Monday, May 24, 2010


More confusion about official policy positions. China to strengthen the Yuan in the face of weakened global demand? (based mostly on the dismal growth prospects for the EU)

This is because "coordination" is breaking down. This is a crucial period for global markets and as usual, the politicians have regressed back to a REACTION FUNCTION based on measures of popular opinion as opposed to acting on contingency plans that should have been in place at the inception of the EU, when the current issues were spelled out for all to see. This flailing results in loss of confidence with predictable results.

100 years macroeconomic theory and no-one can convince the EU to cut taxes and distribute Euros on a per-capita basis in order to combat a massive debt deflation spiral.

This is because social theories only work if all participants agree with the theory, and trust other participants to obey the agreed upon rules.

Every nation for itself, and Devil take the hindmost.

May 25 (Bloomberg) -- China and the U.S. focused their first day of talks in Beijing on joint efforts to prop up the world’s economy in the face of a European sovereign-debt crisis that pushed off a showdown on the yuan’s value.

Officials “spent quite a bit of time discussing the European debt crisis,” Chinese central bank Governor Zhou Xiaochuan said at a press briefing. The nation’s currency policy is being “touched upon” at the talks, he said.

President Hu Jintao said China will move gradually and independently in altering exchange-rate policy after keeping the yuan pegged to the U.S. dollar for 22 months. Treasury Secretary Timothy F. Geithner, who has delayed a report to the U.S. Congress that could name the nation a currency manipulator, said he welcomed China’s commitment to yuan changes.

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