Continued Stimulus

From Briefing.com: "Reuters reports China will stick to its loose fiscal policy for at least three years despite a growing budget deficit, a government economist said in comments published on Wednesday. "Even by conservative estimates, the timeframe for this round of proactive fiscal policy should cover at least three years," Gao Peiyong, a researcher with the Chinese Academy of Social Sciences, wrote in the People's Daily, the ruling Communist Party's mouthpiece. Gao said China's economic recovery was not yet on a solid footing, so an early end to the stimulus now coming from tax cuts and massive fiscal spending could lead to a new downturn. "It is both necessary and urgent to seek stable economic development at the cost of fiscal imbalance," Gao said. "It is inevitable that China's fiscal situation will run into difficulties in the not-too-distant future."

I wonder what that last sentence means ? Perhaps that China will print more renminbi / yuan ? Or run a deficit and be no longer able to buy US Treasuries or any other foreign currency ? That's something to ponder.

And this from the WSJ: "WASHINGTON -- Stimulus spending on infrastructure projects is moving slowly and many projects won't get started before the summer construction season ends, complicating the Obama administration's efforts to tout the impact of the $787 billion economic recovery act. ... The White House Recovery Office said Tuesday that government agencies have decided how to spend about $31 billion of the $73 billion going directly to construction projects, but it couldn't offer a figure on how much has actually been spent. "The Recovery Act was designed to ramp up over time with more spending later this year and early next, ensuring that we're steadily laying the foundation for a real, long-term recovery," said Ed DeSeve, senior adviser to the president for implementing the recovery act." "

In other words, those expecting a double dip recession might find they are wrong. The long, time-delayed stimulus spending here and in China would tend to lessen the growth off the bottom, but then give more staying power to keep going until the negative behavior of the private sector changes to positive outlooks. That would mean sustained growth and no double dip.

Markets

Surprisingly, stocks held over S&P 1000. If they can hold for a few more days to the end of the week, sidelined bears will surely be sweating terribly.

Word of the Day

"Transhumance" - noun [$10]
Transhumance means the seasonal moving of livestock to a different region.
Sentence (metaphorical usage): Study of the transhumance of beefer elephants in the stock markets can be a rewarding. On what do they graze ? Where are their water holes ? In the boom of the 1990s, their sustenance were technology stocks. In the 2003-2007 rebound, financial, energy and commodity stocks provided their feed and water. Will those alpine pastures be re-used or will new pastures be found over other ridges?

Verbum Diei

"Turba, -ae" - noun, feminine; first declension.
Turba mean the crowd.
Sententia: Vitate turbam.
Sentence: Avoid the crowd.