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Wednesday, February 11, 2009


chinese exports (-17.5%); imports (-43%)

brad setser notes that, in spite of interference from chinese holidays, further collapse is likely indicated by east asian exports to china. a devastating collapse in global trade, all in all -- but setser goes further:

What worries me the most? The possibility that the sharp y/y fall in imports doesn’t just reflect a fall in imported components or a fall in commodity prices, but rather a major deceleration in China’s domestic economy.

In some sense, it is hard to imagine a worse combination. China’s export are falling, making China understandably reluctant to allow its currency to appreciate. But China’s trade surplus is also rising … certainly in nominal terms and quite possibly in real terms. That isn’t good for the world.

At a time when the world is short demand, China seems to be subtracting from global demand not adding to it. The best solution: an absolutely enormous domestic stimulus in China.

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Even if the central Chinese government tried to hand out such a stimulus, I wonder whether the local graft-skimmers would find a way to get most of it into their pockets.

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from perrone: well, the very strong possibility of a bullet in the head could be expected to serve as a robust deterrent.

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If the central government has enough loyal shooters to keep the local graft-skimmers in line, then bullets will be adequate.

On a similar topic, a defector reports on the tensions at:

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