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FINALLY, CHINA IS BREAKING THE CHAINS OF AN OVERVALUED YUAN!!! [Copy link] 中文

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Post time 2015-8-11 13:34:37 |Display all floors
This post was edited by abramicus at 2015-8-12 11:14

Today, August 10, 2015, the forces of common sense and pragmatism won over the forces of Voodoo Economics that demanded Chinese products be overpriced abroad and at home due to an overvalued Yuan exchange rate, that could not care less that Chinese factories are about to be closed and workers about to be laid off, all the while dangling the false reassurance of the Yuan being accepted as one of the reserve currencies used to create the IMF Special Drawing Rights, which in actuality limits the volume of China's foreign reserve status to a mere 0.24% of the world's reserve currencies.

China must take charge of its own exchange rate, not pegged to a promise of being accepted as a reserve currency, but pegged to the prosperity of its businesses and its workers, i.e., letting it devalue as far as needed to make use of the full capacity of China's manufacturing sector.

  



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Post time 2015-8-12 11:04:54 |Display all floors
This post was edited by abramicus at 2015-8-12 11:09

CHINA DID NOT DEVALUE THE YUAN, THE FREE MARKETS DID . . . FROM 6.21 TO 6.325 . . . AND IT WAS THE PBOC THAT THEN INTERVENED YESTERDAY TO PREVENT THE YUAN FROM DEVALUING FURTHER, IN ACCORDANCE WITH ITS PROMISE TO THE FINANCIAL MARKETS THAT IT WOULD NOT LET THE EXCHANGE RATE OF THE YUAN FLUCTUATE MORE THAN 2% PER DAY.  THE FREE MARKETS DID THE DEVALUING, NOT CHINA.  LET THIS BE CRYSTAL CLEAR.  NO YUAN MANIPULATION BY CHINA.  UNLESS, THE CHINA CRITICS, LIKE TRUMP, CASEY AND CRAMER, CONSIDER THE FREE MARKET THE MANIPULATOR OF THE YUAN EXCHANGE RATE.

THE ONLY MANIPULATION THAT CHINA DID WAS TO PREVENT THE YUAN FROM DEVALUING FURTHER THAN BY 1.85% YESTERDAY, AUGUST 10, 2015.

CHINA SHOULD NOT TIE ITS OWN HANDS NOW, BY TRYING TO REASSURE THE IMPLACABLE ANTI-CHINA CROWD, BY PROMISING THIS IS A ONE-OFF DEAL.  A DEVALUATION TO 6.325 IS NOT EVEN ENOUGH TO SAVE THE MAJORITY OF THE MANUFACTURERS FROM END OF THE YEAR BANKRUPTCY, SO WHY SHOULD IT BE DEEMED "ENOUGH" FOR THE SO-FAR-OFF-THE-MARK PBOC THAT HAS CAUSED CHINA TO LOSE HUNDREDS OF BILLIONS OF DOLLARS IN THE PASTS 3 YEARS, TRYING TO MANIPULATE THE YUAN TO AN OVERVALUED EXCHANGE RATE THAT IN TURN HAS CAUSED THE MANUFACTURING SECTOR TO NEARLY COLLAPSE, AND CAUSED THE EXPORTS OF CHINA TO DROP YEAR IN AND YEAR OUT, UNTIL THIS LAST MONTH, BY NEARLY 9% COMPARED TO LAST YEAR.

TODAY, THE YUAN EXCHANGE RATE ONCE AGAIN TOUCHED 6.4286 YUAN/DOLLAR, WHICH IS A DEVALUATION OF ONLY 1.6%.  ONCE AGAIN, TODAY'S DEVALUATION OF THE YUAN WAS DONE BY THE FREE MARKET, WITH THE PBOC NOT HAVING RAISED A SINGLE FINGER TO CAUSE IT TO DEVALUE.  IF THE CHINA CRITICS WANT TO FIND THE CAUSE OF THE DEVALUATION, THEY SHOULD BLAME THE FREE MARKET FOR RECTIFYING THE INCORRECT AND UNSUSTAINABLE YUAN EXCHANGE RATE PREVIOUSLY PEGGED BY THE PBOC AT 6.21 YUAN/DOLLAR.

WHEN LEFT TO THE FREE MARKET FORCES, WITHOUT ANY INTERVENTION BY THE PBOC, OR THE CENTRAL BANK OF CHINA, THE REAL VALUE TO THE YUAN IS PROVING TO BE LOWER, MUCH LOWER.  CHINA SHOULD NOT MANIPULATE THE MARKET AGAIN TODAY, AND LET IT DROP AS FAR AS THE FREE MARKET REQUIRES, BUT OUT OF PITY FOR THE BORROWERS OF FOREIGN-DENOMINATED LOANS, WHO NOW HAVE TO REPAY THEIR DEBTS IN DOLLARS AND EUROS OR YENS, BY USING MORE YUANS TO DO IT WITH, CHINA WILL ONCE AGAIN INTERVENE AT THE LAST MOMENT TO PREVENT THE DEVALUATION OF THE YUAN FROM EXCEEDING 2% TODAY.  IT CAN BE PREDICTED THEREFORE THAT THE YUAN EXCHANGE RATE WILL DROP TO 6.445 CNY/USD TODAY.

