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PBOC Launches Day Two Of Currency Cold War Offensive

Tyler Durden's picture





 

The People's Bank of China set the yuan's central parity rate against the U.S. dollar at 6.3737 on Thursday, a second sequential major drop and down from Wednesday's 6.3598. This follows a weakened fixing of 6.3598 on Wednesday, down from the record high fixing of 6.3483 on Tuesday, just before the Senate decided to launch the first salvo in the Sino-US trade wars. Surely news of the collapse in Chinese exports will merely reinforce the theme that the USDCNY is in sudden need of devaluation and be a loud slap in the face of the Senate which will now come face to face with its utter worthlessness.  In Hong Kong, the offshore yuan spot rate was fixed at 6.4407 against the greenback on Thursday, compared with Wednesday's 6.4923. The fixing is based on an average of bids from 15 participating banks and is calculated by the Treasury Markets Association, a Hong Kong-based industry group. We are hardly the only ones who noticed the escalation in spot USDCNY wars by the PBOC, which now appears hell bent on showing the US its peg can go lower in addition to higher (inflationary consequences be damned) - from the WSJ: "The yuan fell sharply against the U.S. dollar in early Thursday trade, after the Chinese central bank surprised the market by guiding its currency weaker for the second consecutive day despite the dollar's global weakness." So even as the USD is plunging against the hope-driven Euro, which has soared 600 pips in the past week on nothing, the USD is now jumping against the CNY for no other reason than mere demagogic policy. And this environment in which central bank decisions are all that matter is the one in which traders hope to make a living based on rational market decisions (as otherwise one can flip a coin in Vegas)? Good luck.

From the WSJ

Traders said the unusual move by the People's Bank of China to set the dollar-yuan central parity, a daily reference rate, at a higher-than-expected level earlier Thursday indicated Beijing's continued displeasure following a U.S. Senate vote to pass legislation targeting Beijing's management of its currency.

 

But traders said they are curious to see how the yuan will perform later in the day, especially given the dramatic reversal of fortunes it experienced Wednesday.

 

Despite a similarly higher central parity rate Wednesday, the yuan erased all its earlier losses in late trading and ended the session stronger versus the dollar, likely a sign of a continued tug-of-war between the central bank and investors who remain confident in the yuan's long-term appreciation trend.

Bloomberg with more on the reason why this is just the beginning in the inversion direction of the USDCNY move which is sure to generate at least several subdural hematomas in the cranium of one Chuck Schumer:

The risk of a slump in trade may encourage Chinese officials to refrain from further interest-rate increases and add to support for companies after the State Council yesterday announced tax breaks for small businesses. The world is relying on China, the biggest contributor to global growth, to sustain an expansion that was 9.6 percent in the first half of the year.

 

“The leading indicators from the developed economies indicate that worse will follow” for exports, said Yao Wei, a Hong Kong-based economist at Societe Generale AG.

 

The yuan slipped 0.42 percent to 6.3849 per dollar as of 10:06 a.m. in Shanghai.

 

Appreciation of the yuan has weakened competitiveness and exporters are afraid to accept large or long-term orders, the customs bureau said in a statement. “Serious development problems, high unemployment rates and sliding consumer confidence” in the EU, U.S. and Japan, and slowing growth in emerging economies “present severe challenges,” it said.

 


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Thu, 10/13/2011 - 00:59 | Link to Comment jarboejl
jarboejl's picture

Busy night at the ZH farm.

Thu, 10/13/2011 - 01:18 | Link to Comment thefatasswilly
thefatasswilly's picture

We live during a period of power transition in America: from wasps to jews, catholics, chinks, and other such human filth.

History will find this one of its most comedic chapters. The wasps are well armed, yet do nothing to throw off their chains. Perhaps the majority of humans really do not treasure liberty. Perhaps the chinks are right when it comes to government . . . as a true lover of liberty, my weak desires for freedom flounder upon the harsh rocks of reality . . .

Thu, 10/13/2011 - 02:23 | Link to Comment reader2010
reader2010's picture

Your new masters are right here, and they will all live like the Americans in terms of daily oil consumption in no time. Mother Earth is FUCKED. Please drop all your nukes and God help us. 

http://www.chinasmack.com/2011/pictures/national-day-golden-week-holiday-crowds-throughout-china.html

Thu, 10/13/2011 - 03:03 | Link to Comment Michael
Michael's picture

I'm more interested in the Two Hump Camel Squeeze.

