China Drops a NUKE!

[ThePythonicCow]

Re: China Drops a NUKE!

EJ writes:

The question is, why did they decide to make a public announcement of a policy that has been in place for many years? Why now?

Hudson writes to me today: "My guess is to bring pressure on the US to give them an exchange-rate guarantee in $/yuan rates -- like the US gave Germany in the late 1960s.

China could play the victim game, whining about their exposure to US debt, or they can play to their strengths, reminding America that in this game of Mutually Assured Debt Destruction, it takes two to tango. They have a sizable chunk of what used to be America's productive capacity, a near monopoly on the mining capacity for some critical rare earth metals needed for solar panels and magnets, and their finger on the trigger of a potentially Devastating Dollar Detonator.

So far, China has shown substantially more consistent and substained will power in these developments than the United States government.

[Zen$]

Re: China Drops a NUKE!

"So far, China has shown substantially more consistent and substained will power in these developments than the United States government."

We are too busy jousting windmills in the Middle East to keep the electorate entertained.

[touchring]

Re: China Drops a NUKE!

China could play the victim game, whining about their exposure to US debt, or they can play to their strengths, reminding America that in this game of Mutually Assured Debt Destruction, it takes two to tango. They have a sizable chunk of what used to be America's productive capacity, a near monopoly on the mining capacity for some critical rare earth metals needed for solar panels and magnets, and their finger on the trigger of a potentially Devastating Dollar Detonator.

So far, China has shown substantially more consistent and substained will power in these developments than the United States government.

Green projects cost $$$$. If America has excess money, it would be paid off to bankers as bonuses.

[bill]

Re: China Drops a NUKE!

EJ writes in:

The question is, why did they decide to make a public announcement of a policy that has been in place for many years? Why now?

Hudson writes to me today: "My guess is to bring pressure on the US to give them an exchange-rate guarantee in $/yuan rates -- like the US gave Germany in the late 1960s.

They can now say, "If you don't give us a guarantee, we've got to protect themselves -- and you'll be hurt even more."

I agree with this.

China wants to expand reserve liquidity, extending credit finance securing reserve pool with assets globally providing diversification collateral to china’s vast reserve pool. One whom lends in a tight liquidity market on assets of value will accumulate wealth during this global recession.