141–150 of 153 posts
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Devaluing the currency is great for exporting countries, but remember that China's official plan is to develop a consumer based economy. People who use a devalued currency have no purchasing power and inflation can become a huge problem for growth.
Why does the economy need to grow? No growth = no bubbles = no busts. Don't see everyone's obsession with growth, growth, growth.
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There is relative little rmb outside the country. Not everyone can just go inside China and borrow yuan and buy USD. If you are talking about non deliverables, who will be your counter party if everyone wants to go short?
> There is relative little rmb outside the country. There doesn't need to be any, so long as the counter currency exists (the USD, EUR, JPY, etc) there can be a control against the onshore yuan, whether it trades or not. There is always a counter party, It can be created using swaps to other currencies and to other companies actual cash flows. I wouldn't want to argue against this topic excessively because its a fair…
There is always something that can be profited from. Therefore markets never assume the correct rates.
It will be interesting to see what happens with China and Russian economies. I think their best chance is major cooperation with other countries via economic development zones (Silk Road, etc.) and trade. It seems like they are betting on a multi-polar world. The problem for Russia and China is the the USA will probably maintain its dominate military role for another decade or so. That said, I think that the world ec…
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China recently and Japan from 1960-1990 took very similar paths to prosperity: Click on the max timeframe for the first charts below to see the similar growth curves: http://www.tradingeconomics.com/japan/gdp http://www.tradingeconomics.com/china/gdp
I think Japan stopped growing rapidly partly because they'd caught up with the west and couldn't keep transforming by copying more developed countries. I don't think China's there yet. Maybe if their gdp/capita goes from $6.8k (China) to $39k (Japan) that will be the case but there's a way to go.
Japan [with a population of ~128 million] could run its economy into exports and scale to catching up with the West in that manner because of the smaller population.
China simply can't do that with 1 billion people.
http://www.cnbc.com/2015/10/12/china-exports-imports-continu...
China's exports have stopped growing and that is a very, very serious problem with debt fueled growth focused on exports. They'll have to print money [to bring export growth back and avoid a private debt bubble bursting] which is why everyone is betting against their currency. Or they'll go into a recession and they'll need to print money.
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…
Meta: Why is it SOP on HN to downvote/chastise those who claim US economic numbers are fabricated, or post zerohedge/shadowstats links, yet fully embrace the notion of the PRC is doing it? What makes the US so special in its sainthood?
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$57 trillion in world debt is something quite unlike a savings glut. And that is just public debt, and it is growing quickly. http://www.economist.com/content/global_debt_clock But in general I agree with your overall statement... everyone talks about China's "ghost cities" as if they are some sort of quixotic or keynesian tomfoolery... but a simpler explanation is simply that China wants to urbanize and grow a middl…
"$57 trillion in world debt is something quite unlike a savings glut" That's also $57 trillion in savings. You do realize that someone owns the $57 trillion in debt, right? From the point of view of the owners, that is $57 trillion in savings. If you think debt is all bad, then you are not thinking coherently.
It may be logical yes but it's not how it works right now. It's how it worked when the gold standard was around...
I wish it was a zero sum game, but it's not.
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If market is forced to trade at an artificial price often the result is illiquidity. Swap or not eventually someone has to be on the long side. I didn't say PBoC is bigger than the market. I said it is bigger than the offshore market. I don't see how that is controversial. It can shut down the offshore market if it wants to.
> If market is forced to trade at an artificial price often the result is illiquidity There is, Offshore-Onshore spread & HKD interbank rate. > It can shut down the offshore market if it wants to. Not forever, markets can do what they are without any limit. The PBOC loses money or hurts China's economy doing this and it cannot be sustained. > Swap or not eventually someone has to be on the long side. There is always…
As I said I believe the hedge funds bets against the yuan are relatively safe. I believe this is the case because they are working for the PBoC, not against it. The PBoC apparently would not mind the yuan to weaken over time. It just doesn't want it too quickly or disorderly. It wants to give time to companies that borrowed in USD to bet on yuan appreciation to unwind but it does not want to freak out retail savers to jump on the same trade so it is a delicate position. One can debate if such a policy is wise but I don't think it is at all like the all powerful hedgies put a gun to the PBoC's head. Having the offshore yuan trade lower actually provides political cover for the PBoC in Washington. It is just that herding cats can be challenging.
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Right, of course. But ultimately debts are paid back through energy creation, natural resource extraction, tangible assets, and human labor. The accounting details of fractional reserve banking in a debt based monetary system aside, that is a huge sum of human labor that governments have promised... and if that money ever gets paid off it will require the global workforce to work for decades to do it... I would hardl…
if that money ever gets paid off it will require the global workforce to work for decades to do it How much of that is pensions? People work for decades, in the expectation of a pension, creating the pension liability; and are then going to require possibly decades of other people's work while they themselves are too old to work. Discussion of "paying it off" is meaningless when it can only be sensibly rolled over fo…
The problem is that eventually the debts can grow so large that the people who are expected to service the ever increasing principal and interest payments view the debts and overwhelming and/or odious, and choose to default. Then you get a deflationary spiral (i.e., Greece, Cyprus, etc), or alternatively currencies can hyperinflate to service the debt, which is essentially another form of default (i.e., Japan).
We haven't really seen the current situation before, so don't know how this plays out... but we'll find out soon enough I think.
It will be interesting to see what happens with China and Russian economies. I think their best chance is major cooperation with other countries via economic development zones (Silk Road, etc.) and trade. It seems like they are betting on a multi-polar world. The problem for Russia and China is the the USA will probably maintain its dominate military role for another decade or so. That said, I think that the world ec…
Any reason, you, who lives in US and making a living off American companies, would want an unlikely catastrophic event to destroy US, and hoping authoritarian billionnaire dictators in China and Russia to gain even more military power on the world?
I am mostly optimistic about the future, but I also think it is a good idea to make plans for unlikely, but disruptive events.
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It's called Huawei, or Xiaomi.
Xiaomi isn't doing very well these days. Their growth fell off a cliff last year, and is very unlikely to recover to the brief glory days. The smartphone market is going to grow extremely slow from here forward. Xiaomi will end up as just another irrelevant smartphone maker, in a heap of dozens of them like HTC or Motorola. http://fortune.com/2016/01/15/xiaomi-smartphone-sales-fall-s...