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[#] Wed Aug 05 2015 15:31:02 EDT from LoanShark

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A "weary client once defined a bubble to us: 'something I get fired for not owning.'" --Citi

[#] Thu Aug 27 2015 08:01:39 EDT from IGnatius T Foobar

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So what's the deal with China?  Is their economy really that unstable or are they just messing with us again?

[#] Thu Aug 27 2015 19:20:18 EDT from LoanShark

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They suck.

They'd been pursuing a heavy growth strategy for a long time, by way of printing lots of renminbi, using that to buy and hold dollars indefinitely, as one of the means to constantly drive a trade surplus and drive job growth in their cheapo manufacturing sector.

When that started to look more inflationary than they were willing to accept, they had to start thinking about reining it in a bit, and playing other shell games that I don't have time to get into (because I haven't really adequately followed them, anyway.)

My impression is that the other shell games started to fall apart, witness the past month's devaluation and the ridiculousness of the "A shares." Also note that they don't have domestic oil reserves.

[#] Fri Aug 28 2015 14:18:05 EDT from IGnatius T Foobar

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That sounds a lot like the "they manipulate currency and trade policy" sound bites I've heard. It also hints that our trade imbalance is made up of more than just cheap labor. Am I right?

[#] Mon Aug 31 2015 14:04:20 EDT from LoanShark

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For one thing, it's possible that they've just switched from suck to blow (like Mega-Maid):

Note that when your whole government policy, from top down, is all about market manipulation, threatening to "punish those responsible" for "destabilizing the market" might be, umm, problematic:

Underscoring the point that I haven't been following stuff enough, this author seems to think like the balance of China's concerns may have shifted from inflationary to *de*flationary pressures (what goes up must come down?)

[#] Wed Sep 23 2015 13:12:01 EDT from IGnatius T Foobar

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So it seems that the Fed has decided to keep the federal funds rate at 0%.
Some pundits are claiming [ ] that they're stuck at 0% because the federal debt is now so high, raising the rate would cause a deep recession. I'm not sure I understand the relationship.

[#] Wed Sep 23 2015 13:39:05 EDT from LoanShark

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Raising the rate a bit would probably not hurt our debt sustainability to an unreasonable degree, in and of itself. Those pundits have got the tail wagging the dog, though: if raising rates hurts the ability of companies to finance themselves, and contributes to a recession, then the *recession* would be bad for our debt sustainability.

[#] Thu Sep 24 2015 12:14:31 EDT from IGnatius T Foobar

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I looked around a bit more and discovered that the person who wrote that article is a bit of a collapsivist, so take it with a grain of salt.

What I'm trying to understand is *why* raising the rate would hurt our debt.

[#] Fri Sep 25 2015 06:15:59 EDT from vince-q

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If you raise the rate then the interest on the debt ("debt service") would go up, costing more to "service" the debt and making it more difficult to "pay it down." Just like what happens if the interest rate on a credit card is raised while you are carrying a balance. Becomes more expensive to carry the balance.

[#] Mon Nov 09 2015 22:52:06 EST from IGnatius T Foobar

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So our brilliant government is borrowing money on variable rate terms. Fantastic.

[#] Tue Nov 10 2015 12:43:35 EST from LoanShark

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Variable rate terms, but with a rate determined by government policy makers? More or less, yes. Not the worst situation in the world, regardless of what the permabears and the professional doomsayers will tell you.

[#] Fri Nov 13 2015 09:25:25 EST from IGnatius T Foobar

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It seems a bit destructive that the government is borrowing money with a variable interest rate that it can determine. I know that's a *very* simplistic view, but what other borrower could possibly say "I'm going to set the interest rate on this money I owe to 0%" ?