What's Next After China's Surprise Interest Rate Cut

It is such a tiny cut you can tell they wanted to see what the reaction would be.

shock!! horror!!! 0.1% reduction..... chinese economy is crumbling down... quick print more RMB like what u.s doing now...

10 basis points isn't much

Property in freefall? Yeah right. I just looked at Shanghai property prices, and at average Australian wages, it is still comprehensively unreachable.

It's so small it's more of a pop than a bang.

Surprised is bad. No one can see what is happening so how can one plan.

0.1% reduction

deleveraging

On Thursday, US Q2 GDP growth rate will be published. Let's see what it's like.

Such an economic recession in today's China could no longer be cured by relaxing the monetary squeeze which has hitherto precipitated it. Today's Chinese economy has lost its natural bounce. Positive stimulation became a prior condition for much faster and more solid economic recovery. Monetary ease no longer worked (even though further interest rate cuts by the PBOC can help lower the refinancing costs for those maturing roll-over debts). - The problem was not a scarcity of credit but an excess of capacity (or, an overall lack of aggregate demand). Fiscal stimulation was required, meaning (mainly central rather than local) government dissaving through budget deficits to offset excess private savings. The policy of balancing the budget of the Chinese central government, which has ruled for many many years in China, should be abandoned. - The coming issuance of much more new central government (longer-term) treasuries in the primary market, if any, which helps solve China's current problem of acute lack of safety financial assets (and which helps steepen China's riskless yield curve), should be boldly pursued by today's Beijing authority. - Simply speaking, the aggregate demand leakage coming from the country's excess (private) savings should be pumped back into the country's circular flow of income, in the form of aggregate demand injection, through the help of non-trivial (central) government deficit spending, so that the country's coming GDP growth rate won't further drop to a too-low level (and that no deflationary pressure will further strengthen). - It goes without saying that, to avoid Japan's past mistakes during the country's lost decades, the coming required fiscal stimulations in China should correctly be undertaken in the right ways. ---

I know... its same old, same old...BUT I THINK, I think...JPMORGAN is going to violate the markets again (I know...surprising!!)

Bear market