Saturday, February 21, 2009

Mrs Clinton goes to Beijing

Pundits on the news wires for the past week or two have been pointing to China’s official manufacturing index and an increase in bank lending as a sure sign that China is on the improve and will lead the global recovery.
DeepLode has been consistent in pointing to the enormous potential of China to recover more quickly than other countries. Its cash reserves are enormous and word coming through contacts in Hong Kong, which DeepLode has mentioned, has been optimistic.
Let’s remember that in January car sales in China topped those in the USA…not difficult at the moment but unthinkable in the very recent past.
And also we need to be aware that Beijing has spent only a little of its huge stimulus package announced late last year.
Banks have responded to the government's demand to lend and have extended a monthly record of 1.2 trillion yuan ($US176 billion) in new loans in January.
And now Mrs Clinton is in Beijing heralding a new era in Chinese-USA co-operation.
The new administration in Washington is (painfully) aware that China is its economic saviour and Mrs Clinton is now swallowing her own presidential campaign message. During her campaign Mrs Clinton, in a letter to Henry Paulson, expressed her concern about “the exposure of our economy to economic developments in countries like China. As we have been running trade and budget deficits, they have been buying our debt and in essence becoming our banker.” Get tough was her message!
And now of course she is in Beijing being very diplomatic…after all how do you go about “being tough” on your country’s banker.China will be the first economy to recover…it has indeed started….and the swing of financial power away from the USA will be in full force.
George W’s legacy will take decades to turn around. The U.S.will retreat to re-build. Its forays into every corner of the Globe and its unregulated excesses in financial experiments are over. And China will be making hay...buying up Australian assets, American debt and extending its oil diplomacy in West Africa and the Middle East.
DeepLode again urges don’t sell those Australian spec miners we follow that have good prospects and close production…They are the diamonds in the recovery.

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