First ECB, Now China Says Has "No Plans For Massive Stimulus"
First the ECB kicked the stimulus junkies in the crotch in the after hours session, now the PBOC is about to eat their faces for breakfast as both rumors causing overnight and intraday stock ramps are systematically denied. From Bloomberg: "China has no plan to introduce stimulus measures to support growth on the scale unleashed during the depths of the global credit crisis in 2008 according to the nation’s state-run Xinhua News Agency. “The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday in the seventh paragraph of a Chinese-language article on economic policy, without attributing the information. “The current efforts for stabilizing growth will not repeat the old way of three years ago." And with that the rug is pulled out from below anyone praying for non-Fed stimulus.
Which only means one thing: those addicted to monetary morphine better pray that this Friday's NFP number come at worse than -1,000,000 as otherwise, with the rest of the world just saying no to more inflation (and not having the safety of a $16 trillion shadow banking deposit-free inflation buffer), Bernanke just may not have the standing to unleash the final CTRL-P onslaught. Of course, with the global Bernanke Put sadly dominating habitual gambler thinking until at least one bank is allowed to fail under the weight of its countless liabilities, idiotic rumors such as these will continue sending risk higher, only to be denied, and to have the whole game repeat over and over.
Pumping in government money to achieve growth targets is “not sustainable” and China will instead focus on encouraging private investments in railways, infrastructure, energy, telecommunications, health care and education, the story said.
China’s benchmark Shanghai Composite Index has gained 1.8 percent since Wen’s call for growth was published May 20. The National Development and Reform Commission may be accelerating construction approvals as part of China’s response, with the planning agency last week saying that Baosteel Group Corp. and Wuhan Iron & Steel Group won permission to build 134 billion yuan ($21 billion) of new factories. The NDRC had delayed approving the two steel projects in 2009, citing industry overcapacity.
Credit Suisse said spending on investment will probably range from 1 trillion yuan to 2 trillion yuan. Standard Chartered said China is starting a “mini-me” version of the prior stimulus.
China’s economy is forecast to expand 8.2 percent this year, based on the median estimate of analysts surveyed this month by Bloomberg News. That would be the least since 1999.
“Unlike in 2008 when the Chinese government rushed to spend, the new stimulus package will be small and modest,” said Zhang Xinfa, an economist with China Galaxy Securities Co. in Beijing. Bank lending will play a smaller role in the new round of investment, he said.
It increasingly looks like that the episode of coordinated global interventions, which started in 2011, may be over rather prematurely, leaving just one former Princeton university professor in charge of the global negative cost of money.
What can possibly go wrong.
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