Thursday, June 02, 2016

Global Credit Boom Is Unwinding
Danielle Park (courtesy of Chart above) identifies the trend by China in moving to cheapen its exports by weakening its currency .. "Each time the Yuan has rallied for a bit, risk markets went along for the ride, before also breaking to lower lows once more. We watch this latest roll over with interest. As global demand continues to retrace from the unsustainable debt-fueled pace of 2005-2011, excess capacity and supply is depressing prices (& revenue) & the need for production worldwide. China’s many cash-strapped competitors will need to follow suit in weakening their currencies/export prices further as well." .. HSBC Co-Head of Asian Economic Research: "As China’s economy continues to cool, it will provide an ongoing drag on global output, curtailing inflation pressures in the process and anchoring interest rates in the process. The economic malaise currently experienced by China’s immediate neighbors, therefore, is only a portend of a milder version to afflict economies elsewhere as China comes off the boil."

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