Thursday, October 21, 2010

CHINA AND THE TIGHTENING CYCLE

There was an attack by the news today, but history is lost in the shuffle - the Chinese raised rates of interest for the first time since 2007.? This is a very real signal that they are worried about overheating.? Bloomberg:

"China would be wise raise rates" Dariusz Kowalczyk, a senior economist at the base of Hong Kong to agricultural credit, said ahead of the announcement today of today. ""He led the global recovery and still is one of the few emerging Asian Nations who have not begun to reversing steep rate cuts orchestrated during the crisis."

Chinese officials are faced with the risks created by recording 9.59 trillion yuan ($1.4 billion) last year credit
boom fed back from the nation of the world recession.Prices in 70 Chinese cities increased 9.1% in September from a year earlier, according to the Statistical Office.

China will accelerate the introduction of a tax of property trial in certain cities and then expand the levy to all
country, the Government has declared September 29 without giving a .the calendar ' State also told to stop commercial banks
provides loans to third and extended home buyers a 30 per cent in the obligation to pay to all purchasers of the first House.

These sorts of actions will certainly put a damper on economic growth in the coming months - a necessary step in container more problems, but also a wind face in the short term.Morgan Stanley has already provided historical manual for a phase of clamping:

Eswar Prasad, senior fellow at the Brookings Institution and Professor at Cornell University provided some excellent insights on the situation:

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