AND THAT IS REALLY NOT ENOUGH TO TURN THE ECONOMY AROUND, AS DICTATED BY THE FREE MARKET, NOT BY THE CHINESE GOVERNMENT, BECAUSE TOMORROW, IT WILL DROP SOME MORE, BY ANOTHER 2% TO 6.57 CNY/DOLLAR.  AT THIS POINT, CHINA SHOULD INTERVENE TO PREVENT FURTHER DEVALUATION OF THE YUAN, OUT OF PITY, AS MENTIONED BEFORE, FOR THE CHINESE PRIVATE AND PUBLIC BORROWERS OF FOREIGN-CURRENCY-DENOMINATED LOANS, BECAUSE THEY WILL HAVE TO PONY UP 5% MORE YUANS TO REPAY THE DOLLARS THEY BORROWED, AND THAT IS PROBABLY THEIR WHOLE PROFIT MARGIN FOR THE YEAR.  HOWEVER, THEY CAN BORROW YUAN-DENOMINATED LOANS FROM CHINESE BANKS TO REPAY THEIR DOLLAR-DENOMINATED LOANS, AND THEREFORE, THEY DO NOT HAVE TO GO BANKRUPT AT ALL.  IN THIS SENSE, IF THE MARKET DEMANDS A TOTAL CORRECTION OF THE YUAN OF EVEN 25%, THE CHINESE GOVERNMENT CAN MANAGE IT BY SIMPLY LENDING THE EQUIVALENT OF 125% OF THE ORIGINAL YUAN VALUE OF THE DOLLAR-DENOMINATED LOANS TO ALL THE CHINESE BORROWERS, OR IN SHORT, THE PBOC CAN SELL ITS DOLLAR CURRENCY RESERVES TO THESE BORROWERS AT THE ORIGINAL YUAN EXCHANGE RATE WHEN THESE LOANS WERE INCURRED, WHICH ARE THEN USED TO PAY OFF THE FOREIGN CREDITORS IMMEDIATELY.  AS THESE BORROWERS WILL HAVE TO BUY DOLLARS FROM THE PBOC, THEY WILL NEED TO BORROW AN EQUIVALENT SUM FROM THE PBOC, THUS IN EFFECT CONVERTING THEIR FOREIGN-CURRENCY LOANS INTO YUAN-DENOMINATED LOANS, STABILIZING THE BOND MARKET IN CHINA, SEAMLESSLY AND PERMANENTLY.

THIS IS NOT A CURRENCY WAR, UNLESS YOU CALL THE FREE MARKET A CURRENCY WAR-MONGERER. THIS IS CHINA'S NOW ENLIGHTENED LEADERSHIP FINALLY REJECTING THE ROLE OF BEING A PUPPET OF FOREIGN FINANCIAL INSTITUTIONS, LIKE THE IMF, THAT DICTATED TO ITS CENTRAL BANK, THAT IT SHOULD OVERVALUE THE YUAN, USING ITS OWN DOLLAR RESERVES, FOR 3 YEARS NOW, TO THE ABSURD LEVEL OF 6.20 YUAN/DOLLAR, THAT THE FREE MARKET YESTERDAY, TODAY, AND TOMORROW, HAS REJECTED, IS REJECTING, AND WILL REJECT AGAIN.  THE FREE MARKET INDEED WILL FREE CHINA FROM THE CURRENCY MANIPULATIONS OF THE IMF AND ITS CRONIES EMBEDDED INSIDE CHINA'S NATIONAL ECONOMIC TEAM.

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Post time 2015-8-12 12:55:05 |Display all floors
NEXT STEP . . . is for the Chinese government to offer to legitimate, non-speculative, borrowers of foreign-currency-denominated loans to swap their foreign-currency-loans with Yuan-denominated-loans, effectively shielding legitimate borrowers of foreign loans from the effects of the Yuan devaluation.

This allows China to keep devaluing the Yuan in lock-step with attempts to revalue the dollar, such as by raising the Fed fund rate, which forces the Yuan to be overpriced also, if it does not devalue to keep the Yuan/Yen, Yuan/Euro, and Yuan/Sterling exchange rates remain stable and unchanged.

Every Fed rate hike makes any currency pegged to the dollar become more expensive compared to other currencies.  Rather than following the dollar, China should follow the other non-reserve currencies, and devalue the Yuanagainst the dollar, to maintain the Yuan/Euro, Yuan/Yen, and Yuan/Steriling exchange rate unchanged.


