Beware the new Beijing-Berlin bond

Michael Pettis at China Financial Markets believes optimism regarding China and Europe is unwarranted. Via email, he states the case while giving nine key things to watch in 2013. The subtitles below are mine, the rest from Pettis. Too Early to be Enthusiastic About China

BERLIN (Reuters) - France and Germany held talks with represen

Dr. Stephen Leeb submits:We've talked a lot about China in recent years – about its miraculous growth, the strain it puts on the world's resources, and the fact that China's leaders seem to “get” the emerging commodity squeeze in ways that Western leaders do not. Let's make something clear. We are not in love with China, so much as we are worried that complacency has led the West astray. Following World War 2, the U.S. economy was the envy of the world.

German Chancellor Angela Merkel stood by her refusal to widen the European Central Bank's role, even as Eurozone giants Germany, France and Italy vowed to stand by the euro.France had urged Berlin to allow the ECB to become a lender of last resort, with the firepower to protect debt-ridden eurozone members from falling victim to the bond markets, but the German leader stood firm at crisis talks.

BERLIN (Reuters) - Europe is already seeing "positive results" from the European Central Bank's announcement that it stands ready to buy unlimited amounts of bonds issued by euro zone states, ECB President Mario Draghi told a German paper. But he conceded he still had work to do to convince some in Germany and could address lawmakers there. Draghi announced last week that the central bank was ready to buy the bonds of euro zone states struggling with soaring borrowing costs provided they put in a formal request for aid and fulfilled strict domestic policy conditions. ...

With many of China’s wealthy elite turning away from public displays of wealth and enjoying high-priced toys within the privacy of their own homes, new status symbols like antique cars and grand pianos are joining the ranks of popular stealth buys.

To ensure long-term access to resources, China will have to make friends across the spectrum beyond the Gaddafis and Mugabes, write Jonas Parello-Plesner and Parag Khann