China’s Insolvable Problems; Watched Pot Thesis; Roll the Dice
Friday, January 8, 2016 8:21
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by Mike “Mish” Shedlock
MISH’S Global Economic Trend Analysis
China has not one insolvable problem, but many of them.
Yuan and Capital Flight
- China needs to prop up the yuan to slow capital flight.
- China needs to let the yuan drop to support exports.
- China needs to float the yuan and remove capital controls to prove it really deserves to be taken seriously as a reserve currency.
- If the yuan sinks, capital flight will increase and China risks the ire of US congress and those play into protectionist sentiment, notably Donald Trump.
- Artificial stabilization of the yuan will do nothing but create an oversized move down the road as we saw in Switzerland.
SOEs and Malinvestments
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Source: http://financialsurvivalnetwork.com/2016/01/chinas-insolvable-problems-watched-pot-thesis-roll-the-dice/?utm_source=rss&utm_medium=rss&utm_campaign=chinas-insolvable-problems-watched-pot-thesis-roll-the-dice
