“China’s Consumer Prices Decline 1.4%, Aiding Recovery (Update2)
By Daniel at 10 June, 2009, 11:39 am
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By Bloomberg News
June 10 (Bloomberg) — China’s consumer prices fell for a fourth month, making it easier for the government to keep interest rates low and boost spending to revive the world’s third-largest economy.
Prices dropped 1.4 percent in May from a year earlier, after falling 1.5 percent in April, the statistics bureau said today. The median estimate in a Bloomberg News survey of 16 economists was for a 1.3 percent decline. Producer prices fell 7.2 percent, the most on record.”
Did you all note how “Decline 1.4%, Aiding Recovery” - how come we keep hearing “deflation” is the biggest horror, worse than inflation, yet we are supposed to believe it will revive China? Reality is the producer prices - demand has plummeted so bad that the producers are not getting ROI. The economy there is worsening along with the rest of us, it is an EXPORT based economy, not strong enough to drive from within. Their stimulus using our money saved over the years will carry them for a time, but with global markets drying up, the downside is much bigger.
The larger question is whether or not China will be buying our debt today or will Ben be making the purchases as buyer of last resort. China is more likely to purchase real assets rather than a declining dollar.
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