Despite having made a number of bearish comments regarding China and its near-term outlook, I am a long-term China bull. Even over the short-term, China’s willingess to fund long-term infrastructure projects will serve as a buffer against the massive downturn in exports as the economy tries to gain more domestic consumption demand. On the whole, the government’s increasing the social safety net will spur spending by Chinese who save to meet anxiety over economic prosperity during downturns.

In that vein, I am posting some bullish comments about China by analysts at Merrill Lynch and JPMorgan Chase and other banks which Bloomberg News has picked up. While I do not see China rebounding as robustly as these analysts, I do want to present the bullish side of the picture because China may well be the first major economy to recover from the global downturn.

I have highlighted some key points in the article to consider. A link to the full post is provided below.

Paul Kasriel of Northern Trust is one of the few economists to have warned about the present economic malaise. So his analysis of present events carries weight. In making recommendations about our future economic path, Kasriel leans heavily on historic precedent regarding periods of deleveraging, one such period being the Great Depression. He draws some interesting conclusions.

Jon Stewart makes light of the stimulus debate.

Last week, Willem Buiter sized up the U.S. and the U.K. and found their desire to enact deficit-financed fiscal stimulus not credible. The attached video does a better job of summing up the mood Buiter invokes and the need for prophylactic protection from so much stimulus.

Bill Gross, the man who controls the largest bond fund in the world, believes that trillions of dollars in government spending will be necessary to get the economy going again. He warns that if the government does not spend trillions of stimulus to boost the economy, the U.S. and global economies could collapse.
Now, on [...]

Marc Faber thinks it would better to nationalize the banks rather than bail them out. In his view, we are seeing special interests feeding at the trough.

I have been out the entire morning and haven’t been able to read any news reports on the GDP numbers. However, I have just now had a chance to look at the data and wanted to share my thoughts with you, unfiltered by the media reports. I would sum it up by calling it a story about the three I’s of imports, inflation and investment. But, I will also have a few words to say about state and local government spending as well.

You may have already seen the Warren Buffett interview on Dateline from last Sunday. In it, he gives a sober analysis of what to expect from the new Obama Administration in terms of economic policy. The long and short of it is that we shouldn’t expect a miracle turnaround. The recession will be deep and protracted regardless of how well Barack Obama’s team deals with economic issues.

Below is the video of Buffett. The transcript is linked as a source.

Recently, I posted a video of Peter Schiff making the argument for small government and resisting stimulus. As I see much to like in Peter Schiff’s views, I sympathisize with the broad themes of his message. However, I do not feel he is realistic about what is politically feasible or understands the negative consequences of a ‘let them eat cake’ approach to governance.

Nevertheless, I would have to admit I sounded a lot like Schiff a few months ago and that I have ‘evolved’ away from his viewpoint. Reader Stephen rightly asks “Does ‘Depression Economics’ Change the Rules?” So, the questions I ask myself in this evolution are the following:

Update 07 Mar 2009: I am re-posting this in light of increasing evidence that Obama’s stimulus bill was in fact too small. Paul Krugman has a good post today called “One-sided debate,” which reminds us he made that argument but was essentially ignored.

President-elect Barack Obama has won plaudits for his management skills as he prepares for office in less than two weeks. However, his stimulus bill is coming under fire from both the right and the left. On the left, Paul Krugman is critical about the high proportion of so-called stimulus that Obama’s proposal gets from tax cuts. On the right, Republicans like the fact that Obama is not only living up to his tax cut promises for the middle class but is also delaying a return to pre-Bush tax levels for the wealthy. However, there is pause within Republican ranks about the size of this package and the debt load that will go along with it.