China Bubbles

Inflation there may be getting out of hand

The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist.

It warns that the Communist Party will have to puncture the credit bubble before inflation reaches levels that threaten social stability. This in turn may open a can of worms.

“Many see China’s monetary tightening as a pre-emptive tap on the brakes, a warning shot across the proverbial economic bows. We see it as a potentially more malevolent reactive day of reckoning,” said Tim Ash, the bank’s emerging markets chief.

Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month.

6 Responses to “China Bubbles”

  1. Gary from Jersey says:

    Not sure how accurate this is (or if you’ve seen it before) but …

  2. Yojimbo says:

    RBS still has……clients!

    You doubt the ability of statist, command and control governments to engineer soft landings on er,command? Do I have to put you on my Nattering Nabobs of Negativity wall so early in the week? Is that how it’s going to go, Mr. Bingley?

  3. Mr. Bingley says:

    You mean to say I was actually off it at some point, Yojimbo?

  4. Yojimbo says:

    Well I was starting to worry. When UVA wins a basketball game you do have tendency of going all counter-intuitive on us.

    I don’t see the big fuss. They’re going from 4.4 to 5. Based upon Yojimbonomics, that’s an inflation rate of .6%. What, me worry?

  5. WunderKraut says:

    Why cant I shake this feeling of doom? DOOM!!!!!11!!11!!!!!

  6. JeffS says:

    Yojimbo, one must always worry about Mr. Bingley. Just ask Sis.

Image | WordPress Themes