Monday, February 8, 2010

The China Bubble

I had written something (of many things) against the China story some time ago. Now, I read another article that speaks of the mother of all bubbles.
A $2.4 trillion bubble - that of the Chinese Forex Reserves. They could create a sovereign wealth fund that could buy countries - theoretically.
But, point being that stockpiling reserves is not an answer, and one time - sooner rather than later - these reserves will be released. The one thing that can be done is to let the Yuan appreciate; in which case, Chinese exports should suffer and the engine should slow down. Seems plausible.

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