Some economists wary of Chinese economic trends

- By John March
Some investors have been optimistically looking to emerging nations like China and India to help the global recovery gain momentum in the coming months.

This is because both countries have seen their gross domestic product continue to expand in recent quarters, even as the recession held back growth in much of the rest of the world. An emerging middle class in both nations is seen as having the potential to provide new consumer spending markets for corporations.

Also, manufacturing activity, particularly in China, could help sustain the price of some commodities and strategic metals as economic conditions improve.

However, some economists are warning against becoming overly optimistic about this scenario. In fact, recent months have seen increased concern that China's economy could turn out to be a bubble, citing real estate prices in Beijing and heavy lending activity by banks that could turn out to be ill-advised. In fact, China's government appeared to respond to such concerns earlier this year when it took steps to scale back lending activity.

More recently, a report in the UK's Telegraph newspaper warned that "China's banks are veering out of control," while predicting that the country's "half-reformed" economy will not be able to absorb some $600 billion in loans issued since December.

The Telegraph cited another potential disturbing trend for investors where Shanghai's composite index has risen 70 percent in the past six months while the country's imports have fallen 25 percent over the past year.

The newspaper also noted that 40 percent of China's economy consists of exports, which happened to fall 26 percent in May. Another point cited the increasing tendency of U.S. consumers to save their money, which does not bode well for a sudden and dramatic improvement to China's export figures.

Another red flag for China is the ongoing debt crisis in the euro zone, since this could turn out to be one more blow to its export sector. The euro has fallen considerably in recent weeks, which means consumers could find themselves paying more for Chinese goods at a time when their respective governments are implementing significant new austerity measures.

If Chinese economic growth turns out to be more of an illusion than a reality, it would have a substantial impact on the global economy. Fortunately however, investors have long known that times like these often call for the stability that dealer gold and other precious metals can offer.


John March is the Chief Technical Officer for the Superior Gold Group, his financial insights on precious metals are sought after by Gold & Silver Dealers globally.

If you have any questions about how to buy gold coins, and want to learn how to grow your portfolio call 888.374.4032 or write to askjohn@gold101.com.
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Fitch downgrades Connecticut bond rating

Fitch downgrades Connecticut bond rating
Tuesday, June 8, 2010
Deficit problems are affecting states as well as the federal government.
- By John March
World markets have been increasingly concerned about sovereign debt woes confronting several governments in Europe, and even in the United States. However, federal deficits aren't the only potential ticking time bomb when it comes to financial markets - a number of states are confronting their own substantial deficits as well.

For example, California's budget woes have been well-documented in the national media for months. The state has been suffering from a multibillion dollar budget deficit, and lawmakers have remained divided on ways to resolve the problem.

More recently, Fitch Ratings announced that it had downgraded Connecticut's GO bond rating from AA+ to AA. Fitch added that its rating outlook has been revised to stable from negative.

The downgrade was said to be due to what was called "the state's reduced financial flexibility, illustrated by its reliance on sizeable debt issuances during the current biennium."

Fitch also noted that Connecticut is the nation's wealthiest state by per capita personal income, and that "significant revenue declines" were among the reasons the state's budget reserves have been on the decline.


John March is the Chief Technical Officer for the Superior Gold Group, his financial insights on precious metals are sought after by Gold & Silver Dealers globally.

If you have any questions about how to buy gold coins, and want to learn how to grow your portfolio call 888.374.4032 or write to askjohn@gold101.com.