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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

#41

Post by ISL »

imron wrote: post #9
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.

Exactly this. China also likes shows of strength, and would be more than happy to expend large amounts of cash to bankrupt the people trying this, rather than lose face being broken by them.

If each Chinese citizen were to sell $1000 worth of yuan back to the Chinese government in return for 1000 USD, a trillion-dollar reserve would be depleted.

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

#42

Post by tim333 »

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…

>China's economic growth simply isn't sustainable, and that's even if it was true growth

People have been naysaying China for a while but it's kept merrily growing. Mostly it's because the Chinese tend culturally to be pro education and hard working but in China were reduced to very low incomes by Mao's communism and have since been recovering and getting back towards the kind of economy they have in Taiwan, Hong Kong, Singapore and the like.

GDP per capita in China is $6,800 (up from $951 in 2000) against $32k in Taiwan and $55k in Singapore so there's a way to go. A housing crash will probably just be a blip for a while. They'd have to turn back to Mao to really muck things up.

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

#43

Post by rdlecler1 »

tosseraccount wrote: post #15
ryandamm wrote: post #7

Earlier quoted context omitted.

The main problem is a devalued currency stokes inflation, so consumer costs go up (so do producer costs, but that's offset by better export earnings). China is in the middle of a shift from an export-driven economy to a consumption-driven economy, part of the normal development arc of major economies. But increasing export profits at the expense of households pushes that balance in the wrong direction. For more (much…

Devaluation causes inflation? Not necessarily: http://www.economicshelp.org/macroeconomics/macroessays/does...

If China starts to devalue their currency, so will their Asian neighbors. They know that a race to the bottom isn't going to be the answer.

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

#44

Post by hackuser »

tim333 wrote: post #42
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…

>China's economic growth simply isn't sustainable, and that's even if it was true growth People have been naysaying China for a while but it's kept merrily growing. Mostly it's because the Chinese tend culturally to be pro education and hard working but in China were reduced to very low incomes by Mao's communism and have since been recovering and getting back towards the kind of economy they have in Taiwan, Hong Kon…

> People have been naysaying China for a while but it's kept merrily growing.

That's characteristic of both bubbles and genuine exceptional performance, and in many situations in addition to national economies. Look at rapidly growing startups, for example.

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

#45

Post by khuey »

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.

You do realize that Apple is one making the realy money from iPhones and iPads, not the contract manufacturers, right?

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

#46

Post by bcg1 »

ryandamm wrote: post #7
GreaterFool wrote: post #6

Isn't everyone and their dog trying to devalue their currency these days to boost exports? What's the problem with weak yuan? Sure, iPhones will get even more expensive to buy in China (rather funny since they are made there) but other than that it should be a boon to exports, no?

The main problem is a devalued currency stokes inflation, so consumer costs go up (so do producer costs, but that's offset by better export earnings). China is in the middle of a shift from an export-driven economy to a consumption-driven economy, part of the normal development arc of major economies. But increasing export profits at the expense of households pushes that balance in the wrong direction. For more (much…

$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 middle class as part of the development cycle you mentioned. They probably need a "hard landing" in order to cool off their real estate market and clear out the dead wood of their malinvestment in order to realize that goal.

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

#47

Post by incongruity »

RA_Fisher wrote: post #33
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. :)

I thought that approach always worked, but it looks like it doesn't for this article. What gives? I thought that was a requirement from Google that users see what the googlebot sees?

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

#48

Post by rdlecler1 »

China purposely engineered its economic growth to capture the lions share of the reward, which leaves China with the lions share of the risk. Moreover with capital outflows at record highs the only money going back into China is sovereign so this shouldn't create a net flight of capital in the west that would lead to a liquidity crisis.

China's been in an economic boom for 37 years and for the most part people don't know what a bad market is. This is healthy for China. It will help shine the light on poor management. The question is whether the CCP will make the necessary changes which are antithetical to their stay-in-power strategy.

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

#49

Post by Eliezer »

bcg1 wrote: post #46
ryandamm wrote: post #7

Earlier quoted context omitted.

The main problem is a devalued currency stokes inflation, so consumer costs go up (so do producer costs, but that's offset by better export earnings). China is in the middle of a shift from an export-driven economy to a consumption-driven economy, part of the normal development arc of major economies. But increasing export profits at the expense of households pushes that balance in the wrong direction. For more (much…

$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…

If you save another dollar in the bank, that's another dollar of global debt that the bank owes you - it's how the accounting works.

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

#50

Post by um_ya »

diego_moita wrote: post #39
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…

And yet, people will continue to praise people like Bernie Sanders. Centralizing government authority does not make the world better.
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