Monday, September 07, 2015

Look Who's Mr. Popular

Last week when all my colleagues came back from their summer break, after the usual greetings, many said, "I need you to explain to me the RMB revaluation." It started on the first day, and while I was answering that colleague's question, three more came in the room and quietly listened. Another colleague asked for a primer while we were on our trip to the Great Wall.

So here's the primer: we're all screwed.

With this caveat: only probably.

A few weeks ago I shared here a link to a story about anonymous forecasters (since accurate forecasts get you jail sentences) who are using eight-to-one as the expected exchange rate by the end of 2016. That's a 25% pay cut. Here's an economist who feels that the start of that revaluation might be only three to four months away. If we take a 10-20% pay cut this December, no one is going to come back from Spring Festival.

Meanwhile, the government says GDP growth has slowed, to seven percent. A few cautious figures have called for the government to have the courage to tell us the "true" number of five percent. There's possible evidence that it is actually negative. But who needs to pay attention to evidence when we beat Japan in a war 70 years ago? (Well, at least somebody did.)

I expect to get a lot more attention from my colleagues for a while, before they all disappear in February.

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