Wednesday, March 10, 2010

The Paper Dragon...

...experiencing a (very) mean reversion.

This is partly reflected in higher commodity prices China must buy to satiate its manufacturing appetite (itself a function of control for the Communist Party).

But where IS the Paper Dragon getting those wonderful GDP figures from if net exports have been declining for over a year? Did a quarter of a Trillion dollars in domestic demand materialize out of the ether?

Of course not. Once those capital intensive negative present value projects financed by "loans" from Communist controlled banks begin defaulting in earnest, perhaps maybe, just maybe, we will see Chinese GDP figures ensconced on something approaching reality.

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