patrick.net

Press are saying the latest wiggle up to 6.32 (not on the chart) is

http://www.marketwatch.com/story/yuan-suffers-biggest-one-day-loss-in-two-decades-after-devaluation-china-stocks-waver-2015-08-11

::eyeroll::

Just another Fiat Currency.

They keep their currency lower than it would otherwise be by letting corrupt millionaires take their money to California and buy houses.
:-)

Here's some fuel on Trump's fire:
Risky assets reel as China allows yuan to fall for second day
http://news.yahoo.com/asia-extends-losses-shock-yuan-devaluation-dollar-sought-004845667--business.html

Currency war is the way China will do QE. This is a setback for the world economy. China just wants to go back to what they were doing before the crisis: exporting and pushing the west into debt.
This is deflationary as pushing labor prices and commodity prices lower. And this will affect the path for the fed.

They might be met with an other flood of green paper, joined now with a flood of euros.

Trump has a point.

China has cut yuan for a second day and Obozo still pushing for TPP. Trump is the only one calling for an import tax. It is either them or us or a few tech companies-we need to deal with them. Trade is for profit-not to turn the whole country into welfare freaks.

lostand confused says

Trump is the only one calling for an import tax. It is either them or us or a few tech companies-we need to deal with them. Trade is for profit-not to turn the whole country into welfare freaks.

I thought it was the Ds pulling for an import tax. What happened? Maybe Perot is back.

The Fed got the country into this mess thanks to QE and ZIRP.

Heraclitusstudent says

exporting and pushing the west into debt.

they're not selling us anything we don't want to buy.

if the Chinese want to work for $1/hr again, more power to them.

The fact is we've already offshored our tech industry to them, and we're not going to get it back.

Our problem is largely we don't have the socio-political policy in place to correctly/adequately mitigate the ramifications of globalism etc.

Eg. we've just applied the savings we've been getting since the 1990s from integrating cheap-labor countries into our economy into bidding up the cost of housing & healthcare.

I spent $300 on new clothes last week, and thanks to globalism got more for that amount than I would have in the 1980s. Wish my rent was cheaper than what I was paying in the 80s . . .

cell phones, PCs, HDTVs, same story. I paid just $600 for a killer Z97 upgrade (i5 4690K, 16GB RAM, Gigabyte mb) this summer, thanks to globalism.

Bellingham Bill says

I spent $300 on new clothes last week, and thanks to globalism got more for that amount than I would have in the 1980s.

Yeah, but people depend on those deals to make up for the raging inflation in essentials such as housing, decent food, education/child care and medical care. So we have to buy it from them to stay solvent. While the country goes deeper into debt.

Bellingham Bill says

cell phones, PCs, HDTVs, same story. I paid just $600 for a killer Z97 upgrade (i5 4690K, 16GB RAM, Gigabyte mb) this summer, thanks to globalism.

These are non-essentials though.

I'd rather have the yuan at 7 than 3, TBH.

3 is a replay of the 1980s (post-Plaza) "Rising Sun" Japan, but with a population 10X larger.

"China has cut yuan for a second day and Obozo still pushing for TPP"

China is not part of the TPP negotiations.

We've had 7 years of dem POTUS and absolutely no movement away from globalism and offshoring. In fact it's gotten worse as municipal and state governments search for ways to offshore their labor needs. The Democratic administrations are perhaps worse for this. But hey, maybe it's self preservation! The 300 lb welfare freaks do vote Democrat!

Bellingham Bill says

Heraclitusstudent says

exporting and pushing the west into debt.

they're not selling us anything we don't want to buy.

if the Chinese want to work for $1/hr again, more power to them.

China can devalue itself until the point where the west cannot produce anything and HAS to buy the Chinese stuff.
But that means losing revenues, and in the absence of revenues, the only way we buy is with more debts - and you can always count on the fed to flog you like a dead horse until you comply, or on the government to do it in your name.

What just happened is a step back toward the Bush era.
It's an admission that the "Chinese will get richer and start consuming" story doesn't work and will not happen. China cannot get richer without factories moving somewhere else. So they cannot consume.

