PENDING MARKET DISASTER: The Global Financial System Is Sliding Uncontrollably Towards An Abyss And There’s Only 2% Chance of Dodging A Market Crash
June 29th, 2013
FOUR years after the worst of the financial crisis and the world appears to be faltering again. According to The Economist’s calculations, world GDP grew by just 2.1% during the first quarter of 2013 compared with a year earlier. Just 12 months ago, output was growing at a reasonable clip of 3.1%.
Why China’s Economy May Be Heading for a Crash
China’s central bank sent global markets reeling when it attempted tighten credit and rein in the country’s shadow banking system. But the consequences of China’s credit binge may just be getting started, and experts say there could be more pain to come for the world’s second-largest economy.
“We’ve been seeing tightening since the end of last year,” said Leland Miller, China Beige Book International president. “This is not a spur of the moment decision by the central bank.”
Leland said the higher interbank lending rates are an indicator of a tension in the system. “The credit transition mechanism is broken and until that’s fixed, there will be no happy endings in China,” he said.
At the last FOMC meeting, by prematurely announcing the timeline and the specifics of an exit from QE, Bernanke might have lost control of rates and volatility.