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Is the Greek Comedy Written with China in Mind? [Copy link] 中文

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Post time 2015-6-13 16:27:49 |Display all floors
While the media bemoans the effect of a Greek default on the Western banks that lent her hundreds of billions of dollars, the fact of the matter is that with China tying herself to an overvalued Yuan exchange rate relative to the US dollar, any appreciation of the US dollar due to a worldwide "flight to safety" is made even more painful for China that is overvaluing its Yuan over and above the US dollar.  If the US were to suffer a loss of export markets due to the dollar being overvalued, then China would suffer an even greater loss of export markets due the Yuan being overvalued over the US dollar.  In short, if the US has nowhere to export, it can still export to China as the Yuan is overvalued relative to the US dollar.  But where can China export to?  Certainly not to the countries where the dollar is already overpriced, and then some more.

Furthermore, as China holds a significant proportion of her foreign currency reserve in the form of Euro's, a Greek default would bring down the value of the Euro, forcing China to incur a loss.

Given that all scenarios lead to a loss for China, should one wonder if the Greek credit crisis were not scripted with China in mind?

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Post time 2015-6-13 16:43:00 |Display all floors
but of course.
absolutely everything that people in the rest of the world do is with the intent of making China look bad.
At home if I buy an apple instead of an orange, it is because I want to make China look bad.

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Post time 2015-6-14 06:01:59 |Display all floors
BlondeAmber Post time: 2015-6-13 16:43
but of course.
absolutely everything that people in the rest of the world do is with the intent of m ...

An interesting admission of subliminal hate.

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Post time 2015-6-14 06:45:46 |Display all floors
The yuan is supported by the Chinese government it's a very safe currency

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Post time 2015-6-14 06:47:16 |Display all floors
This post was edited by abramicus at 2015-6-14 07:01

HOW THE GREEK COMEDY WILL PLAY OUT . . .  

First of all, the Greek debt repayment crisis has no real deadline.  The current deadline can be moved to a later date, by agreement or by unilateral action with the other party acquiescing, and the technical default can be made into a commercial default, etc., with little consequences for either Greece or the EU/Germany.

Secondly, the crisis can end in some kind of a restructured loan repayment schedule, or outright default of the Greek government with no repayment scheduled.  The former is a win-win proposition, and the latter is a lose-lose proposition, and there is no other alternative.  Therefore, the former is a foregone conclusion.

Thirdly, the question devolves to WHEN Greece and the EU will agree to a structured repayment schedule.

This leads us to an analysis of the problem as no longer involving the self-interests of Greece or of the EU, since a restructured repayment schedule is the only solution, and therefore some other EXTERNAL FACTOR is keeping the talks from winding down to reach an agreement on a foregone conclusion.

In analyzing all kinds of SCAMS and SHENNANIGANS, the most important questions to ask are:  (1) Who primarily benefits from it? and (2) Who suffers the most from it?

Dragging out the negotiations between Greece and the EU benefits the EU in that the Euro held by other countries, like China, become devalued - but such benefits can be realized only when holders of the Euro sell out while the Euro's value is depressed, like right now.  Therefore, continuing the Greek comedy by kicking the can down the road serves to put pressure on China to sell its Euro's at a low exchange rate, and increases the chance that China will do so, the more time they give China to do so, by prolonging the talks.

Indirectly, this benefits Greece too, because the earnings that the EU makes when China sells her Euros and the Euro rebounds right afterwards when Greece and EU then agree on a restructuring of Greek debt, could be used to make up for the concessions that Greece and the EU each have to make to the other to come out even.

Who have they then decided to be their mark, to pay for the gap between the Greek and EU positions?  China, but only if China sells its Euros when the Euro exchange rate is depressed.

The Greek debt crisis is doubly painful for China to bear because it's game plan of intentionally overvaluing the Yuan by buying Yuans in the market with its dollar reserves, sustaining month after month of loss of export earnings, is made worse if the dollar itself becomes overvalued due to the global "flight to safety" of the rest of the world, made fearful due to the potential collapse of talks between Greece and the EU.  In order to avoid draining all its dollars, China may have to sell Euros, convert them into dollars, in order to then sell the dollars to support the Yuan.

Therefore, the logical solution to the Greek Comedy is for China to devalue the Yuan, save its dollar reserves by not using them to prop up the Yuan, and save its Euro's for the windfall to come when the Euro rebounds due to the inevitable restructuring of Greek debt.  A more daring gamble would be to buy Euro's with dollars and Yuans, and reap an even greater profit when the Euro rises again, as it must.  This is one way for China to "PLAY THE GAME" of the Greek debtor-vs-EU lender comedy, and end up laughing all the way to the bank, the PBOC that is.

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Post time 2015-6-14 06:53:46 |Display all floors
abramicus Post time: 2015-6-14 06:01
An interesting admission of subliminal hate.

someone with a 'victim' mentality will find offence where-ever they look and fail to see the inadvertent comedy that the world sometimes provides.

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Post time 2015-6-14 07:06:01 |Display all floors
BlondeAmber Post time: 2015-6-14 06:53
someone with a 'victim' mentality will find offence where-ever they look and fail to see the inadv ...

If you cannot help but reveal your victim-mentality as well, we can understand.

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