Sometimes it takes a year for the world’s media to catch up to a story. Late in 2008, China noticed that our economy had stopped. In turn, their export growth stopped, threatening that the Chinese too would suffer distress from the global recession.
So they announced a $585 billion direct stimulus program. They also forced their banks (which do exactly what the political leadership tells them) to push out another trillion dollars in new lending. In proportion to the size of their economy, that’s roughly as if we had done a stimulus of almost 40% of GDP: nearly $6 trillion, instead of the measly $787 bn we did. I’ll let that sink in for a moment before I go on.
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