Word: stimulus
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...social unrest that can force them from power, will succeed in buying their way to their target of 8% GDP growth, the magic number that will supposedly ensure that enough of the 1.3 billion population will have jobs. The central government has already started spending $585 billion in fiscal stimulus, second in size only to America's $787 billion (and counting) package. A second stimulus package valued at 130 billion renminbi ($19 billion) is expected to be unveiled soon...
...stranger to deficit spending, Japan approved this month a new Policy Package to Address the Economic Crisis worth $156 billion, its third fiscal stimulus package since September - and the umpteenth attempt to jumpstart the economy since the bursting of the asset bubble way back in the 1990s. None of the previous attempts worked, in part because much of the money went to wasteful public works spending in the bailiwicks of ruling-party politicians. The latest spending appears to make more economic sense, targeting job-creation, support for the equity market, increased transfers to regional governments, health-care spending, and energy...
...pockets of politicians and other vested interests. The other issue is the long-term damage to economies from the sheer size of the deficit spending. The Chinese spending is equivalent to nearly 13% of GDP while that in Japan comes to 5%. Australia's fiscal stimulus equals 5% of GDP too, while Korea's is at 3.7%, Taiwan's at 3.4% and Thailand...
What does all this mean to personal investors? Be cautious, and don't chase dazzling performance numbers. Economic recovery may indeed arrive early in China, or at least before it appears in the US. But government stimulus does not naturally translate into sustained private investment, so there will likely be nasty hiccups along the way. So far, at least, most Asian stock markets seem to be blissfully unaware of that risk...
Governor Rick Perry didn't actually endorse secession when he spoke at an antitax tea party at Austin city hall. But you could forgive people for misunderstanding, since he's been railing against an overreaching Federal Government, rejected stimulus spending and quoted Sam Houston's declaration that "Texas has yet to learn submission to any oppression." Perry, who faces a tight re-election campaign against that notorious Washington insider "Kay Bailout Hutchinson," observed that he thought the U.S. was still a "great union," but "if Washington continues to thumb their nose at the American people, you know, who knows what...