The price of land in and around Beijing has gone up by a factor of nine in the last few years. Delusion isn't just for Americans anymore. The Chinese authorities have printed and instructed the banks to make loans for shopping malls, apartment buildings, office towers, and condo towers. Average citizens have bought as many as five condos. Everyone knows that real estate only goes up. Their $585 billion stimulus package was used to build entire cities that sit unoccupied. The 2.2-million-square-foot South China Mall, with room for 2,100 stores, sits completely vacant. The Chinese have taken the concept of "bridges to nowhere" to a new level.
S&P 500: -6.6
- The tone was set overnight when China announced that it's imports had grown far less than had been expected. The Shanghai Composite plunged by more than 3%, a move that brought the rest of the world down with it. European markets and US futures both headed lower. The yen and the dollar both perked up.
- The early hours were very quiet, with almost all of the talk centered around the release of FOMC minutes at 2:15. Stocks remained solidly in the red throughout the day. The one econ number of the morning was productivity, which unexpectedly dived, possibly portending bad news for stocks.
- Finally, at 2:15 the Fed made its move. Quantitative easing will begin modestly, via a decision not to let the Fed balance sheet naturally shrink. The Fed balance sheet will be fixed at just over $2 trillion.
- Stocks initially rallied hard on the news. The dollar plunged. Treasuries soared. Gold jumped. The Yen spiked. However, all Bernanke's cash wasn't enough to push stocks into the green today. At least there wasn't no change.
- Some other top stories of the day? The House (as expected) approved a $26 billion bailout of the states. Russian wildfires continue to burn, choking Moscow with smog.
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