Word: stimulus
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...Unlike Chang, Pivot Capital appears to accept China's reported growth in 2009 at face value, but says the "burst in economic activity has been inflated by a front-loaded stimulus package and a surge in credit growth," two drivers that will run out of steam in 2010. "The chances of a hard landing are increasing," the report warns. "The coming slowdown in China has the potential to be a similar watershed even for world markets as the reversal of the U.S. subprime and housing boom...
...reason is that the roaring real estate market is complicating Beijing's decisions on when and how to unwind the drastic stimulus measures that policymakers put in place to combat the global recession. There is clearly a link between Beijing's ultra-loose monetary policy and the run-up in property prices. The amount of new loans granted by Chinese banks in the first 10 months of 2009 surged an eye-popping 144%, to $1.3 trillion, from the same period in 2008. The easy money policy has led to a fantastic increase in property deals - up 82% in October...
Still, policymakers must tread carefully. With exports improving but still weak, exiting stimulus measures too soon could derail the economy's recovery. Even restraining the property market could affect growth, since investment in the sector - which accounts for a full 10% of GDP - has been a key driver of China's overall economic rebound. Investment in property jumped nearly 18% in the first three quarters of 2009 from the same period in 2008. (Read "China's Own Version of the Real Estate Bust...
...economists believe that the longer Beijing keeps the stimulus tap open, the greater the danger that the good times in Chinese real estate could turn ugly. Louis Kuijs, a China economist at the World Bank in Beijing, commented in early November that even though Chinese policymakers may not need a "major tightening" right away, "risks of asset price bubbles and misallocation of resources in the face of high liquidity need to be mitigated." Kuijs concluded that "the overall monetary stance will have to be tightened eventually." Beijing's big test is to make sure that doesn't happen too early...
...truth be told, we’re not too far off from a Department of Culture as it is. We just need tie it all together. In addition to the National Endowment for Arts—which received $50 million in stimulus money—we have the National Endowment for the Humanities, Institute for Museum and Library Services, National Public Radio, the Corporation for Public Broadcasting, the State Department’s cultural programs, and ,of course, the Smithsonian. All in all, the argument against rolling out the frontiers of the state is pretty weak—they?...