How Do You Spell ‘Desperation’?…”Buckle up folks; this is going to get interesting”

Wednesday, August 12, 2015
By Paul Martin

by Karl Denninger

So China thinks that devaluing its currency, allegedly as a “one time” move, will help them eh? They also promise to make the currency market-based (in exchange rate) going forward?

Then why not just drop the crap and allow it to be freely convertible — and quotable?

See, it’s not so simple as China would have you believe, China’s so-called economic miracle is in no small part predicated on outright fraudulent reporting — bogus GDP claims and even worse, claims that you could defend on a definition basis but that make no sense, such as “counting” as GDP a city built with no inhabitants in it.

The truth is something different entirely. China has a smattering of very wealthy people and a whole phalanx of not-very-wealthy. The latter, like here, grossly outnumber the former. China may be the world’s second-largest economy but they damn well should be given their population; they have roughly four United States in terms of persons!

Unfortunately you need to be more than a slave-labor marketplace and thus an exporter of goods made using same to nations where those labor and environmental practices would get you imprisoned to be successful in the long term.

Remember that much of the so-called “miracle” of “growth” that our firms have touted is expansion into China. This move in the currency peg is designed to boost their exporters but will make everything made abroad more expensive.

Poof — there goes the argument that you will find your “growth” over there……

Buckle up folks; this is going to get interesting… and for our next act we will see a few amusing blowups in the energy sector among the grossly over-levered in the fracking-n-shale play department.

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