STOCK markets across the world plunged today amid growing fears China’s monstrous debt bubble is about to burst and trigger a devastating financial crisis.
Investors are becoming increasingly nervous the world’s second-largest economy is about to trigger a crash, which could be worse than the stock mayhem witnessed at the start of this year and last August.
China has been taking on yet more debt in what is thought to be a bid to combat its economic slowdown.
The Asian country’s deficits reached 237 per cent of GDP in the first quarter of this year, from 148 per cent at the end of 2007, according to the Financial Times.
But Stockman says blame lays not with the tax code (indeed, he pioneered a trickle-down approach to taxes under Reagan) but with the Fed.Obama “is talking about a symptom, but he’s clueless as to the cause. The cause is not capitalism. The cause is not some entrepreneur out there trying to invent something and improve the performance of his business. The problem is in the Eccles building [home to the main office of the Fed] and in the 12 people sitting there and thinking that interest rates are some magic elixir that’ll cause this very troubled and difficult economy to revive,” Stockman said. Continue reading