No Country Can Be Productive Enough To Reinvest Half Of GDP In New Capital Stock

No country can be productive enough to reinvest half of GDP in new capital stock without eventually facing immense overcapacity and a staggering non-performing loan problem.

Continuing down the investment-led growth path will exacerbate the visible glut of capacity in manufacturing, property and infrastructure, and thus will intensify the coming economic slowdown once further fixed-investment growth becomes impossible. Until the change of political leadership in 2012-13, China’s policymakers may be able to maintain high growth rates, but at a very high foreseeable cost. - in Project Syndicate

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The United States Has The Most Manageable Fiscal Issues Of Any Major Advanced Economy

The United States has the most manageable fiscal issues of any major advanced economy because federal, state and local revenues as a share of GDP are very low, for cyclical and other reasons. Therefore, fiscal balance can be restored by fiscal adjustment without major economic difficulty in the near term. - in Business Insider

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A Bond Market Revolt Is Not At All Easy To Engineer In The US

A bond market revolt is not at all easy to engineer in the United States” as “there is no safer asset destination on the planet than the United States, which has the third-longest-running system of government in the world, despite being a young nation. - in Forbes

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China Is Rife With Over Investment In Physical Capital

China is rife with over investment in physical capital, infrastructure and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns and brand-new aluminium smelters kept closed to prevent global prices from plunging.

Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment – including East Asia in the 1990s – have ended with a financial crisis and/or a long period of slow growth. - in Project Syndicate

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The S&P Downgrade Of The US Government Debt Outlook

The landmark S&P downgrade of its U.S. government debt outlook reinforces what we have been saying since 2010: The United States is on an unsustainable fiscal path from which it cannot exit without political consensus. - in Roubini.com

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Greece, Portugal And Irish Banks

The issue of Greece is not whether there will be debt restructuring, but when it will be done, and whether it will be an orderly market-oriented debt exchange or disorderly like in Argentina. One can make the same argument for Portugal’s government and Irish banks. - at a conference in Almaty, Kazakhstan’s financial center

Related: Bank of Ireland (ADR) (IRE), Allied Irish Banks, plc. (ADR) (AIB), iShares MSCI Spain Index (ETF) (NYSE:EWP)

US 1st Quarter Growth Is Now Tracking 1.5 Percent Or Lower

"Based on latest data US Q1 GDP growth is now tracking 1.5% if not lower. Optimists call is a Soft Patch. Realists call it near Stall Speed." - in Twitter

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Ireland: Bank Losses And Government`s Balance Sheet

Taking all of the losses of the banking system and putting them on the balance sheet of the Government doesn't make sense. Eventually, the back of the Government will be broken. - in Irish Independent

Related stocks: Bank of Ireland (ADR) (NYSE:IRE), Allied Irish Banks, plc. (ADR) (NYSE:AIB)

China: Short Term And Medium Term Economic Performance

I’m writing on the heels of two trips to China during which I met with senior policy makers, bank executives and academics, just as the government launched its 12th Five-Year Plan, intended to rebalance the long-term growth model.

My meetings deepened my own impression and RGE’s long-standing house view of a potentially destabilizing contradiction between short- and medium-term economic performance: The economy is overheating here and now, but I’m convinced that in the medium term China’s overinvestment will prove deflationary both domestically and globally. - in Business Insider

Spain Is Too Big To Fail And Too Big To Be Saved

"I think the big question is not Portugal — that is too small — but rather whether the contagion could spread, over time, to Spain, a country that is on one side too big to fail, but from the other side too big to be saved.

There have been reforms that go in the right direction, but much more radical reforms need to be done to stabilize the economic, financial and fiscal conditions of Spain." - in Forbes

Related: iShares MSCI Spain Index (ETF)

ECB May Be Signaling A Series Of Rate Hikes

"If the ECB raises rates in April, in my view it signifies a series of rate increases." in CNBC

ECB April`s Rate Hike May Be Premature

They’re going to likely raise rates in April and then continue for a few times this year. But you have five countries in the periphery where there’s almost no growth or contraction, where you have severe banking problems, where you’ve had a loss of competitiveness, where there is a need to restore economic growth.

I fear that an early hike is going to increase the growth fragility, the worsening of competitiveness. - in Bloomberg.com