EU Chamber Warns on Chinese Overcapacity »
The pattern for Asian countries seems to be:
1) export to the US, helping your economy
2) in order to keep your US$ exchange rate low, buy US bonds
3) lower US interest rates, give boost to your own banking system
4) get a lending boom, with overvalued assets and too much investment
5) overcapacity leads to asset deflation and a banking crisis
6) spend the next decade with a weak economy and growing government debt as you struggle to work your way out of the mess
My turkey day guess is that things are going to get bad for China in the next year or so. This would have implications for commodity inflation, and probably a whole lot else.
