From the New York Times:
…From street markets to corporate offices, consumers and executives alike in China are trying to cope with rising prices. The National Bureau of Statistics announced on Saturday that consumer prices in China were 3.5 percent higher compared with a year earlier, the largest increase in nearly two years.
To make matters worse, inflation over the short term also seems to be accelerating. A seasonally adjusted comparison of August prices to July prices showed that inflation was running at an annualized pace closer to 4.8 percent.
Prices are rising in China for reasons that many Americans or Europeans might envy. The economy is growing, stores are full and banks are lending lots of money, according to other statistics released by the government on Saturday. Compared with August of last year, industrial production rose 13.9 percent last month, retail sales increased 18.4 percent, bank lending climbed 18.6 percent and fixed-asset investment surged 24 percent…
Look for more stories soon about the Chinese economy and how we can learn from it. China’s economy is “growing” because of massive government money-printing and banks lending money like there’s no tomorrow. Trouble is, tomorrow is coming – and China, already filled with empty offices, empty malls and even empty cities is simply force-feeding itself in to the appearance of growth. As long as the bills never come due this will continue to work.
This, of course, is what Obama and Co hoped would happen to the US economy – shovel a lot of money in to it, and watch growth take off. What killed the concept was the amount of debt we already carry – government and personal. China had relatively low debt at the start of the crisis…but they are massively increasing it, and placing the debt on a fundamentally weak economy (weak because most of the people live in grinding poverty or a sort Americans can’t even imagine). This won’t be pretty once that bill comes due.
I figure the bill is probably going to be presented for payment pretty soon…
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