director Dominique Strauss-Kahn said yesterday that banks have revealed only about half of their losses from the financial crisis.
This is some swell global recovery underway.
