China Knows Stimulus

China knows how to stimulate. Company after company that has reported has said they have seen the benefits of the Chinese stimulation plans. Texas Instruments (TXN - commentary - Cramer's Take) must have cited China for much of its bullishness. We heard the same from Taiwan Semiconductor (TSM - commentary - Cramer's Take).

But it isn't just the small stuff. On the United Technologies (UTX - commentary - Cramer's Take) call we heard about Chinese elevator ordering. You can look through the Caterpillar (CAT - commentary - Cramer's Take) release and see the Chinese fingerprints all over the bright spots for the world's largest machinery company. In fact, CAT pointedly made the mention of China vs. America and how President Obama's stimulus plan has missed the mark so far.

This is something I have been saying for some time, but it is nice to hear it from the companies if only because I won't be considered as an Obama-basher and therefore be subject to attacks from almost every major media outlet.

What was the problem with the U.S. stimulus plan? I think the plan wasn't meant to help manufacturing. It was meant to help existing workers, many at government positions, make more money. The amount of money actually devoted to the kind of building they are doing in China was quite small. We know there's some road building in the stimulus, but recall that the amount of money being put in to infrastructure was only slightly larger than what was put in to the Big Dig up in Boston.

I know that the U.S. tried to encourage lending with TARP, to spur construction and consumer borrowing, but, as U.S. Bancorp (USB - commentary - Cramer's Take) said eloquently on its call, there aren't all that many creditworthy borrowers around these days, and most don't have any projects going worth borrowing for. But in China, the rate spike the government put in to cool the economy last year created a gigantic pent-up demand for money that's flowing like mad, so heavily that -- of course -- it has been judged by the media bears as being "too aggressive," as if somehow China's strength has the power to send the whole world into an inflation tizzy. Hardly. It can't even do that in China!

The Chinese simply knew how to do it right -- they didn't play politics, they didn't appease constituents, they just put that money to work in a way that is getting the job done.

Here?

We are still waiting.

Random musings: When will an academic come on who actually knows something about money?? When will one step up to the plate and have a respect for the way the capital markets really work, not just in theory. I am done calling them out by name, I just want one to come on and admit that theory isn't practice. Most of these academics would be hounded out as armchair quarterbacks if this were the NFL.

At the time of publication, Cramer was long Wells Fargo.

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