Insiders Rushing Into Yuan

[gasull]

Insiders Rushing Into Yuan

It's the usual suspects, Carlyle Group, Blackstone and KKR. They are launching Chinese funds based in the local currency, the yuan. Do they suspect a dollar collapse?

Writes WSJ:

The flurry of announcements reflects a sense of urgency among the foreign firms.

The PEU Report asks:

What does [Carlyle's] David Rubenstein know? Will China soon float the yuan? Is the dollar headed for an implosion? Will a new Fed chair impact the dollar's value? Are rich Chinese investors hesitant to invest in dollar denominations? Only, the prescient Mr. Rubenstein can answer. Did it come from a private session with Tim Geithner or Larry Summers, maybe a dinner with Rahm Emanuel?

If the dollar collapses, it won't collapse just against the yuan. Thus this chart continues to look very interesting.

If money supply (M2 nsa) isn't growing, then who is buying the euro? Put another way, who is liquidating dollars? Does Rubenstein know the answer?

Under these conditions, IF Bernanke starts printing money again, I would be very comfortable forecasting an imminent dollar collapse. The way it looks now, it may not even take a Bernanke push.

What do people think about this? Is it possible that China will do the opposite and actually devaluate the yuan in order to export more?

If China isn't going to devaluate, doesn't it make sense to invest in yuans instead of T-Bills for the short term? You would have no downside and possible great upside.

[metalman]

Re: Insiders Rushing Into Yuan

Insiders Rushing Into Yuan

What do people think about this? Is it possible that China will do the opposite and actually devaluate the yuan in order to export more?

If China isn't going to devaluate, doesn't it make sense to invest in yuans instead of T-Bills for the short term? You would have no downside and possible great upside.

good luck getting your money back out of china if (when) the shit hits the fan.

[gasull]

Re: Insiders Rushing Into Yuan

good luck getting your money back out of china if (when) the shit hits the fan.

Metalman, would you mind to elaborate?

[Quincy K]

Re: Insiders Rushing Into Yuan

Metalman, would you mind to elaborate?

As EJ has previously pointed out, the US has the best property rights in the world. That, and if you do not have citizenship where your property resides, there is little you can do if it is confiscated(usury tax rates, no insurance offered, no property transfers allowed)when the SHTF.

Foreign governments and officials can do whatever they want with whatever laws they wish to incorporate.

Take a number, get in line.

[skyson]

Re: Insiders Rushing Into Yuan

good luck getting your money back out of china if (when) the shit hits the fan.

there are secret channels to to that if you know the people.

http://www.atimes.com/atimes/China_B.../JB28Cb01.html

http://www.chinastakes.com/2009/8/ho...is-coming.html

one of my friend was(is?) in the smuggling business. he knows very well how to get money in and out of china. there are plenty underground banks in the coastal provinces. the way to transfer money accross border works like this:

Transfer In:
you have to find a dealer, open an account in china, transfer money to the dealer's account(the dealer will go to the bank with you together, so you feel safe. of course, this is all base on trust. maybe start with small amount, then gradually increase to large amount) from your account outside of china, and usually 20 minutes later, your money(in the currency you want) will appear in your account inside china, which you could verify electonically right away.

Transfer Out: reverse the procedures.

the dealer typical charges 0.2% transaction fee(now?). exchange rates go by official rates.

of course, this is illegal. but many people do this...

[WildspitzE]

Re: Insiders Rushing Into Yuan

Insiders Rushing Into Yuan

What do people think about this?

This is all about FIRE trying to get as much access to someone else's money as possible - in this case the money of Chinese investors flush with savings and liquidity. They recognize that China is currently transforming from a mercantilist economy to a keynesian one. Rinse, Lather Repeat.

[rj1]

Re: Insiders Rushing Into Yuan

there are secret channels to to that if you know the people.

Are these the same secret channels the Rio Tinto executives used?

[skyson]

Re: Insiders Rushing Into Yuan

Are these the same secret channels the Rio Tinto executives used?

I am not quite sure about this particular case, but huge amount of hot money flows in and out of China every day.

two major channels:
1.via export/importing businesses: by falsifying documentation of product type or quantities or even the business transaction itself, these companies could move money in secret in huge amounts. Because of usual participation of local government officials, the central government are having a very tough time to clamp down on this.
2. via underground banks: these in strict sense are not banks. they simply set up an account inside of China to create a pool for Reminbi, then another account outside of China as a pool for other foreign currencies. If one wants to move money into China, he just deposit money(for example, $US) in the outside pool, the take money(Reminbi) from the inside pool. Essentially, there is no money cross border, only $US deposit in the outside account, and withdrawal of Reminbi from the inside account. Moving Reminbi out of China is simply the opposit transaction. With enough users, all the deposits and withdrawals will balance out at the pool accounts, and in effect, huge amount of money is moving in and out without actually crossing the border. Therefore, unless the Chinese government could catch both sides of the corresponding transaction, they cannot prove it illegal. At this point, the Chinese government has no effective ways of dealing with this problem.

Hot money is still flow in and out of china freely, legal or not.

[touchring]

Re: Insiders Rushing Into Yuan

Insiders Rushing Into Yuan

What do people think about this? Is it possible that China will do the opposite and actually devaluate the yuan in order to export more?

If China isn't going to devaluate, doesn't it make sense to invest in yuans instead of T-Bills for the short term? You would have no downside and possible great upside.

China will never let the dollar devalue against the yuan. I don't rule out small currency fluctuations of 5-10%.

[rj1]

Re: Insiders Rushing Into Yuan

I am not quite sure about this particular case, but huge amount of hot money flows in and out of China every day.

Hot money is still flow in and out of china freely, legal or not.

Right, the illegal though will get caught. It's not like the yuan is a widely-used international currency, and I'd expect China to treat the illegal flow of money just as well as they treat the Rio Tinto execs.