The Union finance minister, Mr Pranab Mukh-erjee, on Sunday expressed concern over the spiralling inflation, the country’s increasing current account deficit and trade imbalances. “These are the issues which raise concerns. Inflationary pressures are there and non-oil imports are rising,” he told reporters on the sidelines of an event here on Sunday. He said that imports of capital goods, raw materials and intermediaries are rising, widening the trade gap. Though financing the trade gap was now manageable, he cautioned that if the situation continued to be like this, the scenario would be uncertain. The finance minister said the import bill would rise further due to high oil prices. “I do not know to what extent we will be able to control import of petroleum products,” he said. |
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rssFinally, China Acknowledged The Bubble
China’s lending surged to 1.39 trillion yuan ($203 billion) in January and property prices climbed the most in 21 months. According to the National Development and Reform Commission property prices in 70 cities of china have rose 9.5% from a year earlier. The surge of prices has been due to the affects of easy lending followed with uncontrolled flow of funds
in to the main streets. Real estate is one of the sectors where prices have scaled up. Automobile followed with cements and capital goods are also under the ambit of excess flow of funds resulting over capacity bubble .Asset prices and commodity prices are also under the threat of excess valuation.
in to the main streets. Real estate is one of the sectors where prices have scaled up. Automobile followed with cements and capital goods are also under the ambit of excess flow of funds resulting over capacity bubble .Asset prices and commodity prices are also under the threat of excess valuation.It’s not due to the stimulus package alone declared by china but the uncontrolled loans given by banks without taking care of any quality measures on the loan papers. Its juts like US mortgage case where quality of loans was never taken in to account. China’s 9.35 trillion yuan of loans in 2009 have given birth to the fear of another financial crisis in the fastest growing economy.
given by banks without taking care of any quality measures on the loan papers. Its juts like US mortgage case where quality of loans was never taken in to account. China’s 9.35 trillion yuan of loans in 2009 have given birth to the fear of another financial crisis in the fastest growing economy.The borrowing in the month of January’s was 14% less than a year earlier, after the government targeted a reduction in new loans this year to 7.5 trillion yuan from a record 9.59 trillion yuan in 2009. This have happened due to the strict norms declared by china during the end of January 2010.Chinese banks are now focusing and have instructed on the quality of loans that are being disbursed. The new lending norms framed by china are:
Kiss That V-Shaped Recovery Good-Bye: The U.S. "Worse Than Greece," Says Economist
There’s been many letters and symbols used over the last year to describe the shape of the U.S. economic recovery. There’s the strong V-shaped recovery; the square root shaped recovery to connote a strong recovery followed by a period of flat to no growth; and the W-shaped recovery favored by those believing in a double dip recession.
Tech Ticker guest Michael Pento has a new twist on the discussion. Pento, senior market strategist with Delta Global Advisors believes this is a tee-pee shaped recovery with the top of that tee-pee having already formed in the fourth quarter.
Pento is negative on America’s near term economic prospects for three main reasons: too little bank lending, too few jobs and too much public and private debt. “I’ve never seen a v-shaped recovery occur when commercial bank lending was down 7% year over year. So, small business are not getting loans to create capital goods and to expand and hire individuals,” he observes.
Exacerbating the problems at home, is what he describes, as a weak economy abroad. With China looking to clamp down on growth, the EuroZone struggling with its own debt problems, Pento asks, “Where is the growth going to come from in demand from overseas?
When he says “demand” he’s referring not only to products and services but also to our growing debt burden. As the price of servicing our deficit grows, when the Federal Reserve tightens monetary policy, Pento is confident others will realize what he already does: the situation in the U.S. is “worse than Greece.”
The way he sees it, there’s a strong potential for a bond and dollar crisis when China starts selling Treasuries. “Tell me which shape recovery that will yield for the United States?”