Author: sansukong

China should prepare for worst outcome in Europe [Copy link] 中文

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Post time 2015-7-10 12:16:41 |Display all floors
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Post time 2015-7-11 13:48:56 |Display all floors
THE PLOT TO UNDERMINE THE EURO, USING GREECE AS THE CROWBAR, AND INVITING CHINA TO PUT ITS WEIGHT ON THIS CROWBAR, RESULTING IN THE NON-PAYMENT OF SOME 350 BILLION DOLLARS OF GREEK DEBTS . . . IS AN ECONOMIC WAR AGAINST THE EURO BY THE BACKERS OF TSIPRAS.

IF THE EURO COLLAPSES, CHINA WOULD LOSE AT LEAST 25% OF THE VALUE OF ITS FOREIGN CURRENCY RESERVES.  SADDLES WITH A BALLOONING AMOUNT OF DOLLAR-DENOMINATED DEBTS REACHING 2 TRILLION DOLLARS OR MORE, THE NET FOREIGN CURRENCY RESERVES OF CHINA  WOULD BECOME PRECARIOUSLY LOW, MAKING IT IMPOSSIBLE FOR CHINA TO IMPORT THE THINGS IT NEEDS TO FULLY MODERNIZE ITSELF.

UNDER THE LEADERSHIP OF THE ECONOMIC HIT TEAM, CHINA WOULD NEXT BORROW EVEN MORE FOREIGN-CURRENCY DENOMINATED LOANS, AND BECOME THE NEXT GREECE.  NICE PLAY.  NO DICE.



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Post time 2015-7-11 14:06:24 |Display all floors
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Post time 2015-7-11 14:10:30 |Display all floors
If Germany, Latvia and Finland should veto the Greek proposal, China should not consider it an opportunity to dominate or control the economy of Greece or Europe.  Greece is too weak and in debt to be saved.  Europe is too strong to supersede.  Entry into either sphere leads to a lose-lose situation, not a win-win situation.

There is actually very influence that China could exert with its surplus productive capacity that has been neutralized by its self-imposed overvaluation of the Yuan, because neither Greece nor Europe needs to import overpriced Chinese products, beset as they are with their monetary disputes.

Only by resetting the Yuan exchange rate to 6.50 Yuan/Dollar can China use its surplus production capacity effectively in establishing its relevance to both Greece and Europe, which, in order to avoid hyperinflation from excess liquidity due to the quantitative easing by the ECB and the printing of unlimited amounts of Drachma by the Greek national bank, would need to import cheap Chinese products until their monetary supply distortions have worked themselves out to a sustainable equilibrium.

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