Top Chinese financial regulators are sounding the alarm bells with financial bubbles that exist globally. The focus of the statement was on the disconnect between the underlying economies in the USA and throughout Europe and their respective financial markets. This is of course true, as we are observing equity prices at or near all-time highs on a price basis and across virtually all valuation metrics. The only comparable points would take us to 1929, 1937, 2000, and 2007/8 – and things did not end well. The Chinese regulators nonetheless did look internally to their real estate markets and mentioned the frothiness is of concern. Noting how many people are buying real estate and homes not for the purpose of living, but rather as a form of speculation. Has the global economy not learned anything from the housing crisis that is only a decade old?
What further makes these statements interesting, is how the regulators warned of potential spillover effects from the US and European bubbles impacting the Chinese economy. The Kapital News believes this is the first shot across the bow and the start of a narrative that the Chinese want to begin building so that they can blame others for their own missteps and failures, if and when their economy and financial markets turn downward. There is no question that many financial markets are greatly disconnected from their respective economies, and China is guilty of this as well. Now, it will be interesting to see how other regulators and central bankers in the US and Europe respond to these statements. True to form, no policymaker wants to be held responsible for their actions and policies, and it is always easier to play the blame game and say it is the irresponsibility of another country.
These policymakers know that time is running out and they are low on ammunition. And there is no question that due to the interconnectedness of the global economy that there will be spillover effects from one country to the next. This is already being experienced in weaker economies around the world. It is always the weakest links that break first. And a couple or few countries experiencing difficulty may not be of significant concern for the rest of the world, but as these weaknesses persist and travel to other countries, then momentum starts to build. It is this momentum and its size and scope that can begin to negatively impact larger economies. When this takes root, coupled with market forces moving global debt yields higher, is when we will know that we are in the final chapters of this massive central bank economic money printing experiment. We are there. And it will not end well. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #USA #China #Debt #Liberty #EndTheFed #Infrstaructure #Inflation #Gold #Silver #Bonds #Markets #bananarepublic #Leadership