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

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.

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?

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

http://ftalphaville.ft.com/2015/08/31/2138871/will-treasury-yields-soar-if-china-sells/

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:

http://www.ft.com/intl/cms/s/0/2f11ebdc-4ef3-11e5-b029-b9d50a74fd14.html#axzz3kLRSAxDw

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?)

http://ftalphaville.ft.com/2015/08/28/2138656/guest-post-trying-to-throw-our-arms-around-the-sick-chinese-economy/

So it seems that the Fed has decided to keep the federal funds rate at 0%.
Some pundits are claiming [ http://tinyurl.com/o872tdm ] 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.

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.

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.

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.

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

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.

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%" ?

This is pretty interesting.

[ https://goo.gl/ZbvrKs ]

Beginning with the assumption that there are actually *two* economies, a Wall Street economy and a Main Street economy, the effects of past policy and anticipated near-future policy are observed.

(Yes, it leads in with election talk, but quickly moves to economics.)

I would.

Both of these parties act like ninnies to me.

Coming from zooer it's likely that the comment was tongue-in-cheek. Unless he's referring to the "they're all the same" party and the "because they're all the same we don't vote at all" party. But let's not get into politics here; the article raises some interesting economic points that are more worth discussing.

[ https://goo.gl/ZbvrKs ]

The usual tinfoil-hat bullshit. Here are the correct numbers for real GDP: https://fred.stlouisfed.org/series/GDPC1/

But, article says "When you factor inflation, our GDP output is actually down over the same time period."

This has been debunked before. The economy did grow, since the recession. Absolute number of jobs is up (although employment-population ratio is down.)

Output (in terms of things like the number of widgets) is up.

So in order to believe that Real GDP is down, you have to close your eyes and ignore all the output data, and you also have to believe in the right-wing myth that inflation is a lot higher than the official figures.

Right wing myth?

My real world wallet tells me that inflation is significantly higher. Health care costs alone are skyrocketing. Not to mention food and education costs.