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China To Announce New 4 Trillion Yuan Stimulus?
What do you do when your last multi-trillion stimulus is expiring and its effects no longer generate asset bubbles as you once did? Why, you launch another multi-trillion stimulus of course, although if you are the US you call it something funky like Pennies for Prosties, Benjies for Bodyrubs or something comparable. China has no problems with nomenclature so it calls it how it is: as Bloomberg observes, "China will announce in August a new
stimulus package of possibly 4 trillion yuan ($586 billion), the
China Business newspaper reported on its Web site, citing
unidentified sources. The plan, from China’s National Development and Reform
Commission, will likely cover nine industries including
information technology and new energy, the report said." So much for monetary prudence. At this point all economies will spend money into overdrive until each and every economy (that can print its own currency) simply implodes into a Keynesian supernova.
That said, there may be more than meets the eye: Bank of America is somewhat skeptical on the news:
Since early this morning we have received client questions on a piece of news (cited from China Business Journal) that China will announce a new stimulus package of possibly 4 trillion yuan ($586 billion). According to that newspaper, the plan, which is from China’s NDRC, will likely cover 9 industries including information technology and new energy. In our China macro weekly just published, we called the news “low quality speculation”, which quoted a sensitive number (RMB4.0tn) and confused specific industrial policies of the coming 12th five-year plan with emergency macro stimulus measures.
Poor BofA, they think that Keynesians practice this vestigial trait called common sense:
It’s true that some Chinese policymakers are still quite cautious about the global economy, but the consensus view in Beijing is that China could face a problem of overheating if Beijing does not execute a well planned exit strategy. Despite the unchanged rhetoric on the policy stance (“proactive fiscal policy and relatively loose monetary policy”), China’s dominant policy stance now is an “exit strategy” instead of a new stimulus package. Loan control, reserve requirement ratio hikes and recent property tightening measures are clear evidences of this exit strategy.
We need to note that the RMB4.0tn stimulus package was started in November 2008 when China was hit hard by an unprecedented 25% drop of exports and a loss of 20mn jobs in the exports sector. As the global economy recovers and the Chinese economy just posted an 11.9% YoY GDP growth in 1Q10, it’s impossible for Beijing to announce a second RMB4.0tn package without another similar global crisis on the scale we just experienced.
China will announce a draft of 12th five-year plan (for the five year from 2011 to 2015) later this year and this draft will be examined in the National People’s Conference March next year. Like previous plans, this new five-year plan will surely have special industry policies with planned investment numbers. Some high-tech and green-tech sectors will surely be supported by the government.
However, it will be wrong to treat those special industry policies as macro stimulus measures which are supposed to be used only when the economy is in an emergency mode. That being said, we should not be shocked by any big numbers in the 12th five-year plan. China’s annual fixed asset investment amounted to RMB19.4tn in 2009, so RMB4.0tn over a five-year period for nine industries might be good news for those sectors, but it’s not stimulative at all froma macro perspective.
Throwing another half a trillion in the money pit to displace the fragile US consumer recovery should be sufficient to intercept even today's ridiculous market action. Because seeing a down day in this retarded market is now pretty much a joke.
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http://www.businessweek.com/news/2010-04-26/china-stimulus-plan-report-i...
As all people say about US monetary policies:
"What you do when you have a hammer as only repairing tool?
You smash the %$# out of everything."
The stimulus is a done deal, Hang Seng 60K here we go!!!
Cost of forward planned "social stability".
Bloomberg, again! Always has its stinking hands on rumors to pump the markets. Should be investigated along with the squid.
Don't care, closed all my positions yesterday and paid off the last of my debts. I am now financially free and can watch the "fireworks show gone wrong" without having to participate in it. Godspeed everyone.
There will be no escape, not even on the sidelines. You will be sucked into the vortex like everyone else. Your only hope is for a few extra seconds of life dancing on the event horizon.
Cue the survivalist "prepper" asshats who will tell you to get handgun training for your girlfriend so she can protect your hoard of gold coins while you are out pillaging.
Cue the keynesian "progressive" asshats who will tell you to get an abortion for your girlfriend so she still looks good walking to the Berkeley post office to pick up your trust fund check while you are out canvasing for ACORN.
Now that was good! A friend of mine taught his wife how to shoot , and guess what?? She tried to shoot him! True story...gun was empty....
and the rest of the story?
pure evil, that was freaking awesome! you live up to your name.
+100,000 pure evil or DOW 100,000 wichever you prefer
Good on you brother! One day I shall reach that promised land called financial freedom. Or just pray for hyperinflation to kill my fixed interest debt and that i don't run out of ammo.
Well done Whiz! A good example to set.
how much more Keynesian economic terrorism does it take to see that his policies are complete bollocks
surely that has been proven by now??
Keynes will go down as being the most dangerous man that ever lived
his policies have literally destroyed the entire world
more than a world war but still they blindly follow it
I thought the Chinese were meant to be clever
why are they following flawed western thinking?
I thought you had the beginnings of a good joke there:
How many Keynseian economic terrorists does it take to fuck up the world?
I guess the joke is on everyone though unfortunately.
ALL THEY ARE DOING IS AVOIDING THE INEVITABLE...THE POPPING OF THE BUBBLE THAT IS COMING..THEY HAVE NOT LEARNED JACK EITHER....GOT GOLD OR FOLD.....