The gift that keeps on giving.

I'm talking about the sub-prime debacle and now the prime debacle, just now showing up in the news, been hitting our shores for almost a year now.

Prime-X Bitches!

 

Thu, 10/13/2011 - 08:21 | Link to Comment trav7777
trav7777's picture

China won't let their exchange rate normalize.  This is ENTIRELY their doing.

The response is to tariff them.  It's as simple as that.

Amazing how the people calling for market this, market that seem to imply that the western nations should sit by idly while China steals.

Thu, 10/13/2011 - 03:41 | Link to Comment jarboejl
jarboejl's picture

I don't know which faction of "human filth" from which you hail, but you are a sad, sad person.

Thu, 10/13/2011 - 03:44 | Link to Comment Vlad Tepid
Vlad Tepid's picture

Just a point to Mr. The Comedian-avatar:  True lover's of liberty yearn for liberty in the universal sense, not just WASPs (it's supposed to be capitalized, Jr.).  Note how the words "human filth" never made it into the Declaration of Independence, The Road to Serfdom, or The Wealth of Nations.

Thu, 10/13/2011 - 04:26 | Link to Comment thefatasswilly
thefatasswilly's picture

lol.

You are entirely ignorant. You don't realize that we suffer from a major overpopulation crisis on this planet.

Until people stop consuming, until governments stop believing that GROWTH is the answer, I will view ALL of you human consumers as filth. Of course, this will never happen. Just think: most westerners drink water out of a PLASTIC, disposable bottle. Plastic is derived from oil, a rapidly depleting resource which is also used to lubricate the world economy. Fucking cancer cells.

Shove your bullshit "economic" books down your ass, faggot. We're bacteria in a petri dish, and you certainly don't understand that. I tire of seeing morons like you spout bullshit as if you know anything at all. Please shut the fuck up; what you say, think, or believe is irrelevant, insignifcant, and inane.

Again, stfu.

Thu, 10/13/2011 - 05:28 | Link to Comment clymer
clymer's picture

spoken like a brainwashed, NWO shill. Go back to pleasuring yourself to watchmen comics

Thu, 10/13/2011 - 06:48 | Link to Comment nmewn
nmewn's picture

"You are entirely ignorant. You don't realize that we suffer from a major overpopulation crisis on this planet."

Then do the planet & us a favor.

Thu, 10/13/2011 - 07:16 | Link to Comment Vlad Tepid
Vlad Tepid's picture

I'm so glad you're clued in to what I do and do not realize.  So you can add that to your superpowers of shooting your pregnant Asian paramour, raping one of your superteam members, and shooting your daughter to make her stronger...oh wait that was "Kickass."  My apologies.

My ability to comprehend those "bullshit economic books" puts me in a different league from you and the lesson that I take away from them, given by men wiser than me, allow me to perceive your ant-like myopia like a colossus.

Since you gave me a nice target, I will shoot it down but not expend too much effort because I have a life to getback to:  Those disposable PLASTIC bottles are made from PLASTIC, which does not biodegrade and is recycleable so that any PLASTIC bottles made may be recovered even in particulate form and remade into new PLASTIC bottles for people to drink SAFE water out OF.  Of course you may prefer to continue to drink out of a psilocybin cap and I wish you the best of luck with that.  I will close by quoting a great fat ass I know: "what you say, think, or believe is irrelevant, insignificant, and inane."

Thu, 10/13/2011 - 11:43 | Link to Comment thefatasswilly
thefatasswilly's picture

I'll try with your dumb ass again:

All modern economic systems assume infinite growth. We do not have infinite resources.

Does your tiny brain begin to see the problem yet, or are you going to continue in your Pavlovian rejection of the cold, hard truth? I would tell you to shut the fuck up, but I need to be constantly reminded just how worthless the majority of you humans truly are.

