My skepticism about the validity of the IMF’s minimum required reserves formula does not mean that I am skeptical about everything in the letter Kyle Bass sent out to Hayman Capital clients. He addresses important issues, including its large and rising debt burden, but for the reasons discussed above I think China will be able to withstand net capital outflows longer than he and the market might currently believe. If I am right, however, it doesn’t mean that we can simply ignore the extent of the net outflows. And clearly the PBoC isn’t ignoring it. For reasons I can’t publicly disclose I am quite certain that Beijing and its policy advisors have been watching the large net monthly outflows with as much concern as anyone in the market.
China readies iron ore and steel for war
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The mystery for iron ore traders is not why the price is $100 or $120. It
is why the price is not at $50 and falling. Iron ore is pumping out of
every ma...
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