I love how the Globe talks about a 'tame' Chinese media that doesn't criticize their government, and how the Chinese government is blowing bubbles. And Bernanke and Carney aren't? Who's tame here?
http://www.globeinvestor.com/servlet/story/GI.20091228.escenic_1413701/GIStory/
The problem is dramatic enough that the usually tame Chinese media have weighed in with a rash of articles uncharacteristically critical of government policy. One pointed out that house prices in Beijing are now higher than in Dubai, despite the fact the latter's population is far wealthier on a per-capita basis. Another said the government had “little excuse” for not taking action to control speculation in the real-estate market.
“The soaring price of property has become a serious national issue and the economic distortions it gives rise to are affecting the everyday life of the majority,” read a recent editorial in the Global Times, a paper closely affiliated with the ruling Communist Party.
However, some say the government is unlikely to take measures – such as raising interest rates or tightening lending policies – to curb runaway prices because it sees unemployment as a far bigger danger than a real-estate bubble. The fear that factory closings would lead to unrest among millions of laid-off migrant labourers was cited as one reason that Beijing acted as aggressively as it did in introducing its massive economic stimulus last fall. Now, the same ultra-loose fiscal policy blamed for rising property prices has fuelled a construction boom that is keeping millions of workers employed.
“[The government is] stuck in a tough position. On one hand, they're worried about non-performing loans and bubbles in real estate and the stock market. On the other hand, they're worried about rising unemployment,” said Michael Pettis, a professor of finance at Beijing University. “The tools that they have to solve one problem are likely to make the other problem worse.”
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