Fri, 10/14/2011 - 05:29 | Link to Comment oldman
oldman's picture

Some people think it's the 'whiteman's problem'.

we sold the growth idea and continue to beat its drum when it is obvious that infinite growth never was anything other than infinite debt. I say forgive the debt and let the bank's take the hit even though this means our bank acconts will be drained in the panic and we'll be in line waiting forever to see our 'money.

What do you say superman or do you just spout racist shit?

and who do you work for?              just a curious oldman             om

 

Thu, 10/13/2011 - 07:27 | Link to Comment BrocilyBeef
BrocilyBeef's picture

The person behind "thefatasswilly" is a real loser.

Thu, 10/13/2011 - 11:45 | Link to Comment thefatasswilly
thefatasswilly's picture

Not one person is able to counter my analyses. All you can do is attack my character. This board has nothing but ad hominem dumb fucks now. You are all despicable and wastes of oil and oxygen. Fucking cancer cells.

Fri, 10/14/2011 - 12:27 | Link to Comment oldman
oldman's picture

Who do you work for?

Thu, 10/13/2011 - 04:30 | Link to Comment Kina
Kina's picture

as a true lover of liberty, my weak desires for freedom flounder upon the harsh rocks of reality

 

I never saw a lover of liberty and freedom hold such gross obsence racism and bigotry. Usually these people are lovers of dictators and despotism as they feed the masses racism to sure up their power.

Thu, 10/13/2011 - 01:01 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

Yoo twy yoo wike

Yoo wike yoo buy!

Thu, 10/13/2011 - 01:05 | Link to Comment Missiondweller
Missiondweller's picture

This is dangerous.

A trade war to China means millions of factory workers off the job and on the streets.

They fear unrest more than anything else. And this at a time when their banks are blowing up and their "economic miracle" may be about to pop.

Trade wars can turn into shooting wars. Just ask Imperial Japan.

Thu, 10/13/2011 - 01:29 | Link to Comment thefatasswilly
thefatasswilly's picture

Yawn. World War III was already won by GRC.

Germany gained de jour command of western Europe, including Britain and the Mediterranean. Russia reinherited its former soviet territories. China took control of all eastern asia and western pacific ocean (a Persian Caliphate, backed by GRC, conquers the Middle East, but remains a minor player due to the depletion of oil).

And thus, Eurasia was divided. America, though weakened, still nurses ambitions. It IS on the other side of the world, after all . . .

Thu, 10/13/2011 - 01:33 | Link to Comment thefatasswilly
thefatasswilly's picture

Though I have to mention one contingency (amongst many); it is very possible that Russia simply betrays Germany (it is unprofitable for those sneaky Cossack sluts to betray China due to the proximity of Moscow to Europe, you see) with Chinese assistance, and thus stabs Germany in the back to take control of all Europe.

Russian ambitions remain European, and China wants its northern neighbor distracted while it floods siberia with slant eyes. If this contingency plays out, 1984 will be realized.

Haha wait nevermind. People in 2011 line up and pay hand over fist for the telescreens. Thus is the nature of humanity.

Thu, 10/13/2011 - 01:47 | Link to Comment Cynical Sidney
Cynical Sidney's picture

what are you on about? put down that pipe you are way off target

Thu, 10/13/2011 - 03:46 | Link to Comment Vlad Tepid
Vlad Tepid's picture

He's regaling us with the plot of the science fiction novel he's working on...self-publishing soon.

Thu, 10/13/2011 - 04:08 | Link to Comment cossack55
cossack55's picture

Wish he would publish the chapter where the Cossacks kick his ass, the two-legged fool.

Thu, 10/13/2011 - 04:10 | Link to Comment thefatasswilly
thefatasswilly's picture

Obviously, you are not a patron of the fine arts, and have thus not seen the movie Snatch.

Thu, 10/13/2011 - 06:43 | Link to Comment Vlad Tepid
Vlad Tepid's picture

A snatch is many things.  Only Michelangelo can make it fine art.

Thu, 10/13/2011 - 04:09 | Link to Comment thefatasswilly
thefatasswilly's picture

If you provide a rational analysis and prove me wrong, you might be warranted in your comment.

As it stands now, however, you are doing nothing but proving that you're a fucking moron.

I suggest you shut the fuck up, boy.

