Quote from drsteph:
Some pundits have written that the chinese officials, when faced with an impossible task of scrubbing the air, will simply say to the gasping athletes, "see, there's no pollution!"
Much like certain inflation statistics.
I just can't see the chinese being allowed to have their debutante ball if they won't play ball with Paulson. And it doesn't appear that they will 'play ball.' A nice bloody nose a few months before the olympics will remind these upstarts where they stand in the global community. OTOH, if they do toe the line reasonably, there might not be much to worry about and we might be seeing 9000 SSEC for all we know by september.
While I really don't have any rhyme or reason for this evaluation, so take it with a good dose of skepticism, let's see where the Yuan is by march. If we are close to 7, I think we can all be friends. If we are still here at 7.4, I think there is a big problem. (Particularly since PPP suggests a real exchange rate of 4-4.5 per USD). I will be adjusting my china risk based largely upon political factors. No doubt in my mind we are trying to squeeze them - but I think they are squeezing back.
