Hi Haim, <<IMHO ... >> Good observations, thoughts and lines of pondering.
FWIW,
(a) I do not believe the Yuan will be revalued in any meaningful and material manner over the next 24 months (>5%), because there is no percentage in it for the masses in China, and so no benefit for their political masters;
(b) I believe liquidity will continue to flood into China and be released from the PBOC (central bank), and much of it will be put to some useful purpose - infrastructure, health care system, refunding of the social security and banking systems, ... and some of it will go to waste, or in my pocket:0)
(c) I believe the Chinese USD reserve will stop increasing after a bit as diversification into offshore investments is already encouraged
(d) I believe Yuan rate revaluation will do nothing for US financial markets other than a temporary hope for more exports to China. The hope will be dashed, because what China wants to buy from the US is not for sale by the US (5-axis machining centers, supercomputers, port of LA, ...)
... and will only deny the US consumers the benefit of globalization, without compensation
However, given that the Yuan rate is now a US political issue, and social stability had always been a Chinese political issue, and so we have a construct in which an irresistible force will smack against an unmovable object.
There should be some interesting times ahead.
Chugs, Jay |