Thu, 10/13/2011 - 04:35 | Link to Comment Kina
Kina's picture

Wow, what a totaly racist, xenophobic bigotted pig you are. Somebody leave the lid off the sewer?

Thu, 10/13/2011 - 08:23 | Link to Comment trav7777
trav7777's picture

take your rayciss label and shove it up your ass

Thu, 10/13/2011 - 11:40 | Link to Comment thefatasswilly
thefatasswilly's picture

This forum has really declined, huh? Full of short sighted, politically correct dumbfucks now.

I actually like you in comparison, fuck.

Thu, 10/13/2011 - 06:43 | Link to Comment Vlad Tepid
Vlad Tepid's picture

...because you appear to be in the business of rational analysis.

Thu, 10/13/2011 - 01:43 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Tolkien warned us about Germany in LOTR. Sadly, few cared to understand the real life teachings of his works.

But rise the peoples of middle earth shall against the tyranny of the dark lords of Mordor (Germany).

And when they do, the cities of europe will again be witness to the brutality of the 14th century.

When the mobs claim infinite justice, the german opressors and their french laphogs will find a bitter end.

Thu, 10/13/2011 - 01:43 | Link to Comment thefatasswilly
thefatasswilly's picture

uh no

Please read some Nietzsche, (Franz) Oppenheimer, and/or Hegel for more information.

Thu, 10/13/2011 - 05:31 | Link to Comment clymer
clymer's picture

You may in fact be the most vitriolic nihilist ever to pollute this board with such self-loathing garbage (you are a human afterall).

I predict eventual suicide

Thu, 10/13/2011 - 08:27 | Link to Comment trav7777
trav7777's picture

somebody needs to carve a swastika into your greasy bald head

Thu, 10/13/2011 - 01:54 | Link to Comment Cynical Sidney
Cynical Sidney's picture

"A trade war to China means millions of factory workers off the job and on the streets."

i beg to differ; waging a trade war against china, means we will create more factory jobs, hire more workers, and get manufacturing back in the states. american businesses need a level playfield to be competitive against foreign companies, it's time to secure and enforce our IP rights.

Thu, 10/13/2011 - 03:10 | Link to Comment moskov
moskov's picture

I thought Bernake already did that. Your offensive remark surely insulted My beloved Fed chairman

Thu, 10/13/2011 - 01:08 | Link to Comment El Gordo
El Gordo's picture

Boy I guess our fearless Senatorial leaders scared them, didn't they?  What happens to our military folks if the Chinese decide not to make any more boots? What's that old saying about fools walking in where angels fear to tread?

 

Thu, 10/13/2011 - 08:31 | Link to Comment trav7777
trav7777's picture

at some point, enough is enough.  China has been permitted to steal for too long.  It's time for it to stop.

Queen Vicky had more balls than our present "leadership."  She sailed the Royal Navy without hesitation and shoved opium up their asses

Thu, 10/13/2011 - 01:09 | Link to Comment UP Forester
UP Forester's picture

Peak Population....

Thu, 10/13/2011 - 01:12 | Link to Comment BillyBoy22
BillyBoy22's picture

If a war with China starts, I am so out of here.  I hear New Zealand, Denmark, and Abu Dhabi are nice this time of year.  Very much not interested in World War 3 just to appease Krugman

Thu, 10/13/2011 - 01:19 | Link to Comment thefatasswilly
thefatasswilly's picture

Have fun trying to avoid the biochemical weapons, unless you plan on moving to the moon.

Thu, 10/13/2011 - 03:55 | Link to Comment Vlad Tepid
Vlad Tepid's picture

Can you explain what biochemical weapons are?  Chemical weapon's effects are fairly localized.  Or did you mean biological weapons but just wanted to sound like you were in a movie?

Thu, 10/13/2011 - 03:55 | Link to Comment UP Forester
UP Forester's picture

I don't want to put words in his snout, but maybe he meant weaponized bio-mechanical nano-bots that shit out hydrochloric acid in your inner-ear....

