Saturday, June 9, 2012
Bad News for China
Chinese industrial output and retail sales are slowing as reported by Bloomberg. Note that faulty Keynesian analysis by the report also sees lower price inflation as bad sign. In fact, the Chinese are in the same Keynesian position between a rock and a hard place with not much they can do via stimulus. So says the Financial Times. Previous government inflation has fostered massive malinvestment. Now China's business cycle is turning from the inflationary boom phase to the bust and its government is trying to prop up the boom by lowering interest rates for the first time since 2008. It is following the same path of the United States. There is good reason to expect the same dismal results.