Goldman vs Congress

It's worth noting that gold fell nearly $23 on the day. We don't view it as a risky asset. And you should have a look at Greg Canavan's article below for what else is going on with gold. But other precious and base metals took a fall as well last week. And if there is a lot of leverage in commodity prices—as there was in 2007 and 2008—a general deleveraging (and a U.S. dollar rally) could do a lot of damage very quickly. And there's China.

The Wall Street Journal is reporting that China's State Council is cracking down even harder on speculative activity in the country's red-hot property market. The Journal reports that, "In an indication that Beijing is increasingly worried about runaway property prices, the State Council, the country's cabinet, said Saturday that local governments can take temporary measures to limit the number of property purchases each investor makes within a certain period."

"The steps follow moves by the Chinese central government Thursday to raise minimum down-payment levels and mortgage rates for certain home buyers, after data showed property prices in 70 of China's large and medium-sized cities rose 11.7 per cent in March from a year earlier, the fastest pace since China began releasing the data in July 2005. The government's notice Saturday appears aimed at encouraging local governments and banks to even more strictly control credit for speculative property transactions."

This all comes after the Council last week directed banks to raise the minimum down payment on second homes from 40 per cent to 50 per cent. But if you find it strange and ironic that a communist state has become addicted to the revenues from selling land (dare we call it private property) you are not alone. Maybe if the government wasn't so busy subsidising non-competitive enterprises for the sake of gaining global market share, it wouldn't be so revenue hungry that it would have to perpetuate a property bubble.

But hey, it is tough on governments everywhere these days, from the totalitarians to the corporatists to the mildly wanna-be social welfare Statists (here in Australia). The common problem: too many promises and not enough money.