Thu, 10/13/2011 - 05:36 | Link to Comment clymer
clymer's picture

In case you guys haven't noticed, this dude shapes his entire sense of awareness from that which he reads in a fucking comic book

 

http://en.wikipedia.org/wiki/Watchmen

Thu, 10/13/2011 - 06:40 | Link to Comment Vlad Tepid
Vlad Tepid's picture

I noticed.  He's getting to be fun, though.  The irony is that although he seems obsessed with human pollution he is oblivious to the extent that he is polluting our discussion of currency wars (a topic he is no doubt totally unqualified to expound upon.)

Thu, 10/13/2011 - 07:53 | Link to Comment Pay Day Today
Pay Day Today's picture

bio/chemical weapons are pretty useless militarily. As long as you are several hundred yards away from an impact site you should be ok. Can't say the same for say, a 10 kT tactical nuke.

Thu, 10/13/2011 - 01:17 | Link to Comment phraseshifter
phraseshifter's picture

gotta repair that boat...

Thu, 10/13/2011 - 01:19 | Link to Comment Raynja
Raynja's picture

wall street offers way more leverage than vegas

Thu, 10/13/2011 - 01:22 | Link to Comment infiniti
infiniti's picture

It's over. Books have been cooked. Quotes are quotes, except worse. Chinese real estate is Lehman x10. Finito.

The US is bad, Europe is worse, China is somewhere between Argentina and Greece.

Thu, 10/13/2011 - 01:25 | Link to Comment philipat
philipat's picture

The Senate really made their point didn't they? This is just a warm up from the Chinese. Next, how about dumping, oh say, $250Billion of Treasuries and turning up late for a few auctions? Gold is popular in Asia at this time of year!!

Thu, 10/13/2011 - 01:27 | Link to Comment infiniti
infiniti's picture

Dump $250 billion on whom? Do you understand how this works?

Thu, 10/13/2011 - 01:35 | Link to Comment Ye Ye
Ye Ye's picture

It's even worse than that.  If you sell US Treasuries you get ... wait for it ... US dollars in the form of reserves at the Fed.  So you go from earning 2% to earning 0.25%.

I say go for it!

 

Thu, 10/13/2011 - 02:37 | Link to Comment philipat
philipat's picture

To the Chinese its just politics. And they have 3 Trillion of reserves to use or diversify.

Thu, 10/13/2011 - 04:13 | Link to Comment cossack55
cossack55's picture

Bad China. China will be paper-divided into Good China/Bad China.  All toxic (US, Euro) assets will be moved into the Bad China column and then sold to Greece and France. 

Thu, 10/13/2011 - 01:26 | Link to Comment chump666
chump666's picture

It was coming, China are acting like babies messing around with the CNY...

The next stage is the UST dump then re-buy. 

Thu, 10/13/2011 - 01:28 | Link to Comment qussl3
qussl3's picture

Want the Chinese to fall in line?

Hope for a drought.

The only producer large enough to feed them is the States.

Thu, 10/13/2011 - 01:33 | Link to Comment Ahmeexnal
Ahmeexnal's picture

"let them eat melamine"

Thu, 10/13/2011 - 01:34 | Link to Comment thefatasswilly
thefatasswilly's picture

You are an idiot. Please don't post again.

Thu, 10/13/2011 - 02:13 | Link to Comment qussl3
qussl3's picture

Alls fair in love and war.

What the hell do you think has been going on in Africa the last hundred odd years.

Pretty sure noone gives a shit about the natives being drugged out, armed then robbed of their land.

But when shit comes home THEN it becomes personal.

Right.

Thu, 10/13/2011 - 04:14 | Link to Comment thefatasswilly
thefatasswilly's picture

There are droughts everywhere, moron.

I was also laughing at his insistence on hope.

Seriously, stfu.

Thu, 10/13/2011 - 06:52 | Link to Comment Delonglaw
Delonglaw's picture

Among the other things you seem to be confused about is the way COMMENTS work on a website.  This is a public discourse where people comment to express their ideas.  Ending each of your comments with "shut the fuck up" is probably the most childish approach to conversation I have ever seen.  Your family and aquaintences must love to have conversations with you.  Every time you come against intelligent debate or discourse your only response is to yell like a baby...NO....shut up....

Very enlightening.  If STFU is your best argument you truly are an idiot.

Further, no one is actually going to STFU in a COMMENTS section.  Your request will categorically be ignored, so what is the point of further proving your ignorance....oh, yeah, that's right, you're ignorant, so you can't answer that.

