Paul Denlinger

On China and What the World Won’t See During the Olympics

Thanks for talking about the very real challenges which China faces. Some Chinese officials have a saying: "If China reforms too fast, China will become chaotic. If it reforms too slow, it will die."
The reforms have created huge wealth, but there are severe prices for this prosperity. Now they are becoming more apparent.

China's Impending Financial Crisis

Everything points to the Chinese government not having acted fast/hard enough to stem the capital inflows, and the recent oil price rise and capital inflow restrictions almost seem like panic reactions.

The picture I get is that there will be major steady rises in all commodities, especially food, and price stagnation in real estate. Already there is major pressure on RE developers in China, who are having to live with increasing interest rates and a public which is becoming more wary about investing in housing in the face of rising prices across the board.

In the face of this, it may even become likely that the Chinese government will come down hard on "speculators" who play the yuan rise. The purpose would be to make an example of them and discourage the practice.