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Sunday, February 22, 2009

THE ECONOMY IS DOING PRETTY WELL


Haikou city, Hainan, China, by Anna Frodesiak

In China, the economy is doing pretty well.

A currency needs sound underpinnings, such as oil or large savings.

China has large savings; Norway and Scotland have oil.

Liam Halligan, at The Sunday Telegraph, 21 February 2009, tells us about China's economy. (Slim pickings if China loses its appetite for Western debt)

According to Halligan:

1. In China, retail sales are up 17% in real terms.

2. In China, GDP grew by a 'pretty spectacular' 6.8% during the fourth quarter of last year.

3. Chinese shares have gained 25% this year – the best return of any stock market in the world.

4. Optimism in China has been helped by the government's £405bn support package.

5. China is funding its stimulus package using reserves, not extra borrowing.

6. China's currency has appreciated more than 20% against the dollar since 2005.

The USA and most of Europe are not in such a strong position as China.

China has $700bn of US Treasury bills.

With Western governments 'intent on printing money and debauching their currencies', China, Russia, Taiwan, South Korea and others are 'privately raising doubts about their future appetite for Western debt.'

America hopes to sell more treasury bills - 'a staggering $2,000bn' of them.

(Clinton Urges China to Keep Buying US Debt)

Liam Halligan wonders what happens when China stops buying US government debt?

In continental Europe, the countries with the biggest problems include Portugal, Ireland, Italy, Greece, Spain and Austria.

Liam Halligan predicts 'the demise of the single currency.'

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