China's Monetary Policy and the Japan Trap

Next month will be the 20th anniversary of the peak in the Japanese stock market.

Chinese officials attribute Japanese capitulation to the relentless US demands for currency appreciation as a contributing factor to the poor performance over the past two decades and do not want to be caught in the same trap. Consider that in early 2005 notable economists were claiming that the yuan was 20-25% under-valued and that such a currency adjustment would be necessary to bring the bilateral trade into balance. Beginning in July of that year, China allowed its currency to appreciate 20-25% over the next three years and by the end of the period the Chinese trade surplus had doubled.

At the start of this year, some of the same economists were calling for another 20-25% appreciation.

Disclosure: No positions

Comments

[jepittman:]

If you are right it will be very easy for you to get rich. They will sell you all the S&P puts you care to buy. Have at it.


On Nov 16 02:16 PM SP1100 wrote:

> Over 120 banks went bust since 2008 and this is only 8% of all what's
> to come. 99% of this banks went bust on Saturdays and Sundays ( look
> at the dates here: www.fdic.gov/bank/indi...
> ) when markets were closed, because FDIC don't want you to know about
> it's biggest secret: your bank will be next to go bust.
> The problem is that most US banks are dead and FDIC tries to close
> the smallest banks first, leaving big crème de la crème for the desert.
>
> The more banks will go bust the less your deposits will be insured,
> that's why check our RUN ON A BANK list if your bank is there.<br/>shorl.com/frofrujostet...
>
>
> S&amp;P at 1100 is the thing of the moment, biggest runs on a bank
> is more than real.

Nov 16 04:46 PM