Monday, August 20, 2007

The Chinese just don't get it:

In the news:
BEIJING (AP) — Grocery shopping has become a painful experience for Zhang Xueyi. Meat prices have risen 50 percent in the past year, and eggs and other products are not far behind, forcing the 31-year-old railway technician's family to spend a third of its $400 monthly income on food.
After a run that has seen sizzling growth top 10 percent for four years, analysts say China's supercharged economy is facing strains that could break out into an upsurge of inflation.

... rising too [are] the costs of oil and electric power.
Silly Chinese. Do what the U.S. does and claim that the only important measure of inflation is "core inflation" which excludes food and energy costs. You see, that way inflation practically disappears. In the United States core inflation has been low for years. Therefore, we have no inflation. It's that simple.

OF INTEREST: In the story we also read:
The price surge has alarmed Chinese leaders, who remember that 1989's Tiananmen Square pro-democracy protests were driven in part by anger at raging inflation that exceeded 18 percent a year.
Did you know that? I didn't. Continuing...
Local authorities have been ordered to subsidize the grocery bills of poor families.

Beijing has raised interest rates three times this year to cool the boom and avert a rise in inflation. After seeing the July price data, economists said they expect another rate hike shortly.
We could be seeing some very interesting currency rate dynamics for the rest of this year.


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