As the Bank Of England and the European Central Bank both resort to printing more money, the Chinese state bank has issued a barely disguised warning to the debtor nations.
"As more and more economies are adopting unconventional monetary policies, such as quantitative easing (QE), major currencies' devaluation risks may rise," it said. The bank fears a "big consolidation" in the bond markets, clearly anxious that interest yields will surge as western states try to exit their QE experiment.
Hans Redeker, head of currencies at BNP Paribas, said China is switching into hard assets. "They want to buy production rights to raw materials and gain access to resources such as oil, water, and metals. They know they can't keep buying bonds," he said
The point of this is that China now holds all the aces and is getting ready to lay them. While the media has reports of various "green shoots" - mostly based on optimistic assumptions and the news that the banks losses may only be devastatingly bad rather than catastrophically bad (thanks to the taxpayer bailing them out) - it seems to me that the next stage of this "recession" is about to begin.
Don't be surprised to see inflation rising sharply and currency values falling substantially. The good news is that I'm starting a wheelbarrow business. Well - we're going to need something to carry the cash needed to buy a loaf of bread!