The Atheist
15th March 2009, 06:33 PM
It seems that China is seen by many as the answer to the world's economic woes.
That theory is being quickly eroded on several fronts, but a major one is the fact that the Chinese stock market is being propped up by the government while the real share price - as reflected in Hong Kong prices - is trading at a 40-50% discount to mainland prices. (http://www.bloomberg.com/apps/news?pid=20601087&sid=aDtidHGVUJpg&refer=home)
The inevitable downturn in China's market cannot be far away, an event which will wipe out trillions of yuan from the portfolios of those who are hoped to save the world.
Even China's pockets are not bottomless, and their concern at the high USD is already evident, where their trade surpluses are quietly vanishing at an interest rate of 0.25%.
Looks to me as though the answer might be a little more prosaic than China saving everyone's bacon.
That theory is being quickly eroded on several fronts, but a major one is the fact that the Chinese stock market is being propped up by the government while the real share price - as reflected in Hong Kong prices - is trading at a 40-50% discount to mainland prices. (http://www.bloomberg.com/apps/news?pid=20601087&sid=aDtidHGVUJpg&refer=home)
The inevitable downturn in China's market cannot be far away, an event which will wipe out trillions of yuan from the portfolios of those who are hoped to save the world.
Even China's pockets are not bottomless, and their concern at the high USD is already evident, where their trade surpluses are quietly vanishing at an interest rate of 0.25%.
Looks to me as though the answer might be a little more prosaic than China saving everyone's bacon.