Now the China syndrome.
With whats happening with ECB money printing and EU bailouts, China now appears to be disinterested in tightening monetary policy
A shrinking trade deficit and a loose monetary policy that has spawned the housing bubble in China. China with overcapacity (exports slowing) and now slowing input credits into their terms of trade points to one thing: a rapid slowdown.
Frightening
From Bloomberg:
"China’s trade surplus shrank 87 percent from a year earlier as imports grew at a faster pace than exports, the state-run Xinhua News Agency reported.
The surplus was $1.68 billion, Xinhua said today on its website. Exports rose 30.5 percent from a year earlier to $119.9 billion, while imports climbed 49.7 percent to $118.24 billion.
The 79 percent decline in the trade surplus this year, reported by Xinhua, may ease pressure for gains in the yuan and strengthen Premier Wen Jiabao’s argument that the currency isn’t undervalued. The sovereign-debt crisis in Europe that today prompted a loan package of almost $1 trillion to help nations under attack from speculators may also encourage Chinese officials to delay ending the yuan’s peg to the dollar.
“The trade surplus will continue to narrow this year as booming domestic demand supports imports and the European debt crisis clouds the outlook for global demand,” said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia who formerly worked at the International Monetary Fund and the European Central Bank. “Improvements in the trade balance may help to reduce pressure for the yuan to appreciate.”
In Europe, China’s biggest export market, the 16 euro nations will offer financial assistance for debt-laden countries and the European Central Bank said it will buy government and private bonds. The crisis that is centered on Greece roiled global markets last week and highlighted Chinese officials’ concern that the world could face a second economic slump. "
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