China’s inflation

Increasing lending interests alone will not ward off housing bubble . At least not fast enough to prevent bubble from reaching peaks impossible to deal with .

Chinese authorities will need no less than four more moves of this kind during the current year without substantial results and in addition they may find that with rates around 8 % the whole dynamics of global growth may be drastically affected .

What the chinese authorities should do is impose a substantial tax on the difference between purchase and selling prices tied to the period of possession time and fix a rigid evaluation policy of property by lenders .

On the other hand the gap between deposit and lending rates must be narrowed , because saving is strongly discouraged by the present difference which leaves savers with un interest below inflation and convinced that he looses more saving than assuming a mortage that they expect to be clearly compensated by the continuously rising prices .

Brahmason

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Published in: on febrero 8, 2011 at 4:34 pm  Dejar un comentario  

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