by James Kynge at Financial Times
David Stockman’s Contra Corner
China’s sugar highs do not last as long as they used to. The saccharine stimulus of 2009-10, which relied on heaped spoonfuls of debt-fuelled investment, kept the economy fizzing at least until the end of 2011. But the impact of far larger credit infusions this year is much more feeble.
An economic equivalent of insulin resistance appears to be setting in. So large is the credit injection that much of it cannot be productively absorbed. This has led to liquidity spillovers that have spurred a speculative frenzy on commodity exchanges.