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RE: Countries Vulnerable to Economic Devastation Soon

in #money6 years ago (edited)

I wrote in my prior post:

but probably not via renminbi depreciation

William Pesek wrote:

There are many ways for China to hit back. Xi could devalue the yuan to boost China Inc.'s global edge.

Is incorrect because devaluation is countervailing to China’s necessary re-balancing to more consumer share of the economy. That would exacerbate China’s structural weaknesses.

In addition, Beijing could stop the flow of mainland unicorns -- startups worth more than $1 billion -- listing on U.S. exchanges.

That is China’s loss not ours. The short dollar vortex will be sending all the money in U.S. stock markets. U.S. investors don’t need to be invested in Chinese startups at this juncture.

One, knocking back corporate deals.

Then Trump can ramp up more tariffs and squeeze China into a much more severe re-balancing that could lead to political unrest in China, as the consumer share would regress.

Two, telling Facebook to get lost.

Trump doesn’t fucking care. The U.S. economy doesn’t hinge on Facebook, but rather on small business growth. We’ll be disintermediating Fascist book anyway.

Earlier this year, Beijing began hinting at slowing down, or stopping altogether, U.S. debt purchases. China is the biggest holder of Treasury notes and bonds, with just under $1.2 trillion. The first whiff of concern came after Trump's party passed a giant $1.5 trillion tax cut the economy did not need.

U.S. Treasuries and stock market are the most liquid markets. Where else can China park reserves?

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