And Chinese leaders about to convene some Chalk Talk about their next five-year plan and the wages of their Union at the top of the agenda-around inapplicable.(3) the average of the inflation in the sort by this worldwide? Our pal Sy Harding presses ...
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China: 800-Pound Gorilla of inflation
Being Street Smart tags
Sy Harding
7. the March 2011
When it comes to growing worldwide triggered inflation, apparently, is "goes, so goes the world than China."
China is the 2nd largest economy in the world, and as soon as possible, the security barrier, among other statistics in the U.S. is the world's largest importer of copper, steel, cotton, and soybeans, and the world's largest exporter of the goods-not say anything, the world's largest owner of U.s. debt.
Inflation fears have been Circling the Earth in recent months, blaming the US Fed, many of the other round of quantitative kuljete, launched last fall to give the economy another boost for the United States.
However, the fears of the people's Republic of China began a year ago. The Chinese launched a massive 585 billion dollar economic incentive plan for the economic crisis in the depths of two years ago. The size of its economy at the time was considerably greater than even the United States launched massive stimulus plan All so easy money chasing limited the supply of investment goods, properties, and margins on sales to the Chinese economy and the stock market Bubbles.
The problems began last year, returning home to roost. After surging world stock markets with the rest of the first half of 2009, the Chinese stock market rolled up a bear market, where it lost 33% of its value in its small plunge last July.
Easy money in China's economy remained in a system, and moved to Bust continued its stock market in the real estate sector (sound familiar?) The Speculation.
Concerns about the soaring buildings flooded its economy and, finally, to ask the Chinese prices to begin reversing lamps makes it easy money policy a year ago. It began with the raising of the banks ' capital reserves, was in possession of valid money off of the financial system and down payments to increase the size of the buy in real estate. When these efforts was the impact of the sharp economic, real estate speculation or inflationary pressures, the Central Bank of China started to raise interest rates. And as the problems persisted, has become increasingly aggressive in several hikes in interest rates and increases in Bank reserve requirement, the most recent is carried out in the last week.
General Spike-up food and oil prices have helped you. But China's inflation problems are not limited to real estate and the prices of raw materials, either.
China is the economic development when it needs and by adding the products to the domestic demand and to move away from dependence on exports, wants to stage. To achieve the objective of the wages and salaries must rise to move the more middle-class population.
China's major cities and ports of the minimum wage has already raised an average of 10%. In the meantime, the Chinese people's Congress meets this weekend to establish China's next ' five-year action plan. An important feature is the continuation of the factorial of higher wages and salaries.
Wage-price inflation is the worst kind of inflation, because it feeds on itself. Such as wage increases, businesses to increase their prices. Price rises further, workers require increasing wages and difficult to stop inflationary spiral to get running, such as occurred at the global level the motor insurance directives.
China is the world's largest exporter of potential wage-price spiral has a serious impact on the rest of the world.
For example, the November inflation problems in mainland China into Hong Kong, where the roiskunut index of consumer prices rose by 0.5%, 6% annualized amount the fastest monthly increase since the mid of 2008.
Last month, on the basis of the Li & Fung Ltd, Hong Kong s.a.r., Wal-Mart, the largest supplier of products that have their head office in China and predicted the Hong Kong export price increases to up to 15% this year. Britain, next Plc, the second-largest retailer said it expects higher labor costs in China in the lead in the first half of this year the prices increased by 8%.
Rising inflation has already become an important global economies, including China, Hong Kong, India, Brazil and the emerging markets, such as South Korea, Indonesia and Singapore, both inside and outside a major problem. And their stock markets down in November has exceeded the 10% and 17%, concerns about interest rates rising and the tightening of monetary policy, which has already begun, to combat inflation pressures required.
The same inflationary pressures have yet arrived in the United States and the opinion of the European and the consensus has been that the interest rates in the United States and Europe, as the case may be, may remain in the record lowest, at least until the end of this year, destroying vermin 2012.
But the Chief of the European Central Bank shocked analysts on Thursday, saying that the tyre pressure must indeed become worrying the ECB could raise rates by more than: the 17-nation euro zone as soon as its next meeting in April.
Which leaves Us Fed Chairman Bernanke about the General central bankers only, recognizing that what began a year ago, the people's Republic of China is the Spiral is a globe, pushing the pressure subsiding, the people's Republic of China.
That satisfaction is not likely to take much longer, or it is too late.
In the meantime, another historical reminder: Gold is a hedge against inflation.
Sy Harding is the editor of the Street Smart report and on the free market blog, www.streetsmartpost.com.
This article was originally on our sister site, www.ContraryInvesting.com.
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