Tuesday, June 14, 2011

A Question for China's Bulls

June 15, 2011
China inflation spikes due to food prices

The inflation rise in May was the fastest since July 2008, when the rate was 6.3 per cent, before peaking in February 2008 at 8.7 per cent. The financial crisis led to prices falling, because demand for China’s exports fell sharply.

September 22, 2007
Warren Buffett on 1970's Inflation

The less prosperous the enterprise, the greater the proportion of available sustenance claimed by the tapeworm.

I once again ask the same question I asked in 2007.

If inflation is rising in China and inflation hurts low-return businesses the hardest, then what does that say about how well China can weather an inflationary storm?

SSE Composite Index

...an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.

SSE Composite Index Chart

September 22, 2007: 5,454.67
June 14, 2011: 2,730.05

Gain/Loss: 50% loss


Charles Kiting said...

I hate headlines like that. Rising prices don't cause inflation, inflation causes rising prices.

I know, it will never change. Sigh.

Stagflationary Mark said...

Charles Kiting,

While we are in pet peeve mode, it bothers me that the "Fed" has "fed" us but we never seem to get our fill.