The Chinese have taken Keynes' utopian dream of 'digging a hole and filling it back in' to a whole new level of excess...

Mr Keynes would say it does not matter what projects we chose. Digging holes and refilling them is better than doing nothing, after all we need to get people to work.

But projects like digging needless holes, or any project which exists just to create a job, does no one any favours. It will employ some people for a little while, but it delays the structural adjustment that the economy needs to undergo.

Such projects provide only temporary jobs in areas requiring skills the market does not demand. To a large degree, poorly designed stimulus, only prolongs the pain. In order for fiscal expansion to work most effectively, the jobs it creates must provide some certainty that people will be employed for the medium to long-term. In order to boost consumer demand, people need to feel secure about the future as well as the present - otherwise they will save as much of their income as possible.

So if digging needless holes (and filling them back in) 'works' then why not build entire needless cities...

And then a few years later, raze them to the ground!

Those buildings have been standing there for years with no one to buy or rent.

What goes up - on malinvested credit expansion, must come down - on lack of real demand...

We're gonna need more credit.