china changes the subject, page-19

Dopey, considering that Spain’s property market is collapsing (transactions fell by over 90% in the three months to July) and Greece’s economy is falling deeper into a depression (GDP now contracting by a disastrous 7%) authorities are failing to keep pace with intensifying deflation.

Following on from unlimited bond buying announcements from the ECB & the Fed, the Bank of Japan has now extended its open-ended QE program since 2000 as they continue to fight a losing battle with deflation (a lesson which other central bankers fail to grasp).

And recently China’s government announced another massive infrastructure spend to try and stimulate their stalling economy where. Regarding monetary stimulus, the CCP seem so focused on inflation risks that they don't even notice the burgeoning deflation. By the time they re-act to market conditions that trend will already be established.

Back home, in a paper released yesterday, two eminent economists warned further falls in commodity prices will act as a ''substantial deflationary force'' on the Australian economy. So I have no doubt that the RBA will be forced to follow the market by slashing rates moving forward.