Currency Conun-drum

The Chinese authorities move to devalue the Yuan last week was a futile effort to reverse the credit implosion of late and to “stimulate” exports in a further effort to kick start economic growth which has halved from over 12% annualised at Q106 to 7% at Q215,

We warned that history is littered with examples of market damage due to state intervention, within the early July 2015 posting, “State Signals,” which related to the folly of the Chinese authoritie’s endeavours to reverse a debt-induced stock-market bubble.

A look at Australia’s attempt to devalue its currency, to stoke exports, provides one of many examples that “you may not get what you seek.” Despite a 33% devaluation of its currency over the past few year, the trade deficit has widened as exports have continued to fall.

 20 August 15

 China’s currency move is not really a Conundrum, it’s actually quite straight forward, debt-bubble = rising stocks and real-estate but slowing GDP…and then the debt-bubble deflates with predictable results

Talking of predictability, the April 2015 “Twin Peaks,” gave some further clues, which readers may be wish to revisit.




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