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Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

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Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#31

Post by eru »

EGreg wrote: post #28
ctrl_freak wrote: post #21

Earlier quoted context omitted.

All other things being equal, a weak currency is a good thing for a country. Unfortunately for China, a weak currency comes with a host of other problems, one of the most significant is capital outflow: http://www.bloomberg.com/news/articles/2015-09-25/china-capi...

Good thing according to what goal? I think countries have various trade imbalances and rectifying them is good for the country. At the end if the day, though, robots will do most of the work.

Funny enough, post-war Germany traditionally ran a trade surplus and a very strong currency.

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#32

Post by toomuchtodo »

memracom wrote: post #18
mahranch wrote: post #3

China's economic growth simply isn't sustainable, and that's even if it was true growth. There isn't a top economist alive who believes China's self-reported GDP numbers aren't fudged in one way or another (source: http://www.businessinsider.com/economist-reactions-to-chinas... ). Either one of those situations (an economic slowdown, China fudging the numbers, or the more likely situation: a combination of both) make…

Last I looked, China was a big export economy. So the population size is irrelevant. Look elsewhere for indicators of China's future economic growth. And never forget, that big revolutionary wave of iPhones and iPads? It came from China manufacturers. In today's world, if you only look ahead, you will be blindsided from the rear. China is not China any more.

Which markets in the world, besides the US, have a stable enough economy for China to rely on their consumption?

Europe still has significant headwinds, Canada and the middle east...that's pretty obvious with $30/barrel oil prices, Russia of course not doing terribly great, capital flooding back to the US from Central and South America due to interest rates rising.

Keep in mind, a lot of manufacturing is moving back to the US from China with automation being cheeper than (quickly rising) Chinese labor rates [1] [2] [3].

If China cannot stoke internal demand quickly enough (and I assure you, it cannot), it's going to slide into a deep recession. On the bright side, this is going to help cool off London, Toronto, Vancouver, SF/LA, Miami, and central Texas property markets (where a lot of Chinese money was flowing into).

[1] http://www.marketwatch.com/story/us-flips-the-script-on-jobs...

[2] http://news.yahoo.com/manufacturing-moving-china-us-survey-0...

[3] http://www.economist.com/news/special-report/21569570-growin...

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#33

Post by RA_Fisher »

ryandamm wrote: post #8

Non WSJ-paywalled article by Reuters: http://www.reuters.com/article/uk-china-forex-hedgefunds-idU... Not the same article, FWIW.

One trick is to Google the headline. The article as linked-to from Google won't have a paywall. :)

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#34

Post by meric »

toomuchtodo wrote: post #32
memracom wrote: post #18

Earlier quoted context omitted.

Last I looked, China was a big export economy. So the population size is irrelevant. Look elsewhere for indicators of China's future economic growth. And never forget, that big revolutionary wave of iPhones and iPads? It came from China manufacturers. In today's world, if you only look ahead, you will be blindsided from the rear. China is not China any more.

Which markets in the world, besides the US, have a stable enough economy for China to rely on their consumption? Europe still has significant headwinds, Canada and the middle east...that's pretty obvious with $30/barrel oil prices, Russia of course not doing terribly great, capital flooding back to the US from Central and South America due to interest rates rising. Keep in mind, a lot of manufacturing is moving back…

China has been conjuring demand for concrete buildings for 7 years. IMO "stoking internal demand" is harmful to the economy. There's always demand for what people really want. Clean air, comfortable, affordable, living spaces with readily access to transportation to quickly travel to where other people are, good food, etc.

But then again, China can't step back from the current structure of the economy without risking collapse, which would endanger the Party's power.

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#35

Post by [deleted] »

meric wrote: post #34
toomuchtodo wrote: post #32

Earlier quoted context omitted.

Which markets in the world, besides the US, have a stable enough economy for China to rely on their consumption? Europe still has significant headwinds, Canada and the middle east...that's pretty obvious with $30/barrel oil prices, Russia of course not doing terribly great, capital flooding back to the US from Central and South America due to interest rates rising. Keep in mind, a lot of manufacturing is moving back…

China has been conjuring demand for concrete buildings for 7 years. IMO "stoking internal demand" is harmful to the economy. There's always demand for what people really want. Clean air, comfortable, affordable, living spaces with readily access to transportation to quickly travel to where other people are, good food, etc. But then again, China can't step back from the current structure of the economy without risking…

[deleted]

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#36

Post by [deleted] »

sharetea wrote: post #24

Pretty easy bet: China Capital Outflows Rise to Estimated $1 Trillion in 2015 http://www.bloomberg.com/news/articles/2016-01-25/china-capi... Chinese banks' new bad loans more than doubled in 2015 http://www.reuters.com/article/us-china-banking-npl-idUSKCN0... China Crash: $28 Trillion Debt Load Forces Credit Crunch http://www.breitbart.com/national-security/2016/01/05/china-... Capital flight pushes China to the bri…

[deleted]

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#37

Post by [deleted] »

sharetea wrote: post #30
Analemma_ wrote: post #4

Earlier quoted context omitted.

They're trying to do the same time thing as Soros did, yes. But even after its recent $300 billion spending spree to defend the yuan, China still has trillions in foreign currency reserves left, orders of magnitude more than the BoE ever did. And they have a cultural imperative against "giving in" to Western capitalist pigs. I really don't think these guys have thought their plan through.

Not enough reserve "by 2018 all of China's excess reserves — cash that it has on hand to use immediately — could be gone." http://www.businessinsider.com/chinas-fx-reserves-less-than-...

[deleted]

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#39

Post by diego_moita »

PakG1 wrote: post #19

What I'm about to say is unfortunate but true. China has a big us against the world mentality. Economic "attacks" are often seen as attacks by nation states, not by individuals, and as such, directly reflect foreign policy attitudes. Language like this only adds fuel to the fire. Given the different worldview about how the world works, motivations will always be suspect. Official party mouthpieces will never view suc…

> China has a big us against the world mentality.

It is a typical pattern on authoritarian mentalities and regimes. You'll find the same in Russia, widely spread among the Latin American left and the supporters of far right Republican candidates (Trump & Cruz).

The best to do is to "give them enough rope so that they hang themselves", unfortunately. Authoritarian, centralized and anti free trade regimes end up broken because they suffocate economic diversity, see Argentina, Venezuela and Russia.

Re: Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

#40

Post by aminorex »

ken47 wrote: post #20
mahranch wrote: post #3

China's economic growth simply isn't sustainable, and that's even if it was true growth. There isn't a top economist alive who believes China's self-reported GDP numbers aren't fudged in one way or another (source: http://www.businessinsider.com/economist-reactions-to-chinas... ). Either one of those situations (an economic slowdown, China fudging the numbers, or the more likely situation: a combination of both) make…

I would shy away from the word "fudged," but almost every country's gdp numbers are the result of subjective interpretation.

China is an exceptional case. It has a long tradition that way.
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