This then, is an admission that global capitalism doesn't work. It's just a global race to the bottom.

If that's the way it is we should vote for Trump and have at it with the tariffs.

Heraclitusstudent says

But that means losing revenues

We're just stuck in the Triffin Dilemma again.

How come corporate profits are pushing $2T/yr if everything is so fragile?

Granted, in real terms they've topped out:

Chinese will get richer and start consuming" story doesn't work and will not happen.

China is so big it's basically 4+ United States. 1/4 of China is most certainly consuming and becoming middle class in the western / East Asian "tiger" sense.

I don't know what China's problem is but from 10 time zones away it looks like they're not doing socio-economic policy all that well (e.g. real estate sector BS).

And like post-Soviet Russia they seem to have a lot of crony capitalism going on, Party insiders operating for their private benefit at the public's expense.

I think the macro situation is too complex for anyone to get a grip on. Just a FRED graph or two isn't going to clarify where we're going with this.

Bellingham Bill says

I don't know what China's problem is but from 10 time zones away it looks like they're not doing socio-economic policy all that well (e.g. real estate sector BS).

China has a GDP based on investments and exports. It used this to develop quickly at the expense of its workers, keeping their wages low.
But they built a lot of things that assume they will become a society with a large middle class, more like the west.
The question is how do you transition between poor laborer to middle class society without destroying exports, at a time when it becomes difficult to build more freeways/airports without it being completely useless. Customer spending cannot grow if these industries are destroyed and workers lose their jobs.
You see the yuan devaluation.
You see companies like Foxconn investing in India: http://www.industryweek.com/emerging-markets/apple-manufacturer-foxconn-invests-5-billion-india

Sure this is more complex and maybe I'm wrong, but these are not exactly speaking of a smooth transition in China.
- These signs are saying: "we can produce everything we need with the workers we have and we will not grow wages because there is a lot more people waiting in line to get these jobs at current wage level - and therefore we will not grow demand".
- These signs are saying "all extra profits will go to the top, because the job market doesn't require us to pay more wages".

Heraclitusstudent says

at a time when it becomes difficult to build more freeways/airports without it being completely useless

There is urban china with 3 populations of United States, and rural China with another population of United States.

China's ghost cities are out in the sticks, in an attempt at remote localities drumming up new immigrants.

Chongking, Hubei and Hunan have a population of 150M total and these are just 3 medium-density provinces.

I haven't been any closer to China than Seoul, but a nation of 1.35 billion people who came out of the economic dark ages in 1985 still have a massive amount of infrastructural investment to work on 30 years on.

"all extra profits will go to the top, because the job market doesn't require us to pay more wages".

demographically, China is going to run out of 20 yos:

well, see that group fall 30% from the peak at least.

BB said: demographically, China is going to run out of 20 yos
And females... the nation’s gender imbalance is among the highest in the world, with 1.17 boys for every girl, a level that demographers have warned could lead to social unrest in years to come.

EBGuy says

And females... the nation’s gender imbalance is among the highest in the world, with 1.17 boys for every girl, a level that demographers have warned could lead to social unrest in years to come.

Note to self: Movie idea. How I stopped worrying and learned to love the gay bomb.

BB said: demographically, China is going to run out of 20 yos:
And I thought China had demographic problems: For sale in Spanish 'paradise': entire villages. Cheap.
The latest figures from the European Commission’s Eurostat show that while the average fertility rate in the European Union stands at 1.55 births per woman, in the hardest hit countries it is below average: 1.27 in Spain, 1.2 in Portugal, and 1.3 in Greece. Galicia’s rate stands at only about 1 birth per woman, and some years below that.
Also see this article about the Celtiberian highlands :
A process of depopulation and rural flight that has lasted more than five decades is drawing to its seemingly inevitable conclusion.
What is left behind is a region twice the size of Belgium but so devoid of people that it rivals the Arctic provinces of Lapland as the least populated zone in Europe. For every square kilometre, there are fewer than eight inhabitants.