How to do Simulus Right

Obama blew it. He had a chance to come into office with his hair on fire, geared up to rescue the US from the multiple disasters of the Bush admin, but he didn't. He went for "consensus" and got a slap in the face from Republicans and a denatured "stimulus". His own party undercut him by turning the stimulus into "pork" and not serious help to get the US out of the worst downturn since the Great Depression.

On the other hand, China went big and did it right. Here's an article by Richard McGregor from the Financial Times. I've bolded the key bit:

China’s economy is on track to hit the government’s growth target of 8 per cent this year following increased government spending and a surge in bank lending in the second quarter.

The economy expanded at an annual rate of 7.9 per cent in the three months to the end of June, the National Bureau of Statistics announced on Thursday, with investment, industrial production and retail sales all contributing to higher output.

China’s accelerating growth has already lifted prices of commodities such as iron ore and copper and boosted economic output of raw materials exporters such as Australia and Brazil.

The speed of the Chinese recovery, without an accompanying boost in demand from advanced economies in North America and Europe, has surprised economists and led the International Monetary Fund to revise higher its outlook for the world economy earlier this month.

The Chinese government’s mass injection of money into the economy has also pumped air back into the asset price bubbles in the domestic property and stock markets.

Li Xiaochao, a spokesman for the NBS, said the economy “had stabilised with increasing positive changes” after dipping sharply at the end of last year and expanding at an annual rate of only 6.1 per cent in the first quarter, leading many economists to believe that the government would not be able to meet its year-long growth target of 8 per cent.

But the government’s pump-priming has turned the economy round, prompting rapid revisions by many economists, and the World Bank, to upgrade China’s outlook.