China Raises Interest Rates

It’s important to remember something we wrote on here years ago before the Chinese equity market collapsed.   That is, China was raising reserve ratios in lieu of interest rates within its economy because so many of its banking loans were nonperforming.  And raising rates would have the effect of calling in these loans or expose them as unpayable.  That China has been raising rates since October should tell you something.  It might also tell you why emerging countries financial markets are now underperforming and why data released last week shows us that money is being repatriated to the US at rates not seen since the collapse.   Umm, all of these points have been discussed on here and the last two have been discussed on here in the first month of 2011.