Friday, July 16, 2010

No Really -- Austerity Doesn't Work

From the AP:

China rebounded quickly from the global downturn, powered by a 4 trillion yuan ($586 billion) stimulus and a flood of bank lending. But communist leaders worry about surging home prices and a possible spike in bad loans at state-owned banks. They have imposed curbs on lending and investment, key drivers of growth and demand for raw materials.


But government spending is bad -- or at least I thought it was. But then the Chinese government spent 4 trillion in stimulus and got a growth rate of 11.9%. Surely that can't be due to the government spending, can it?