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sdholloway56
Senior Advisor

China weakens yuan fix

https://www.bloomberg.com/opinion/articles/2020-05-26/china-s-weaker-yuan-fix-is-the-real-cold-war-s...

As the US defaults from world leadership, the Chinese feel emboldened.

They didn't deserve this outcome.

9 Replies
BA Deere
Honored Advisor

Re: China weakens yuan fix

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sdholloway56
Senior Advisor

Re: China weakens yuan fix

They aren't stupid and they know that while there will be saber rattling for the domestic base, the POTUS only cares about the Dow going up. He's not going to risk upsetting Wall Street.

That kinda circles back to the start of the tale.

I have no better idea than anyone else what they're thinking on US farm imports. Not sure it matters any more, except for the political spin. The government will make payments and future farm policy will try to fix it.

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timetippingpt
Honored Advisor

Re: China weakens yuan fix

Ah yes, oh enlightened one, the great global super-powers have always established global dominance by WEAKENING their currency.....  Could you be any further off the mark? nope

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sdholloway56
Senior Advisor

Re: China weakens yuan fix

The US would dearly love to weaken the USD.

Our POTUS used to complain about that all the time.

MAGA 1 was successful with that. It resulted in a massive commodity carry trade and some pretty darn good years in those businesses.

This time couldn’t even do it with an unprecedented pro-cyclical deficit.

As far as China farm trade goes, this and other recent moves do suggest that they’re not feeling like they need to accommodate anybody.

 

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sdholloway56
Senior Advisor

Re: China weakens yuan fix

With most of the world at the zero bound the USD won’t depreciate much until the Fed relents on negative rates.

One of the pernicious side effects of (for the time) ultra low rates in the 00s was it made crap look good. An MBS that was loaded with dynamite looked good with a 50 bps premium over agencies.

Yield starvation is a big problem and will bite us again as the Fed props up zombies.

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bruce MN
Advisor

Re: China weakens yuan fix

He!!ishly good piece on all of the varying views....political, geopolitical and economic... that are at play in the “what to do about China” situation:

https://www.lawfareblog.com/mapping-china-debate

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bruce MN
Advisor

Re: China weakens yuan fix

Well, there was a time when U.S. farm policy was a continuum of New Deal reactinism. Taken as a given.

Lots of jokes about Ag Secretaries and clever bumper stickers came along with that, but the “our farmers” thing was sort of a matter of a greater national interest.

Since somewhere around 1980 the consolidation and financialization, further sweetened by a healthy dose of Western neoliberalism has turned that into nothing more than a romantic myth too useful to let go of. 

The “My Farmers” bit may just  have slammed the gate shut.

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rsbs
Advisor

Re: China weakens yuan fix

Sorry Bruce, I don't open up left winger sites like lawfare.

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r3020
Senior Advisor

Re: China weakens yuan fix

Lawfare??? You still read them after the fool they made of you with the russia russia russia hoax?

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