Comments on: Scary Bad Hot Money Influx Into China http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china.html Mon, 23 Nov 2009 06:07:28 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Francois http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china.html#comment-8962 Francois Wed, 04 Jun 2008 05:37:00 +0000 http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china/#comment-8962 Adrem raises an excellent point: Chinese authorities are control freaks.<br/><br/>Historically, what has happened when they could not control a situation anymore?<br/><br/>I'm asking because I frankly do not know, but I have a sense it cannot be good.<br/><br/>Anyone? Adrem raises an excellent point: Chinese authorities are control freaks.

Historically, what has happened when they could not control a situation anymore?

I’m asking because I frankly do not know, but I have a sense it cannot be good.

Anyone?

]]> By: Adrem http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china.html#comment-8935 Adrem Tue, 03 Jun 2008 21:17:00 +0000 http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china/#comment-8935 Having worked in Hong Kong for many years I take it as axiomatic that the PRC does not really know how to run a economic & financial system in an open global economy. They think they do but they don't. They are control freaks. It is their mindset in all they do. So they think they can control money supply, interest rates and their currency, all three at once. But they can't. They can control any two but not the third and the longer they remain detached from this reality the worse the eventual retribution. Yet it is hard to see how they can cope since given their mindset they find it impossible to deal with situations they cannot control. Having worked in Hong Kong for many years I take it as axiomatic that the PRC does not really know how to run a economic & financial system in an open global economy. They think they do but they don’t. They are control freaks. It is their mindset in all they do. So they think they can control money supply, interest rates and their currency, all three at once. But they can’t. They can control any two but not the third and the longer they remain detached from this reality the worse the eventual retribution. Yet it is hard to see how they can cope since given their mindset they find it impossible to deal with situations they cannot control.

]]> By: Jim M http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china.html#comment-8908 Jim M Tue, 03 Jun 2008 13:47:00 +0000 http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china/#comment-8908 Folks, might the inflation differentials appreciate the RMB enough in real terms to cool this off soon? Folks, might the inflation differentials appreciate the RMB enough in real terms to cool this off soon?

]]> By: foesskewered http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china.html#comment-8903 foesskewered Tue, 03 Jun 2008 12:05:00 +0000 http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china/#comment-8903 The problem with hot money is not so much the inflow (of course that causes upward spirals but that rarely upsets most people. ) but the inevitable outflow.One question is how and how fast that outflow can be, may be a nasty surprise in store for speculators. Good grief, sounding like some broken gramophone... The problem with hot money is not so much the inflow (of course that causes upward spirals but that rarely upsets most people. ) but the inevitable outflow.One question is how and how fast that outflow can be, may be a nasty surprise in store for speculators. Good grief, sounding like some broken gramophone…

]]> By: rahuldeodhar http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china.html#comment-8899 rahuldeodhar Tue, 03 Jun 2008 11:20:00 +0000 http://www.nakedcapitalism.com/2008/06/scary-bad-hot-money-influx-into-china/#comment-8899 This is another "hinge" we should watch out for. <br/><br/>The conditions are now ripe for buildup of massive pressure on the Yuan v/s the dollar. <br/><br/>Somehow the model of pegging currencies and accumulating reserves does not sound right to me. Particularly so if the channels ,through which this money can reach across income class, are not well developed. It is against natural order of things.<br/><br/>Someday there is a breach and following wash out is worse than it would have been otherwise. This is another “hinge” we should watch out for.

The conditions are now ripe for buildup of massive pressure on the Yuan v/s the dollar.

Somehow the model of pegging currencies and accumulating reserves does not sound right to me. Particularly so if the channels ,through which this money can reach across income class, are not well developed. It is against natural order of things.

Someday there is a breach and following wash out is worse than it would have been otherwise.

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