Contrasting Fed and Beijing Interventions

By Colin (Huaizhi) Chen

Is it me or does anyone else find the contrast between the Chinese and the American policies in government intervention of the financial market striking? Over the past year, the Fed rescued the ailing Mortgage-backed Securities, wooed investors, slashed short term rates, and bailed a huge failing financial institution. In contrast, the Chinese has taken a devil may care approach, raised lending rates to curb inflation, and laughed as its investors took dives on foolish investments.

Personally, I wouldn’t touch the emerging Chinese market funds with a 10 yard stick, but I do wonder who is more committed to the long term health of their economies.

-H

I can't help but think that this is one of Beijing's 'Crazy Plans'... P/E ratios are too high, what could be better than just sitting back and watching while people panic - then intervene at a later date to allow stable growth? Admittedly this is a risk, but then again the people always believe in their Government here, right?

SSE is down 3.55% as I type...

-GP