Chinese stimulus? Push on that rope, boys! We'll get 'er unstuck one way or another!
Keynesian supernova---I love it!
"China has no problems with nomenclature so it calls it how it is"
Really? They didn't call it the "Great Stimulus Forward" or the "Cultural Monetary Revolution" or "Mao's Little Red Fiscal Book" or the "Chinese Paper Tiger"?
All things considered, China has the weakest hand at the table; fools. They don't know who the sucker at the table is, they think they are ahead of the game, and thus their fate is sealed. I would conjecture this reality dawning on them is the real reason for NK getting uppity. Poor China, used by the West again, and left to its punishing demographics; again. Ever wonder why China didn't conquer the world when their technology was vastly superior for nearly a millenia?
they didn't conquer anything b/c of their inward looking society. MIDDLE kingdom. they are distrustful of the rest of the world. They had a massive fleet with long range ships, the emporer got scared and had them all burned. I don't feel bad for them though.
They should just use up all the dollars they can to secure resources.
And European colonialism brought just how much benefit to the citizens of those realms? Are the British today better off than they would have been without their former empire? Or the French? Or the Spanish? Or the Russians?
Maybe the Chinese were smart to have burned those ships. Expansionistic imperialism has brought misery and death to billions throughout history, and benefited NOBODY except the psychopathic ruling elites who fostered it in the name of "patriotism" and "glory".
Not that I completely disagree with you on the ultimate beneficiaries and implications of empire, but... I do have unfettered access to tomatoes and spices.
The real reason China didn't conquer the world with numbers and technology on their side?
"You fell victim to one of the classic blunders - The most famous of which is never get involved in a land war in Asia." - The Princess Bride, Vizzini
Hard for the Chinese not to fight a land war in Asia, and their "country" is made up of a vast mix of languages, cultures, and ethnicities. They have a hard enough time keeping China Chinese, and the peasants from rebelling, to worry about the rest of the world; historically speaking.
akak, i did not place a positive or negative opinion on their attitude, all i did was answer crabs Q.
though i like crabs answer.
btw, the american empire with be our downfall. 700-800 bases worldwide. overeach.
i reccomend everyone read Nemisis by Chalmers Johnson
Sorry, AS, if you took my reply as a rebuttal or attack on your comment --- it was certainly NOT intended to be such. I did not interpret your post as being in support of imperialism, and was responding more generally to the concept rather than to you in particular. I apologize for the ambiguity.
They better do that quickly
they should just spend that money and give everyone free booze for a few years and food
serves the same purpose ie stops people rioting
but is more useful than bulding stuff that noone needs
might as well go out with a party.
I guess if you already have one vacant city there is no harm in building another
fools
To take a contrarian viewpoint the monies could come from dumping of foreign treasury/gov't bond holdings. Or just some jawboning to prop up the Shanghai index has broken down from a triangle formation.....
Either way, got gold!?
So, who will be the first to announce a stimulus package in the Quadrillions, Bernanke or China?
how about Europe? I believe their aging population is worse than ours (but maybe not worse than Japan's?)
I would like to remind everyone that Keynes theorized that governments should run a surplus during economic expansions, not just plain spend to oblivion like our gubbies are doing now. So putting so much of the blame on him is unwarranted.
That being said, I think Keynes was full of $#!?.
Agreed, Keynes is just some politician-ass-kissing econ guy. it's those who enacted and continue to run his playbook and not save or bank the surplusses who are the crooks.
"it's those who enacted and continue to run his playbook..."
i think that's mr. schump's point: the crooks have bastardized his playbook to their benefit.
Great coverage as usual Tyler.
Welcome to the New World Order. I can finally smile at a few of those damned communist phrases.
Another reason to hold gold, bitches!
"At this point all economies will spend money into overdrive until each and every economy (that can print its own currency) simply implodes into a Keynesian supernova." Nicely said. Informative and always entertaining.
And you do realize, of course, that the creation of gold can only occur as a result of supernova explosions.
Just uploaded a Dow weekly chart showing a bearish broadening top pattern.
And Euro is breaking down now.
MARKET UPDATES:
http://www.zerohedge.com/forum/latest-market-outlook-0
First, the doelarr "strength" to continue tightening the trading range of Euro/USD. The move to $1.30 will happen quick, in the next week or two. DXY to trade roughly at 81.5. Gold and silver will continue to make nominal highs against the Euro, as well as push back up to the nominal highs for the doelarr. Then there will be a move down to $1.25 Euro USD with the DXY staying in the 81.5 range. By late May, the pressure from the doelarr will have peaked, as the State budgets of Amererica will once again be addressed. California, will legalizing pot combine with personal investment by Walled Street in Hollywood save your ship?
http://www.zerohedge.com/article/here-how-your-new-soon-be-worthless-mon...
4.21.10
"Then there will be a move down to $1.25 Euro USD with the DXY staying in the 81.5 range. "
The DXY is at 82 today as Euro touches 1.31, so you think the DXY will fall to 81.5 when the euro falls further to 1.25? You know something we do not about the DXY? Or you assuming the sterling yen etc would outperform the dollar even as the euro touches the abyss?