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Overview of countries effected by credit, liquidity and inflation; recession conditions – Japan (Asia), Spain, Iceland, Australia – (update 10). Is Asia facing a economic meltdown? China’s central bank under strain?

Posted by Adrian on September 5, 2008

High debt to GDP countries are suffering as their currencies are being sold off on mass, namely South Korea, Taiwan.  The carry trades are unwinding in far more widespread way, so investors are leaving any once high yield currencies.  The Japanese Yen and the US dollar have risen on the back of risk aversion.  This could be permanent, in the sense the global recession has kicked into gear harder than expected  – anything very oversold, say the 1st and 2nd largest economies and their currencies (JPY and USD); may return some gain (although the US and Japanese stock markets appear to be falling further into a depressed bear market).

Still the big worry, in my opinion, is the Chinese central bank dumping US treasures and currency on masse, due to a shrinking capital base (bought too much high risk debt from the US).

Does the Chinese central bank require capital and may need to borrow externally, similar to the Brazilian central bank of the 1990’s?

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3 Responses to “Overview of countries effected by credit, liquidity and inflation; recession conditions – Japan (Asia), Spain, Iceland, Australia – (update 10). Is Asia facing a economic meltdown? China’s central bank under strain?”

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