Thu, 10/13/2011 - 04:15 | Link to Comment cossack55
cossack55's picture

Which is why they are buying/leasing farmland thruout the world, esp. S.A.

Thu, 10/13/2011 - 01:30 | Link to Comment chump666
chump666's picture

ZH,

Italian bond auction due...look forward to your response.  Till then.

Thu, 10/13/2011 - 01:32 | Link to Comment Ye Ye
Ye Ye's picture

This is _precisely_ the signal I've been waiting for.  The Chinese are printing again!  (Ok, buying bank stocks was another clue).

Load up on PMs.  Bring your friends.  Back up the truck.  Gold and Silver to the moon.

Thu, 10/13/2011 - 01:49 | Link to Comment Ye Ye
Ye Ye's picture

11 days can seem like an eternity ...

http://www.zerohedge.com/news/gold-silver-speculative-longs-plunge-march...

Hi ho Silver!

Thu, 10/13/2011 - 01:33 | Link to Comment gwar5
gwar5's picture

The dufuses in congress want to pick a fight to scapegoat their failed policies. I guess blaming the weather for bad GDP numbers was getting tedious. Time to pick a fight with the Chinese, or the Iranians, or Ron Paul supporters. Blame them.

And if all else fails, sure, just rally people around the only remaining institution Americans still respect, the military.

 

Thu, 10/13/2011 - 07:55 | Link to Comment New_Meat
New_Meat's picture

"The dufuses in the WH and the Department of Justice want to pick a fight... "

Fixed it for ya.

- Ned

Thu, 10/13/2011 - 01:48 | Link to Comment DonutBoy
DonutBoy's picture

This is a message from the PBOC, but in the end they will not want a war.  QE2 was in good measure about breaking the dollar yuan collar.  At the end of the day, the Fed can always win that war.  China owns 3 trillion of US paper, the US doesn't own yuan bonds.  If this gets ugly, it will bring on QE3, and the PBOC can watch it's wealth evaporate.

And what if the PBOC starts dumping treasuries?  Well - that's OK with the Fed.  They buy enough treasuries to cap rates and let the dollar fall.  That wss the Fed's purpose, Make the US competitive through devaluation.

The end-game for the US is the Fed sucks up the treasuries and the default occurs.  Debt owned by the Fed is renounced.

One could almost applaud that if it was accompanied by a new fiscal responsibility but that seems an impossibility.

Thu, 10/13/2011 - 04:07 | Link to Comment oldman
oldman's picture

Actually, it seems to me, that the Chinese response could be very simple. Sell dollars against which their currency is pegged and the Chinese currency becomes very cheap in all other currencies. Since I am ignorant in these matters, however, I would love to hear your critiques of this thought.

Thank you      om

Thu, 10/13/2011 - 08:53 | Link to Comment trav7777
trav7777's picture

sell dollars for what?

China has already made overtures to this effect.  They were told by the ECB that they would not provide euros for these dollar assets and the Gulf told them they would not provide oil for the money either.

If China sells against its own currency, it will appreciate against the dollar

Thu, 10/13/2011 - 13:05 | Link to Comment oldman
oldman's picture

Four 7's,

I thought that the ECB was taking some of  China's dollar-denominated securities in order to buy the sovereign debt of a few of the weaker EU members. I did not mean by 'sell dollars' that they were going to a 'Casa de Cambio' in Madrdid. But, thank you, because

I didn't know that the ECB told them 'no', or that the Gulf turned away payment for oil in dollars from the Chinese. That's why I say I am ignorant, among other reasons; I can't seem to keep up with the news. Do you how they paid for their supposed 'rescue of Europe', or in what specie they pay for their oil? I find this most interesting and it puts a new twist on things for this oldman.

Also, indulge me a question about your last sentence: Why would China sell against its own currency(I suppose you are referring to shorting for future delivery) when it has dollar denominated assets that it can deliver against it's short position? Or is this assumption faulty----?