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Post time 2015-8-12 13:15:58 |Display all floors
NEVER ALLOW . . . any foreigner or foreign proxy to buy up or borrow so much Yuans that it could use later on to flood the market with, such as in the Asian Currency Crisis of 1997, to cause the Yuan to devalue to the point that imports become impossible to transact . . . these sell orders (or shorting) of the Yuan are not legitimate market activities, but rather are illegitimate market manipulations, that being illegal, must be prevented, and if nonetheless carried out, stopped with counteracting purchases of Yuan using China's dollar reserves, which leads us to the fact that China's dollar reserves must remain always larger than the Yuans owned or borrowed by the currency speculators that they use to drive down the Yuan with.  

In short, the amount of Yuans owned or capable of being borrowed by currency speculators (domestic or foreign or a combination thereof) must NEVER exceed 33% of the equivalent amount of dollar reserves owned by China.  

Because of this, unlimited convertibility of the Yuan is not possible, for the simple reason that China cannot issue an unlimted amount of dollars to offset a massive speculative attack on its currency.  China does not need to be recognized by the IMF as an international reserve currency in order to be a de facto international reserve currency.  It merely has to become the major exporter and trading partner of at least 50% of the countries, through producing cheap and quality superior products that they need, and can use also to prevent domestic inflation with.  This "international reserve currency" status due to need of having the Yuan as a medium of exchange, and not because of the political consequences (regime change) of not using the Yuan, is what will establish the Yuan in the end as the next international reserve currency of CHOICE.



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Post time 2015-8-12 14:20:20 |Display all floors
THANKS TO PRESIDENT XI, CHINA WILL RECOVER FROM ITS SELF-INFLICTED LOSSES OF NEARLY A TRILLION DOLLARS, OF ACTUAL FOREIGN CURRENCY RESERVE REDUCTION, OF UNCONSUMMATED EXPORTS THAT WERE LEFT ON THE TABLE FOR JAPAN AND VIETNAM TO PICK UP DUE TO CHINA'S PRODUCTS HAVING BEEN OVERPRICED IN DOLLARS FOR THREE YEARS IN A ROW, AND OF INTERESTS OWED ON FOREIGN-CURRENCY-DENOMINATED LOANS THAT HAVE BALLOONED TO NEARLY 3 TRILLION DOLLARS IN THE LAST 3 YEARS.

FINALLY, SOMEBODY DID SOMETHING RIGHT.

AS WE SPEAK, THE YUAN EXCHANGE RATE CONTINUES TO DEVALUE DUE TO FREE MARKET FORCES, TO 6.44 YUAN/DOLLAR.  EACH CENT OF DEVALUATION MEANS ANOTHER HUNDRED THOUSAND CHINESE BUSINESSES AND FACTORIES SAVED FROM BANKRUPTCY BY YEAR'S END.  EACH CENT OF DEVALUATION, BY THE FREE MARKET FORCES (TRUMP, NOT BY THE CHINESE GOVERNMENT), EQUALS TEN MILLION JOBS SAVED FROM BEING CUT OR PAYCHECKS FROM BEING REDUCED.  AND ALL THE PBOC HAS TO DO IS NOTHING.  THE MARKET IS SPEAKING OUT, THE YUAN NEEDS TO DEVALUE FURTHER.  SINCE TWO DAYS AGO, THE FORCES OF THE FREE MARKET THAT THE CHINESE GOVERNMENT HAS FINALLY ALLOWED TO OVERRIDE THE PBOC EXCHANGE RATE POLICY HAS HELPED HUNDREDS OF MILLIONS OF ORDINARY CHINESE MEN AND WOMEN KEEP A JOB, FEED A FAMILY, AND SEND THEIR CHILDREN TO SCHOOL.

LET THE YUAN DEVALUE SOME MORE!  DON'T BE SHY.  THEY NEARLY DECAPITATED CHINA'S ECONOMY IF PRESIDENT XI HAD NOT PULLED CHINA OUT OF THE GUILLOTINE, SET UP BY THE ECONOMIC HIT MEN, AT THE VERY LAST MINUTE BEFORE THE FED WOULD HAVE ANNOUNCED ITS RATE HIKE.  IF THE DEVALUATION HAD NOT STARTED BY THEN, MILLIONS OF CHINESE FACTORIES AND BUSINESSES WOULD HAVE TO DECLARE BANKRUPTCY BECAUSE THEY WOULD BE UNABLE TO SELL ANYTHING ABROAD OR AT HOME COMPLETELY.

THIS IS THE SECOND CHINA MIRACLE UNFOLDING IN FRONT OF OUR VERY EYES!

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Post time 2015-8-12 16:22:53 |Display all floors
Enjoy.........while you can




I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2015-8-13 23:01:54 |Display all floors
What is a Carry Trade? How Does It Work?

https://www.youtube.com/watch?v=lKBCxGPFwkU


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