Archive for April 12th, 2009

Sunday, April 12, 2009

Hermit: The Dubya-Shaped Business Cycle

Hermit the (angry) Taoist Dragonfly

Hermit the angry Taoist Dragonfly

Hello Children,

this is Hermit again with another scientific economic lecture for bird brains. Maybe you are sometimes reading Mr selegant’s hostile blog over there, with stuff like Gloom, Dr Doom and Maybe No More Boom. Of course, Mr selegant is just another envious American and afraid that we will surpass his sorry ass country soon, but at least, Dr Doom, though malicious and envious too, is a scientist. And we must never stop learning from scientists.

Dr Doom aka Nouriel Roubini says that judged on a number of indicators, there was no or virtually no growth in China’s economy during the last quarter of 2008, and only little growth during this year’s first quarter, but that indicators for the coming quarters (the current one from April to June included) are looking better.

But the scientist is also suggesting that the Great Stimulus may either be too small, or that the drugged (i. e. stimulated) economy will lead to further over-capacity (means that you can produce more than you can sell), and consequently to a rise in non-performing loans, falling profits, or rising losses.

Either, or, hehe. This envious scientist who hates China should make up his mind!

Me, Hermit, a great scientist, will soon show you how the coming great social insurance and economic growth are inter-related or not. But for now, let’s keep busy with Dr Doom and Mr selegant. Mr selegant refers to some more economists who think that the picking-up by the Chinese economy during this quarter could be a false dawn and that China could be headed for a “W” shaped recession. Something like this:

The "W"-shaped Business Cycle

The "W"-shaped Business Cycle, read from left to right

OK, children. Let’s keep it simple. Before our times, something like a stimulus package was calledl a flash in the pan – easily lit and quickly burnt down.

And then came the test: where is the domestic demand?

So, this “W”-shaped bullshit is of course old news in a new shape only. We Chinese invented the W shaped business cycle 5,000 years ago. Whenever the harmonious central government freed the peasants from serfdom, there was growth. Whenever the local ganbu gentry had managed to enslave the peasants again, there was a downturn, and so on.

So, don’t trust the media which are hostile to our motherland. They are only selling old wine in new skins and make a big fuss about it.

That much for today, children. Stay tuned for a peasant’s balance sheet. When I’m in the mood. Got to fly now.

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