As Fed, China pull back, so do global markets

Link to the Article

The article talks about how S&P and Dow Jones had dropped 2% in the global market due to the fact that China's massive build up of its infrastructure has slowed down. Because China has slowed down its infrastructure build up, countries are not able to export construction goods like heavy equipment and raw materials. And due to the fact that they are no longer buying these goods, the economies of the world that sell these material goods have taken a hit, so the fed has to keep up the stimulation of the american economy and there will no repeat of the 2008 economic crisis. The state of world economies is still very fragile after the housing bubble collapse in America. The fed fears that there will be another economic collapse due to the fact that China may have bad loans and unstable debt. If China defaults on these loans we will be forced into another world recession. China has taken precautions in putting trillions in foreign reserves as a buffer in case the loans are bad and debt is unstable.

This article gives a great insight on how China has learned from the mistakes of America and has taken the precautions of preventing another recession. This forward thinking hopefully can have other countries follow suite when building up there infrastructure and making sure that there is money in reserve to back up loans in case locally municipalities can not pay back their loans.