Whether the effects of squandering money will last depends on the government's decision on whether to keep throwing money about.Next he discusses fundamental problems with the rebalancing notion China's economy has structural problems that cannot be easily solved by palliatives.
The kind of stocks that fall into the value category may be risky: there is a reason they look cheap, after all.Another problem is that rebalancing a smart-beta portfolio may involve transaction costs that are higher than for a cap-weighted index fund.
Another problem facing the "rebalance" is that this, its most important economic dimension, is in trouble.
The way to address the problem is to rebalance the body into proper alignment.
The combination of lower than past growth and lagging employment are likely to produce a slow enough rebalancing as to leave serious residual problems in areas like extended youth unemployment.
"Rebalancing" means solving the big underlying competitiveness problem faced by southern Europeans that led to their economies racking up so much debt in the first place.
He plans to keep shares until at least the next rebalancing, barring unusually high redemptions by investors or problems like misstated financial results by a company.
On August 29th Wen Jiabao, China's prime minister, must have enjoyed lecturing Japanese visitors on the need to tackle the problem of "relatively low wages" at Japanese factories in China.This "rebalancing", though, could take decades.
