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After decades of spectacular growth, China passed Japan in Q II 2010 to become the world's second largest economy. At its present pace, it will surpass America as early as 2030, but it still has a long way to go. Nonetheless, China stumbling will impact Asia and other regions, especially where economies are weak.
(16) Since November, China's stock market (the Dow Jones Shanghal) has been declining, perhaps signaling "something about emerging market growth."
PIMPO's Bill Gross Assessment
In his January Investment Outlook, he notes four major factors of concern:
(1) US wages continue to lag inflation and rising commodity prices like food and energy.
(2) Dollar depreciation will cut purchasing power "as well as the global valuation of dollar denominated assets."
(3) One consequence of trillion dollar deficits is the need to finance them at very low rates "as long as possible." He warns, however, that once "reflationary policies take hold, long-term bondholders (will) lose their heads" as yields begin to rise, "reflecting higher future inflation."
(4) "Trillion dollar deficits add up, and eventually produce a stock of debt that can become unmanageable." Witness Greece, Ireland, Belgium, Portugal, Spain, Italy, other European countries and earlier era Latin American ones.