China joined the ECB with more easing late Friday with another 25bps rate cut and 50bps RRR cut, predictably, US stocks injected the drugs and rallied further.
MB is not of the view that this is another leg higher for the business cycle. Rather, as argued in recent times it is this:
One should simply accept that the Chimerican phenomenon was the driver of the post-millennial boom in the global economy. As China supercharged its growth via net exports to the United States, hung upon a currency peg which, in turn, fed an enormous capital injection into US bonds and therefore low interest rates, high asset prices and over-consumption, the two economies boomed and external imbalances were ignored.
