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What China AUGHT to do.

   Recently, we were treated to news that China is supposedly riding to the rescue of Europe, financially speaking. Again. After a moment's consideration, this appears to be the near precise opposite of what they Should be doing.
   And in using the term "should", I imply no reference to a higher moral compass. These are the Heirs of Mao – morality should not be expected to enter into their calculus. I am speaking of immediate results.

   If I were the Chinese governmnet's CIO, I would be counting the minutes until the Euro dies. For each paroxysm leading up to that debacle would drive more and more investors into the $US (Where else they gonna go – the Yen ?!) . . . allowing me to sell my US Treasury paper holdings into that demand, with minimal losses.

     So, why aren't they following such a strategy? Some fiendishly inscrutable master plan, to cause even more havoc? Unlikely. They're simply aren't smart enough to see their own interest in the matter. They're still communists, at the top, an authoritarian structure that defies reality. And they are deeply uncomfortable with the notion of the (inevitable) breakdown of centralized structures. So they rush to save the Euro, because they find the consequences of its death unimaginable and frightening, but also because is would be a manifest example of what awaits them, which they would rather not confront.

    When the ECB fails, and maims Chinese national finances in a notable manner on the way down, we will have two shows for the price of one.