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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

U.S. and China, The Alarming Tale of Two Economies

Economics / US Debt Sep 14, 2009 - 09:48 AM GMT

By: Claus_Vogt

Economics

Best Financial Markets Analysis ArticleThe contrast between the U.S. and China has never been more disturbing.

Here in the U.S., our government is sinking into debt at the fastest pace in history. The federal deficit has nearly quadrupled in a year. New spending programs now before Congress seem to guarantee even higher deficits and debt ahead.


To finance its skyrocketing debt, the U.S. Treasury and Federal Reserve are burying the planet under an avalanche of treasuries and newly printed dollars. As a result, the greenback suffered its largest weekly decline last week, plunging to a new one-year low.

Last week, we also learned that U.S. home foreclosures have just hit new all-time record highs and are still rising. Personal bankruptcies are exploding — even among the rich. Unemployment is still soaring. Consumer borrowing is contracting at a disturbing rate.

As a result, even the most optimistic analysts are now warning that we should expect the anemic earnings and stock performance we saw in August to be “the new normal.”

More pessimistic analysts are warning that the next shoe could soon drop: The rapidly deteriorating commercial real estate market could be the straw that breaks the economy’s back and crush U.S. stocks in 2010.

Meanwhile, on the other side of the globe, economic reports coming out of China seem to be getting more exciting with every passing week …

On Friday, Beijing reported that the Chinese economy gained momentum in August and that growth in the world’s third-biggest economy is likely to continue accelerating in the months ahead:

  • Industrial production rose 12.3 percent in August from a year earlier — outpacing July’s 10.8 percent increase and setting a new 12-month high.
  • Retail sales surged 15.4 percent — a clear sign that Chinese consumers have more than enough power to grow the economic malaise in the U.S. and Europe that causes Chinese exports to decline.
  • New bank loans totaled 410.4 billion yuan in August — a whopping 14 percent jump in a single month.
  • Although Chinese bank lending usually tapers off in the second half of each year, that is NOT happening this year. In the first half of 2009, lending soared to a record 7.1 trillion yuan — but it soared even higher — to 8.15 trillion yuan ($1.2 trillion) by the end of August.
  • Investment in Chinese real-estate development surged 14.7 percent in the first eight months of 2009. House prices in 70 cities rose 2 percent in August, the fastest gain in 11 months.
  • Despite rising property values, there is no consumer inflation in China. In August, consumer prices actually fell 1.2 percent from a year earlier, alleviating worries that China’s red-hot economy might fuel a resurgence of inflation.

Investors are reaping China’s bounty. The flow of money into Chinese stocks from all over the globe is surging. The Shanghai Composite Index surged 2.2 percent on Friday, bringing its total gain for 2009 to 57 percent — 5 times greater than the gains we’ve seen in the S&P 500.

The Weiss Global Forum has just updated its report to help you harness this tremendous profit potential — and to do it conveniently with investments that are as easy to buy and sell as IBM and Microsoft stock.

But your opportunity to save $481 when you join us in grabbing huge profit potential in China — as well as in India, the Asian Bloc, Brazil and Russia — will expire at midnight tonight.

This is your final opportunity: Just click this link to read this all-important investment guide before it’s too late.

Best wishes,

Claus Vogt

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

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