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Michael Pettis Chimes in China’s Growth and Debt

Summary:
Caradoc-again5 hrsEvery economy has big set backs during its ascent. China will be no different. The question is not will it become #1 (it will), it's what happens to the rest of the world when China stumbles on the way up. Will there be sufficient decoupling or will we all be dragged down in a deflationary maelstrom. My suspicion is we all go down if the Yuan gets a hit. Chinese problems will be exported. If it happens soon (no one can say when) it will be an epic blow to EU, USA, EM and commodity exporters on top of the current pressures. $ will take off, foreign debts in $ will crush EM, an avalanche of shit and the managers ofvtge senior currency (Fed) will have to act to save the world or the subsequent depression will be off the charts.

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caradoc-again

Every economy has big set backs during its ascent. China will be no different. The question is not will it become #1 (it will), it's what happens to the rest of the world when China stumbles on the way up.

Will there be sufficient decoupling or will we all be dragged down in a deflationary maelstrom.

My suspicion is we all go down if the Yuan gets a hit. Chinese problems will be exported. If it happens soon (no one can say when) it will be an epic blow to EU, USA, EM and commodity exporters on top of the current pressures.

$ will take off, foreign debts in $ will crush EM, an avalanche of shit and the managers ofvtge senior currency (Fed) will have to act to save the world or the subsequent depression will be off the charts.

Mike Shedlock
Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

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