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China’s great leap into private equity will revolutionise the world’s markets 23/05/2007 The Chinese will eventually act like Arab states and royal families, taking stakes in blue chip companies IT IS a shame that Deng Xiaoping, the Chinese leader who reconciled China with capitalism, is no longer with us to savour the moment. You can hardly get more capitalist an institution than Blackstone, the American private equity giant run by Stephen Schwarzman, the bombastic billionaire who has made his name organising massive leverage buy-outs. So the news this week that China would take a major stake in the company, a first step towards creating what amounts to its own activist investment fund, is truly a milestone in the development of socialism with Chinese characteristics. It is also a hugely significant moment for the world’s financial markets. As a result of China’s decision to start to manage its massive foreign exchange reserves more rationally, hundreds of billions of dollars could u...

European property crash could bring the euro down with it By : Matthew Lynn 09/05/2007 "The European Central Bank didn't worry about prices on the way up so there is no reason to imagine it will worry about them going down" In the eight years since the euro was launched, soaring, runaway property markets in Spain, France, and, most of all, Ireland have been seen as one of the greatest threats to the stability of the currency. Now it turns out that precisely the opposite might be true. It is not rising house prices that are a threat to the euro. It is falling prices. Why? Because as property markets in those three countries start to collapse – as they now appear to be on the edge of doing – the European Central Bank (ECB) will be able to do nothing about it. Economies may be plunged into recession, financial systems hit, and people's wealth wiped out. And the central bank will be able to do nothing except sit on its hands and fret. In the past few years, a small num...