Thanks for your comments, though     even an ignorant oldman can learn something new              om

Thu, 10/13/2011 - 01:49 | Link to Comment Milton Waddams
Milton Waddams's picture

End the 'Yuan Standard'.  A Chinese slave class that produces cheap trinkets that Western corporations sell at a 30% profit margin to undiscerning consumers is MORALLY WRONG ... on so many levels.  I can envision a scenario where some chump is shopping at a dollar store while complaining about the 'chinese stealing american jobs'.  Someone please tell the TRUTH.  China's poor people are China's problems- not multinational's determined to pull them out of relative poverty in order to turn them into voracious consumers.  This is China- it could take hundreds of years before the propaganda 'stimulating the urge to consume' trickles down to the Chinese 'underclass'.  This big bet that multinational companies have taken -- global labor arb, build new markets  -- is going to fail, in an epic fashion.

Thu, 10/13/2011 - 01:54 | Link to Comment bill1102inf
bill1102inf's picture

130% profit, minimum

Thu, 10/13/2011 - 03:46 | Link to Comment philipat
philipat's picture

Remeber though that very little of the value added remains in China other than (Low) wages. The real profirs acrrue to US Corporations who transfer price the profits through tax havens where they remain to avoid US Corporate taxes. Even if workers wages doubled and the RMB doubled in value, it would STILL not result in any of the manufacturing jobs in China going back to the US.

 

But its easier for Congress to blame China rather than "Globalisation" and US Multinationals because they own Congress.

Thu, 10/13/2011 - 01:53 | Link to Comment bill1102inf
bill1102inf's picture

Give me a break, Chinas entire economic bubble is bursting when their prop bubble bursts it will be like medium sized nuclear warheads going off.  This is bullish for gold?? Nope.  Maybe the chinese will show up here and put a floor in on OUR property debacle. NOT!!!! They CANT even put people into their GHOST CITIES, why would they buy the junk here?!? And sell UST's?  only to buy new issue, maybe.

Thu, 10/13/2011 - 02:21 | Link to Comment ArsoN
ArsoN's picture

That's not a knife printer, this is a knife printer.

Thu, 10/13/2011 - 02:28 | Link to Comment BlueDonkey
BlueDonkey's picture

"the USD is plunging against the hope-driven Euro, which has soared 600 pips in the past week on nothing"

Read FOFOA.   As everything goes to shit and gold goes up, the Euro gets stronger due to their MTM of gold in reserves, no???

 

Thu, 10/13/2011 - 04:03 | Link to Comment gdnchg
gdnchg's picture

HELLO QE3!!!

Thu, 10/13/2011 - 04:19 | Link to Comment El Gordo
El Gordo's picture

The biggest scam ever pulled in history has been USA's ability to trade worthless paper dollars to the Chinese for hard goods.  Now we somehow think they are going to increase the value of their currency - based on what? - that worthless load of dollars they are holding...Somebody need to slow down for an ego check.

Thu, 10/13/2011 - 04:34 | Link to Comment moskov
moskov's picture

If USA dollar is worthless, that means US economy is worthless too. You just answered your question. Trade is for the purpose of consuming and reproduce. It's not sorely based on fiat paper.

Thu, 10/13/2011 - 05:29 | Link to Comment BigInJapan
BigInJapan's picture

And your Treasury holdings are denominated in....

And you're pegged to...

Who's the loser now?

Thu, 10/13/2011 - 06:02 | Link to Comment moskov
moskov's picture

Well. When dollar collapsed as the reserve currency. That means a eternal bull for the rest of the world.US is having trade deficit with 99+ countires world wide. That's a paraside rather than the contributor to the world economy

Thu, 10/13/2011 - 04:53 | Link to Comment writingsonthewall
writingsonthewall's picture

As a tribute to our Wall street brothers and sisters - we will be occupying the London stock exchange on Saturday.

All free men and women welcome. 12 Midday meet

Spread the word - the world is changing.

Thu, 10/13/2011 - 05:07 | Link to Comment moskov
moskov's picture

Full Support!!! Fingers Cross.I would be there for you

Thu, 10/13/2011 - 05:30 | Link to Comment BigInJapan
BigInJapan's picture

Commies.

Thu, 10/13/2011 - 06:22 | Link to Comment writingsonthewall
writingsonthewall's picture

Fascist sympathiser.

 

Name calling is easy mate - fighting a powerful enemy requires REAL men.

