huangthomas

China Stockpiles TIPS, Anticipates Commodities Bubble

In 70's, the house cost was replaced by rent or rent equivalent of your own house in calculating cost of housing. During the last housing bubble, house price rose and the rent fell because renters were buying into the bubble. If you don't like the inflation figures you don't like, you can always manipulate the way it is calculated.

Most people feel that the government's inflation figure of 3% is too low. We can feel the price increases close to 8%. The government argue that 5% are due to "quality improvement" of goods and services and not due to inflation. Ha! what a "quality improvement" of our daily living.

China Stockpiles TIPS, Anticipates Commodities Bubble

China didn't raise any questions regarding investment in treasuries until US started "quantitative easing" (printing money). This is a prelude to inflation. China intends to protect their future investment in treasuries against inflation and ask for inflation-protected treasuries. It is so simple. I must admit I can't stand to finish reading the post. Make it simple, s.........

The Economist In One Bite

During the waning day of Chairman Mao's rule, more than 50% of annual national budget went for subsidies for government-owned-enter... which produce nothing or something no one want to buy. Therefore, they are mostly public debt. Thereafter, Chinese design an ingenious way to hide the public debt and to make them look financially prudent. They buried the public debt as non-performing loan in government owned banks, which serve the role of treasury. Private banks are few and small. Major lending of Banks are approved by the government. NPL of banks, thus the public debt, become a huge unknown. Over years, the government transfer close to trillions of $ from foreign currency reserves of People's Bank of China to prepare several banks for oversea IPO: Construction Bank of China, Bank of China, Commercial and Industrial Bank of China (CIBC), Bank of Communication............ They were the acts of paying back public debts. Considering the magnitude of the NPL, I have never heard of bank officials ever being sacked or punished for major NPL. The message is clear.