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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: TobagoJack who wrote (9023)3/1/2004 8:48:54 AM
From: russwinter  Read Replies (1) of 110194
 
So you are saying the inflation policy of the Chinese govt will be to stand by and watch whole industries collapse from energy, bottlenecks and input goods starvation, just so they can maintain a currency peg that allows their exporters to sell at a loss?

It makes much more sense for them to increase the purchasing power of the RMB and thereby allow firms to buy input goods (priced in USD) at more favorable terms. It will only work in the very short run though, much like allowing a drowning swimmer to come up for a few gasps of air, before pulling him under again.

BTW, the 800,000 MT copper shortage mentioned by the Societe analyst is light at least in terms of current draw down rates. At the 4,750 MT a day we've been consistently averaging, the market will be 1,235,000 MT short of copper. Of course it will be severely price rationed long before that, that's already started. Choo choo choo!
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