This morning we woke up to play an economic giant, flexing its muscles. The Chinese government decided to pump an additional boost to the economy. . . $ 4 trillion yuan's worth. That is about $ 586 billion U.S. dollars. They say they are doing to help the world, but everyone knows that a lie.
The real reason why so much money. . . More on that in a minute.
Part of the reason for action in China is their decision to follow in the footsteps of the global> Business leaders. Just last week we witnessed the last battle in the credit crisis war. larger quantities of the stimulus was injected into the global markets of the major central banks.
The European Central Bank (ECB) cut interest rates by 50 basis points. You try to loosen the credit log jam, and stimulate greater economic growth. The ECB was concerned about the runaway inflation. That's why gas prices so high for so long. Now CPI figures are lower for the third even-numbered months (indicating little threat of inflation) and concentrate from the economy to.
As an example, Spain has been growing for more than 15 years. This quarter, they bust on their first.
The ECB was not the only central bank to work hard.
Reduce the Bank of England (BOE) reinforces all the great interest rates by 150 basis points. Thus, the interest rate was seen at 3% - a level not since 1955. Like the ECB, the BOE to credit and> Economic recession.
Everyone follows the U.S. Federal Reserve.
Both measures following the recent Federal Reserve interest-rate cut. They continue the U.S. markets with the stimulus flooding. The 700 billion U.S. dollars bank bailout package begins to be distributed. Everyone's watching the credit markets too narrowly.
So back to China.
China's economic stimulus package rather than harmonics of the major construction projects the U.S. in the 1930s. The plan calls for implementation of more roads, airports and moreSpending on infrastructure. But that's not all. Farmers are always supported, as well as health and education sectors.
They did not someone, even high-tech is a part of the stimulus package.
What drives this fascination? When you hear the PR people, it is her desire to help the world. In reality, it is used a lot more confidence. Business in China is suffering.
Think about it. Global spending slowed. We are not just tightening our beltshere in the U.S., but it has happened in the world.
China exports a lot of cheap goods from the rest of the world consumes.
If nobody buys, then factories start to close and get the employees fired. It comes here in the U.S., and it certainly is happening in China. According to official estimates, growth slowed to its lowest level in five years. Some are planning economic growth in China to eventually fall to zero.
This is a frightening scenario. If growth slows downClose enough, and more and more factories, large parts of their workforce will be unemployed. And that's one thing can lead. . . Unrest.
This is the scenario of the central planners in China provides. This is the great fear. They will focus on anything they can do to be done for. Your first step is a massive boost. (This is not the last of the China bailouts).
How does this affect you?
China is a major global exporter. The economy is closely linkedon almost every other country in the world. If the economy begins to falter world feel their pain. Much like when the U.S. fights so does the rest of the world.
That tells me the place for our investment dollars into safe-haven investments.
Overseas economies are much more than in the U.S. are injured. We can see some devaluing currencies in the coming months. This allows the rest of the world will be in safe investments to frighten. And the safest investment is the U.S. -- Dollars.
Now do not get, I am not wrong, the U.S. economy in a difficult situation. Factory orders, a measure of the demand for industrial goods in the U.S. by 2.5% in September. A clear sign companies are cuts in spending. The job market is reflected also see this as a precautionary measure. We have more than 1.2 million U.S. jobs lost this year. Surprisingly, 50% of them were lost in recent months.
Despite these concerns, the U.S. dollar as one of the strongest currencies in the world.> Economic turmoil that the U.S. market meets the rest of the world's rocking even harder. And we see it in China now. This is a trend to stabilize until the global credit markets.
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