Is the oil price confusion related to China…?

china oil

We have commented on these pages, and others have queried the strange fact of oil price slippage in the face of massive geopolitical headwinds in the Mid-East and Ukraine. But maybe the commodity price slippage is more demand driven?  

The latest data from China has prompted comparisons with 2008 economic slow downs, the only problem this time is that China’s credit mountain has exploded….

Here’s the WSJ on the woeful industrial production data…

China’s economy is slowing, with industrial output growth at its lowest level since the 2008 global financial crisis. That led economists at Royal Bank of Scotland and Barclays to slash their Chinese economic forecasts Monday as worries rise that the world’s second-largest economy is headed for another slowdown.

And the solution…… more debt. Here’s the NY Times:

With industrial production growing at the slowest pace since the worst of the global financial crisis and foreign direct investment in a tailspin, China appears to have taken the unusual step of using monetary stimulus in an attempt to forestall further economic weakness.

China’s central bank has lent 100 billion renminbi, or $16.2 billion, to each of the country’s five main, state-controlled banks, bankers and economists said Wednesday, although the central bank and the five banks involved stayed silent. The seemingly stealthy decision to inject a total of $81 billion into the banking system this week came as the Chinese economy, like many economies in Europe, has slowed over the summer, although still expanding at a pace that would be the envy of most countries around the world.

Just the $81 billion in a week. Note the Fed has tapered back to $5 billion per month on its QE asset purchasing programme. Guess why we’re still QEasy….?


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