Page 4 of 5 CREDIT BUBBLE BULLETIN Only cure for a bubble
Commentary and weekly watch by Doug Noland
yuan ($586 billion) plan to sustain its economy ... China's cabinet pledged
'fast and heavy-handed investment' in housing and infrastructure through 2010
and a 'relatively loose' monetary policy ... "
November 11 - Bloomberg (Li Yanping and Nipa Piboontanasawat): "China reported
the slowest export growth in four months ... Exports climbed 19.2% in October
from a year earlier after gaining 21.5% in September ... Imports rose 15.6%,
the least since June 2007. The trade surplus swelled to a record $35.2 billion
... "
November 14 - United Press International: "A declining export
market contributed to the closing of 67,000 factories in China from January
through June, government data revealed. While exports are still growing, the
annual growth rate of 9% in October contrasts sharply with the September 2007
annual growth rate of 26%, The New York Times reported ... Closing factories
have left thousands of Chinese workers angry over the loss of back pay, leading
to some clashes with police, the Times said."
November 13 - Bloomberg (Nipa Piboontanasawat): "China's industrial output grew
at a slower pace than any economist forecast in October, stoking concern that
the biggest contributor to global growth is running out of steam. Production
rose 8.2% from a year earlier, the smallest gain in seven years ... Output grew
11.4% in September."
November 12 - Bloomberg (Nipa Piboontanasawat): "China's retail sales rose 22%,
close to the fastest pace in nine years, signaling that domestic demand may
help the fourth-biggest economy withstand a looming global recession. Sales
climbed to 1.008 trillion yuan ($148 billion) in October, the statistics bureau
said today, after gaining 23.2% in September from a year earlier."
November 13 - Bloomberg (Wang Ying and Winnie Zhu): "China's power production
fell 4% in October, the first decline since March 2005, as a slowdown in the
world's fourth-biggest economy cut demand."
November 11 - Bloomberg (Nipa Piboontanasawat): "China's money supply grew at
the slowest pace in more than three years as the economy cooled. M2 ... rose
15% from a year earlier to 45.31 trillion yuan ($6.6 trillion) at the end of
October ... That was less than September's 15.3% gain ... "
November 10 - Bloomberg (Lee J. Miller): "China's property market is struggling
most in export-dependent regions, such as along the Pearl River Delta in the
south near Hong Kong, illustrating the relationship between the global economic
slowdown and investment on the mainland, analysts said ... "
November 10 - Bloomberg (Chua Kong Ho and Judy Chen): "China's slowest growth
in five years is finally making carpet salesman Edwin Hong pay attention to his
doctor's advice: Stay off the hairy crabs. An autumn delicacy in Shanghainese
cuisine, the cholesterol-rich crustaceans can wholesale for as much as $80 a
kilogram during their October-November season, or a quarter of the average
monthly salary of a new university graduate in China's largest city. 'In times
like these, your definition of what is a necessity changes,' said Hong ...
'Hairy crabs were a necessity for me in the past, but now they're looking more
and more like an extravagance. My doctor will be very happy.'"
Japan Watch
November 11 - Bloomberg (Toru Fujioka): "Japan's consumers became the most
pessimistic they've been in at least 26 years ... The confidence index dropped
to 29.4 last month from 31.4 in September, the Cabinet Office said today in
Tokyo. It's the lowest since the government began compiling the figures in
1982."
November 10 - Bloomberg (Jason Clenfield): "Japanese machinery orders tumbled
10.4% last quarter, matching the biggest drop on record ... The decline in
orders, an indicator of capital spending in the next three to six months,
matched a record drop set 10 years ago ... "
November 11 - Bloomberg (Finbarr Flynn): "Lending growth at Japanese banks
accelerated in October to the fastest pace in more than 16 years as the global
credit squeeze shut off other funding avenues for companies that had previously
shunned borrowing. Loans, excluding those by credit associations, rose 2.5% in
October, the fastest pace since August 1992, the Bank of Japan said today.
Lending grew by 1.8% in September."
India Watch
November 13 - Bloomberg (Subramaniam Sharma and M.C. Govardhana Rangan):
"Mukesh Ambani and Lakshmi Mittal led India's richest in losing $200 billion
this year as the global financial crisis triggered a plunge in stocks and
property values, Forbes Asia said. The combined wealth of India's 40 wealthiest
people slumped 60% to $139 billion, the magazine said ... Mittal ... lost his
top position to Mukesh Ambani of Reliance Industries Ltd. Mittal lost $30.5
billion after the world's biggest steelmaker ArcelorMittal extended production
cuts."
November 11 - Wall Street Journal (Santanu Choudhury and Nitin Luthra):
"India's local car sales in October had their biggest percentage decline in
more than three years as higher rates on loans and increased fuel costs crimped
demand for vehicles ... Sales in the past month slid 6.6% to 98,900 cars from
105,877 a year earlier ... "
Asia Bubble Watch
November 10 - Bloomberg (Farhan Sharif): "Pakistan's inflation accelerated to
near a three-decade high in October, placing further strains on a nation that
the International Monetary Fund says needs $10 billion to avoid defaulting on
its debt. Consumer prices ... soared 25% from a year earlier ... "
November 10 - Bloomberg (Patricia Lui): "Pakistan, Sri Lanka and Vietnam are
the Asian countries most at risk of a credit-rating downgrade as the global
economy heads into a recession and funds become scarcer, said S&P.
'Pakistan is the weakest, followed by Sri Lanka, then Vietnam,' said Elena
Okorotchenko, head of Asian sovereign ratings at S&P."
Latin America Watch
November 14 - Bloomberg (Lester Pimentel and Daniel Cancel): "Ecuador's bonds
tumbled, pushing yields above 100 percent, after Finance Minister Maria Elsa
Viteri said the government may miss a $30 million interest payment tomorrow."
Unbalanced Global Economy Watch
November 10 - Bloomberg (Joyce Moullakis): "London's financial services
industry, which generates about 10% of British gross domestic product, is being
'deeply affected' by the credit crisis, with investment banks and hedge funds
bearing the brunt ... Banks may cut 62,000 jobs in London by the end of next
year ... the Centre for Economics and Business Research estimated ... "
November 11 - Bloomberg (Brian Swint): "U.K. home sales declined to the lowest
level in at least three decades and the lending freeze pushed down prices for a
15th month, the Royal Institution of Chartered Surveyors said."
November 11 - Bloomberg (Brian Swint): "U.K. unemployment rose at the fastest
pace in 16 years in October after companies from banks to builders cut jobs as
the economy slid into its first recession since 1991. The number of people
receiving jobless benefits rose 36,500 to 980,900, the highest level since
March 2001 ... "
November 14 - Bloomberg (Fergal O'Brien and Simon Kennedy): "Europe's economy
fell into its first recession in 15 years in the third quarter ... Gross
domestic product in the 15 euro nations shrank 0.2% from the previous three
months ... "
November 14 - Bloomberg (Andreas Cremer): "European car sales plunged almost
15% in October, the sixth straight monthly decline, as credit-market turmoil
and an economic slowdown hurt demand."
November 13 - Bloomberg (Gabi Thesing): "The German economy, Europe's largest,
contracted more than economists expected in the third quarter, pushing the
nation into the worst recession in at least 12 years. Gross domestic product
dropped a seasonally adjusted 0.5% from the second quarter, when it fell
0.4%..."
November 10 - Bloomberg (Tasneem Brogger): "Norway's October inflation rate
unexpectedly rose to the highest since 1995, after
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