The good news cannot come from China. Nimish, chinese economy is booming and so is their credit growth. What china is doing is trying to control the credit outburst. This is going to suck out lot of liquidity of the system. Over the few days, Asian markets were reasonable weak. Our market is catching up now. Let's hope people don't have too much leverage in the system.
Tc.
First of all this is all bullshit that the financial transactions and creation of bubble lead to Economic or GDP growth. GDP growth in reality terms only takes into account productive credit in the economy that in reality is quite brilliant in China which is industrial, manufacturing and net new house built sales of existing house or buying shares is not counted in GDP aggregates. Plus I am not sure if you are aware of this to buy a land in China or a house in China if you already own one you need to put a 70% payment before getting a loan from the bank. Secondly sale of house other than the one you are living brings in tax rate of 50% or more. If easy credit would have provided growth US, UK and so called these western economies would have had 10% or more growth pre-recession.
And the other thing is India as with China is an emerging market if the Chinese government restricts the supply of credit by increasing the IRR then it would lead to a negative sentiment for Indian market as similar move would be expected in our markets thus putting pressure on our stock markets with the outflow of the FII money. Also increase in Interest rate would lead to a drop in prices of the paper and would provide a higher yield that would make the investors hungry for yield transfer money to these assets.
Lastly gone are the days when US was the everything now China is on track to be the second biggest economy and with it being turned into a fake depression the buying capacity of the western goods would go down hence the firms in US, Europe and other countries would suffer as China contributes to 38% of their trade. It also accounts for 6.4% of the total GDP growth registered by the world economy which is substantially huge. Hence I believe a Chinese injection of moderately low interest instead of almost free credit might change a lot of things.
And I agree with your US view about Obama and banks but I am not sure how that affects our markets as they are not involved in trading with the government money.