 

Good luck with your promotion!

Thu, 10/13/2011 - 06:50 | Link to Comment moskov
moskov's picture

I beg I would rather be a Commie than a Facist if I would have to choose. Above that, Chairman Maobama has alreadying been ruling his People's Republic of America for over 2 years now. Where have you been?

Thu, 10/13/2011 - 07:07 | Link to Comment Dr. Engali
Dr. Engali's picture

You guys go ahead and occupy Wall street or London, whatever. I'll vote no against the system by buying precious metals, and I'll keep earning more so I can buy more.

Thu, 10/13/2011 - 05:33 | Link to Comment Wakanda
Wakanda's picture

"...which traders hope to make a living based on rational market decisions..."

Note to traders - nobody owes us a living or an honest market to function in.  I am long chaos, dishonesty, cheating, and a lot of fearful humans doing really mind blowingly stupid things.  We as a species are not even close to trusting one another. 

Will we get to the other side of this nonsense?

Maybe - after the corp-gov and religions are leveled we may rediscover our higher nature.  Until then - hungry wolves, scared sheeples and a few honest folks on the sidelines watching the slow motion train wreck.

4 days until Black Monday II

Thu, 10/13/2011 - 06:19 | Link to Comment billwilson
billwilson's picture

The root of all global imbalances - a pegged Chinese currency. 

Until China stops accumulating larger and larger FX reserves there can be no global recovery or rebalancing.

 

Only 2 countries in modern times have had FX reserves close to as big as China's - The US in 1929ish and Japan in 1987ish.  China is on the edge ... and it can blame itself.

Thu, 10/13/2011 - 07:00 | Link to Comment Dr. Engali
Dr. Engali's picture

Yes and our borrow and spend or print and spend doesn't have a thing to do with global imbalances. It's all those damn Chinese fault.

Thu, 10/13/2011 - 07:33 | Link to Comment moskov
moskov's picture

Only if Dollar standard collapes and massive drop of US living standard. Otherwise there's no other countries would left to be sucked dry by the Dollar Monopoly system

Thu, 10/13/2011 - 09:16 | Link to Comment rwe2late
rwe2late's picture

 

 

 

 

The fiat dollar has evolved into a medium for blatantly immoral transactions, the taking of something in exchange for nothing. It has facilitated and stimulated the upward transfer of wealth, the upward concentration of power, quisling oligarchies and dictatorships, global fraud, global corruption, and global warfare.

The unfair exchange of fiat dollars is enforced globally by military power and petrodollar monopoly. Misdirected resources, the loss of liberties, increasing world-wide immiseration and resentment, and rampant militarism , all intimately connected to the maintenance of fiat dollar dominance and privilege.

 

 

http://kingdomecon.wordpress.com/2011/08/25/americas-economic-hegemony-has-become-rather-immoral-why-is-this-so/   

 

 

 

http://www.marketoracle.co.uk/Article803.html   

 

Thu, 10/13/2011 - 06:23 | Link to Comment writingsonthewall
writingsonthewall's picture

Tyler,

 

When is the next Fukushima story being done?

 

Should include this.

 

http://www.bbc.co.uk/news/world-asia-pacific-15285843

 

Apologies if I already missed it.

Thu, 10/13/2011 - 07:21 | Link to Comment Corduroy
Corduroy's picture

PBOC can do whatever they want to - including devaluing their currency to toilet tissue. PBOC can do it as fast as they want, when they want, and they actually do not care what the result is because the currency end game is the same either way. USA cannot devalue to toilet tissue unless the rest of the West goes to the toilet at the same time. Not only this - but with Chinese occupation of so many of the worlds resources it will be extremely difficult to move manufacturing back to the West without considerable heartache and delays. PBOC will just tell the citizenry that it is all the fault of the West for being greedy and loose with money, this will be believed or else non belief will be used as the basis of brutal repression of same.

Thu, 10/13/2011 - 07:51 | Link to Comment nathan1234
nathan1234's picture

 

I dont see anything wrong if China does this.

If the West can tolerate the TBTF banks who keep emptying their country's coffers and occupy their printing presses 24/7, this is just a flea bite by China

Ni Hao China

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