Originally Posted by petegz28:
The dirty secret is Chine NEEDS US $'s. They are hurting and companies are moving out of there for places like Vietnam. Talking heads that think they know everything say China is just waiting out Trump when in reality a Democrat like Elizabeth Warren would probably be even harder on China. China's only hope in that scenario is Joe Biden and that's unlikely.
If China would just agree to quit stealing our IP things would probably go back to the way they were for the most part.
Originally Posted by TwistedChief:
Given the trade war and worries about a Chinese slowdown, there are people who want to pull their money out of CNY (the Chinese currency) and put it into other currencies. Chinese manages a semi-pegged currency regime, so in order for the CNY not to depreciate relative to other currencies, the Chinese central bank (PBOC) has been buying CNY to prop it up. The USD/CNY level of 7 was thought to be particularly important as we hadn't crossed that since 2008.
Last week, because Trump decided to threaten 10% tariffs on a further 300bn of important (nb: these are the *really* important consumer goods that will be felt much more by all of us), China basically said, "Look, we're gonna be relaxed about where the CNY ends up fixing. We no longer view 7 as a line in the sand and will no longer buy CNY to keep it below that level." So, they allowed it to cross 7. This has two important implications: 1/ It's clearly an escalation on their side in response to Trump's actions. If one had been hoping for a calming of tensions, this pushed in the opposite direction. 2/ In simple economics terms, China becomes more competitive and exports deflation globally.
Originally Posted by Great Expectations:
When China devalues their currency does our national debt load slow just a little? I know they own a decent portion of it.
No. Nothing changes with respect to the amount of our national debt.
You're correct that they own a large amount of Treasuries, and you're correct that what they do with their currency has implications for their holdings of Treasuries. But that doesn't directly affect our national debt at all. It's just a transfer from their holdings to those of other investors (or vice versa).
Earlier I mentioned that China is trying to control capital outflows and thus was buying their currency. When they do that, they're selling dollars. And typically they get the dollars to sell by selling Treasury securities.
By letting their currency depreciate (devalue), they actually need to sell fewer dollars and thus fewer Treasury securities.
(My profession by the way is trading interest rates and fixed income markets like Treasuries.) [Reply]
Originally Posted by Hog's Gone Fishin:
Hey sho63 . if you'd bought 1000 shares of X yesterday you could have sold it today and paid for a $500 hooker.
Just FYI
My luck, I buy 1,000 shares the day before and LOSE my $500 I had for my escort and get stuck jerking off again! :-) [Reply]
