New Cfk Money Deal With China

[Rich One]

 

[ajoknoblauch]

So, Assange's understanding of judicial autonomy matches that of Cristina...

 

[ben]

It would be far more interesting if the brain behind Wikileaks was a brainy technocrat (I'd say Snowden-style but know too little about him - but at least in line with the image Snowden has cultivated about himself in the media), rather than a run-of-the-mill conspiracy theorist with an anti-imperial axe to grind.

There's an old adage, "Just because you're paranoid doesn't mean they aren't after you". But the warning still has more credence when delivered by someone who is not in fact paranoid.

 

[thorsten]

It would be pretty stupid from China if they just change Yuan to ARS (i.e., not binding the swap on purchases from the other country) as otherwise Argentina can just get the max amount, sell the Yuan to US$, pay China with freshly printed pesos and devaluate the pesos afterwards... As I don't assume China is a business "partner" which would sign such an agreement, it's way more likely that they use the swap to enable Argentina to purchase products made in China w/o having to drain the reserves, while using the AR$ to get access to resources.
I can imagine that a deal like this can postpone the pressure on the reserves a bit as it could be used to cover the trade deficit with china. On the negative side, it would be interesting to know what exactly is in it for China. Also, I imagine that the swap will probably be enough to avoid a big crisis during CFK's term; but assuming we are going into a recession, the dollars from the number one export (soy) won't flow as much anymore due to low prices and Argentina can't issue new debt, I have a hard time imagining a positive ending for the local economy.

 

[garryl]

Folks, China is printing Yuan and like crazy, the M2 in Yuan doubled or tripled since 2008. At the official rate of 6.2, if you divide the 126 trillion Yuan(M2) China has, China has more dollars than US(US M2 is a little under 12 trillion), and the size of Chinese economy is only 50% of that of the US, and if the amount of Yuan is divided by 6.2 , China has about double of dollars that US has. So the Yuan is grossly inflated. But this is a very strange time. Since the Yuan is so inflated, like Argentina peso, blue Yuan should drop like crazy. But for the time being, it doesn't, due to the reasons that China has a large dollar reserve, and US is enjoying a strong export to China, the US politicians urge China to hold at a crazy rate 6.2, the official rate. That's why China is under a weird situation that can not be sustained. But this situation won't be like this forever, Yuan will tank just like AR pesos, but it's very hard to predict the timing. I believe it's coming.
As an expert on Chinese economy, I just told you the secret It will crash. And do not buy Alibaba stock, they will go IPO soon in US stock market. It will be the biggest IPO in US, and it's a scam arranged by the Wall Street crooks and the liar CEO from China, it will implode eventually. (but many want to make a quick buck on it)


As for the AR peso, China is promoting trade with Russia and South East Asians countries to trade with Yuan, to remove the middle man (US dollars), that's why they were trying to do the same with Argies. But they did not know AR peso is the most unstable inflated currency. If they do currency with swap with peso, it's like Argentina is robbing China. So they have to stop and renegotiate, they are desperate to export the trains and other stuff to Argentina.

Yuan is a controlled currency, once Argies get Yuan, they can convert it to dollars at 6.2. But the amount has to be small as Yuan is not a free traded currency like Yen or Euro, and China is using its reserve to balance(manipulate) it at the ratio at 6.2, an artificial rate that doesn't make sense (the correct rate should 15, I think). That's why even the average Chinese think everything is cheap in US, buying everything in cash, from real estate to US companies (part of IBM, Volvo and they want to buy Cheveron). Are they really that rich ? No, that's a country which was just a third world 15/20 years ago, hell no. This will not last, just watch in the next 5 years, it will crash. (US government is totally aware of the crazyness of 6.2 and Chinese printing endless of Yuan, but since US is trading with China via dollars, not Yuan, and the ratio is attractive to US, US just kept quiet and enjoying the trade. Internally inside China, Yuan is weak with inflation. do you know that average Chinese employees expect a 10% raise each year ? That's because of the inflation, China is printing at about 15% a year and the growth is about 6-7%, they are in trouble. Externally, Chinese are having a good time shopping abroad at 6.2, changing their Yuan and bring dollars to Europe and US, another thing to keep US happy. It's kinda like Argentina in 2001 and Mexico in 1996)

That doesn't mean US will do great. US has a lot of problems, With the internet and technology, and free trade, Americans do not have much secrets/edge anymore, and they are not superman, the Americans kids have to compete against the kids in China and other countries for the same job, not going to be pretty.

While Argentina will be among the worst group as it's a self destructing country. Argentina kids do not have a chance because their government ruined it for them.

I apologize for my negativity, but this is the truth.

 

[sergio]

For sure there is something good in this for China. I can't help feeling that Argentina is getting into another debt situation, only this time with China. While some keep up the old line that the US wants to own and manipulate Argentina, it looks more to me that China is going to be the owner before long.

 

[garryl]

For sure there is something good in this for China. I can't help feeling that Argentina is getting into another debt situation, only this time with China. While some keep up the old line that the US wants to own and manipulate Argentina, it looks more to me that China is going to be the owner before long.

Sure, Argentina is not afraid of getting into debt and not paying the debt. What can China do, send troops to South America. Argentina is like a relative with gambling problem, will take money from anyone.

 

[garryl]

China wants to trade with other countries in Yuan, China issues Yuan like toilet paper, so things are in favor of China. But when China and Argentina meet, it's like a small ass*le meet a bigger one, in this case, Argentina is the bigger ass when they have 30% of annual inflation, trying to cheat in trading. No one wants AR pesos.

 

[cbonanni]

I am sure that somewhere in the fine print , the Chinese would be allowed some future tonnage of Soy , if Argentina did not pay. Or some discount of the future current price.

 

[Rich One]

It would be pretty stupid from China if they just change Yuan to ARS (i.e., not binding the swap on purchases from the other country) as otherwise Argentina can just get the max amount, sell the Yuan to US$, pay China with freshly printed pesos and devaluate the pesos afterwards... As I don't assume China is a business "partner" which would sign such an agreement, it's way more likely that they use the swap to enable Argentina to purchase products made in China w/o having to drain the reserves, while using the AR$ to get access to resources.
I can imagine that a deal like this can postpone the pressure on the reserves a bit as it could be used to cover the trade deficit with china. On the negative side, it would be interesting to know what exactly is in it for China. Also, I imagine that the swap will probably be enough to avoid a big crisis during CFK's term; but assuming we are going into a recession, the dollars from the number one export (soy) won't flow as much anymore due to low prices and Argentina can't issue new debt, I have a hard time imagining a positive ending for the local economy.

That is correct ! If China wanted to loan USDollars to Arg, could do so they have plenty? The purpose is to secure sales of Chinese goods.