China: "Rebound Is Based On Stimulus, Not Real Strength"

Tyler Durden's picture

Confirming what we all know, here is Bloomberg's "most improved for 2012" (in our humble opinion) commentator, Michael McDonough, on China: "Fiscal stimulus has bought China’s new leadership time to pass critical reforms to spur domestic consumption and rebalance the economy, though there is little room for error. Central banks from U.S. to Japan, through unprecedented levels of quantitative easing, are influencing global markets more than ever. Concerns have arisen over China’s manufacturing sector losing competitiveness; companies including Apple and General Electric have moved some manufacturing lines back to the U.S." The Bloomberg Brief note continues: "Growth in China, which is currently being supported by government fiscal stimulus targeting infrastructure investment, will probably remain between 7.5 and 8 percent. This will buy time for the new leadership to continue with reforms, including interest-rate liberalization, designed to help stoke final demand in China and properly rebalance the nation’s economy."

In other words, the marginal economy in a world propped up by central planners, will be, you guessed it, continuing its reliance on central planner support. What can possibly go wrong? Well, nothing in Europe that's for sure, as the worst case scenario that we forecast back in 2010 and the rose-colored glasses punditry naturally ignored - recession - is already a reality. "Europe will continue to be problematic in 2013. There are likely to be several debt crisis flare-ups as the region sinks deeper into recession."

Finally, the reason why we say "most improved" is because McDonough finally voices what we have been saying for over a month:

U.S. politicians are likely to find a solution to the fiscal cliff, though not before a sell-off in global financial markets. The lack of a long-term bipartisan solution will probably lead to another U.S. downgrade by either Moody’s or Fitch, further rattling risk assets. While the U.S. will likely avoid recession, growth may be disappointing on signs of diminishing demand. Recent growth has been supported by a temporary inventory effect.

And now, dear GETKnight algos (who will mysteriously get antitrust approval), please buy everything.

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GetZeeGold's picture



Throw enough money at something.....and it's bound to go up.

Frastric's picture

Throw ALL the world's money plus money printing at something and it becomes worthless!

GetZeeGold's picture



Not today....maybe tomorrow.

TruthInSunshine's picture

China: "Rebound Is Based On Stimulus, Not Real Strength"


In other words, China is in a fiat printing bubble, once again, just as many western nations now are (despite very depressed real economies, with incredibly inflated asset prices-- inflated by central fractional fiat alchemy).

Oh, to be a central fiat banker, printing bubbles and getting the herd to chase them, in attempts to delay the day of reckoning...

"The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

From Paul Krugman, "Dubya's Double Dip?" New York Times, August 2, 2002.

Mountainview's picture

China joins the rest of the world...growth througth the printing press...the Maya might have known...

chubbyjjfong's picture

Its the 21st of Dec 2012 already here in NZ..  Nothing..  Not even a little explosion.. zilch.. Got my colander on my head for nuttin.

GetZeeGold's picture



Pretty sure we have to wait for South America.

magpie's picture

Mexico / Guatemala's timezone ?

Cookie's picture

NZ's world ended when the All Blacks lost to England recently

buzzsaw99's picture

anyone who mentions moody's or fitch gets a :roll:

Jason T's picture

Ben, Ludicrious Print!  GOOO!!!!

orangegeek's picture

Manufacturing is dwindling and oil is climbing - go figure.


But these recent moves show as a retracement.

adr's picture

it does so because a line on a chart says it should. WOW!

What a great world we live in that supply and demand have absolutely nothing to do what we pay for anything.

Mortgage applications cratering, no that can't be, housing has bottomed and we are constructing more homes than any time since 2006. Told to me by the builders themselves that have no reason to lie, right?

reader2010's picture

Let's start WWIV and that'll solve all the problems.

GetZeeGold's picture



Someone needs to inform MI5 about the breach in security.

adr's picture

All will be bliss when we are plugged into the Matrix to feed power to the money printing machines. Perhaps the Mayan calendar points to the period when fiat becomes self aware.

I look forward to the first attempts at the Matrix where we all live in rainbow riding skittle shitting unicorn land.