Greek stock market surges as outline bailout deal reached with creditors€86bn, eh? But somehow that looks small beer alongside
China stuns financial markets by devaluing yuan for second day runningThat's quite a blockbuster for the silly season. As the price of oil gently subsides back into the 40s and Vladimir Putin mints ever more of the hard metallic currency he reckons the world understands best, Obama's final 18 months in office may be more demanding than he once expected.
ND
12 comments:
Demanding?
Rewarding more like.
Having trashed the Constitution to bring in his NHS, encouraged Iran to make its bomb and abandoned US foreign policy, this can only aid him in his mission to destroy the USA.
It's rather rubbish that the MSM simply reports this as a "devaluation" story. Of course, against neighbouring/competing south-asian countries the Renminbi has significantly appreciated. eg over the last 2 years +25% again Malaysian Ringgit and +20% against Indonesian Rupiah. I think against a wide basket of currencies the Renminbi is increasing in value.
... Bloomberg has some detail: "A Bloomberg gauge of the dollar against 10 major trading partners has climbed more than 7 percent this year" and the rationale is "to cushion [the Renminbi] from strengthening along with the dollar after a projected interest-rate increase from the Federal Reserve".
Along with today's UK employment and wage numbers, it looks like the base rate may not rise as quickly as Mark Carney would like...
I can't help wondering if there isn't some other reason for Yelland and Carney to keep promising rate rises.
The problem for China with its lack of transparency and flexibility is that the situation runs out of control.
@John Miller - as a kid, you are what we would call a 'mentaler'.
@BE - I'm often puzzled by peoples differing explanations of the same phenomena; in Britain and the US everything is justified and reasonable, while the same actions in China lack transparency and flexibility.
FWIW I think @rwendland is closest to the mark. The 'grown ups' coming back from holidays in September might not be pretty for the markets.
I can't help wondering if there isn't some other reason for Yelland and Carney to keep promising rate rises
They talk the interest rate futures markets up and down for their mates? I've managed to make a few bob trading on that thesis.
It is a symbiosis of corruption tainted money, politics one feeds off the other, throw in unbalanced economic growth, an over heating housing market bubble and in the PRC the garden is not so rosy.
There are no good fundamentals in the PRC but if it is exemplar systemic failure, then look no further.
The growth myth is a big illusion, with a population of ±1.3 billion, a growth rate of 7-8% is needed just to tread water. The whole system is hairpin bent - from lowly charge hand, the guy who delivers the building materials - all the way up the line to provincial governor everyone's palm is fragrantly greased.
Add in, the infrastructure building madness, which has built many public works but throughout perhaps the vast majority of railways, roads and buildings the structural steel is rubbish and the concrete surrounding it weak - this is a disaster waiting for collapse.
Local party functionaries cream of millions, gang master bosses abuse a compliant workforce and 6 day weeks, a life of slave labour but it's still better than a life of a peasantry, of toiling in the fields, just about.
One of the spin offs of this dizzying industrialization, the growth of a manager class, bureaucrats and the middle class, these people travel, they see the outside world, hence there is a clamour for change in China. Change, a universal cry it seems but the rest of the world never gets to see the unrest just bubbling under the dispassionate oriental facade.
Many Chinese, mendaciously encouraged by the state, to put their very hard earned individual savings betting on the stock market, somehow swallowing and being sold the great lie " the Stock exchange.......it'll always rise". How, the Chinese authorities have prevented a rout, we'll never know but in the end, just as Major realized he could not protect the pound forever, the dawning foreboding has caused the recent devaluation. How this will end is uncertain but put it this way, I do not think it will be an easy landing.
The biggest lies are the worst and cause the greatest calamities, the PRC fashioned a whopper, its consequences and I do not say this lightly for truly I dread it and we will all reap its whirlwind.
anon - yup, when China sneezes we shall all catch cold
Every country in history that has gone a boom over investing 50%+ GDP in infrastructure has come mightily undone. In Argentina and Spain's case, forever.
China will have an almighty crash, but when, that would be the trick to know indeed!
And they've now devalued three days in a row !
@Anonymous 1:23am -
When I read this - "It is a symbiosis of corruption tainted money, politics one feeds off the other, throw in unbalanced economic growth, an over heating housing market bubble and in the ...." I honestly thought you were talking about the UK.
Perhaps you actually were?
Glad to know that we're on the good ship Equity and not some rickety and overloaded lifeboat. We should weather the storm with all the value stored in our housing market.
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