{"id":10931,"date":"2015-08-12T07:50:14","date_gmt":"2015-08-12T12:50:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10931"},"modified":"2015-08-12T07:50:14","modified_gmt":"2015-08-12T12:50:14","slug":"desperate-move-by-china-a-worrying-sign-don-pittis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10931","title":{"rendered":"Desperate move by China a worrying sign: Don Pittis"},"content":{"rendered":"<div class=\"story-headline\">\n<h3 class=\"story-title\"><a href=\"http:\/\/www.cbc.ca\/news\/business\/desperate-move-by-china-a-worrying-sign-don-pittis-1.3186935\" target=\"_blank\">Desperate move by China a worrying sign: Don Pittis<\/a><\/h3>\n<\/div>\n<p class=\"story-deck\"><strong>Instead of boosting economy there is danger China&#8217;s sudden move will hurt confidence<\/strong><\/p>\n<div>The father of Western medicine, Hippocrates, had some advice in 400 BC\u00a0that has been passed down to\u00a0today:\u00a0&#8220;Extreme remedies are very appropriate for extreme diseases.&#8221;<\/div>\n<p>As the world responds to this week&#8217;s extreme\u00a0and<a href=\"http:\/\/www.cbc.ca\/news\/business\/china-devalues-the-yuan-amid-trade-slump-1.3186676\">unexpected\u00a0devaluation<\/a>\u00a0by the\u00a0Chinese central bank, it sounds as if Beijing was taking the good doctor&#8217;s advice. And while the obvious intent was\u00a0to snap\u00a0the Chinese economy back to health, the frightening thing is that Beijing&#8217;s move smacks of desperation.<\/p>\n<ul>\n<li><strong><a href=\"http:\/\/www.cbc.ca\/news\/business\/china-devalues-the-yuan-amid-trade-slump-1.3186676\">China devalues yuan amid trade slump<\/a><\/strong><\/li>\n<li><a href=\"http:\/\/www.cbc.ca\/news\/business\/canadian-dollar-hit-by-yuan-drop-fresh-low-for-oil-1.3187041\"><strong>Loonie and oil\u00a0plunge\u00a0as world adjusts to Chinese devaluation<\/strong><\/a><\/li>\n<\/ul>\n<p>The modern equivalent of that\u00a0Hippocratic maxim is: &#8220;Desperate times call for\u00a0desperate measures.&#8221; As the Chinese currency and world markets took a dive,\u00a0investors and trade partners around the world were asking themselves:\u00a0&#8220;What does Beijing know that we don&#8217;t?&#8221;<\/p>\n<div class=\"figure\"><img decoding=\"async\" src=\"http:\/\/i.cbc.ca\/1.3186998.1439305050!\/fileImage\/httpImage\/image.png_gen\/derivatives\/original_620\/china-yuan.png\" alt=\"China Yuan\" width=\"100%\" \/><\/p>\n<p class=\"figure-caption\">Falling off a cliff. Chinese currency saw biggest one day decline in decades. (CBC news)<\/p>\n<\/div>\n<p>It&#8217;s not the first time this year\u00a0that China has used strong government action to try to counteract inimical market forces. This spring, Beijing intervened, once to encourage stock markets to inflate,\u00a0<a href=\"http:\/\/www.cbc.ca\/news\/business\/china-s-reminder-that-markets-are-never-risk-free-don-pittis-1.3169051\">and then repeatedly<\/a>\u00a0in an\u00a0attempt\u00a0to stop the irresistible\u00a0plunge when savvy\u00a0traders realized stocks had become unrealistically high.<\/p>\n<ul>\n<li><strong><a href=\"http:\/\/www.cbc.ca\/news\/business\/china-stock-crisis-asian-markets-plunge-despite-beijing-s-measures-to-halt-financial-meltdown-1.3142547\">Asian markets plunge despite measures to halt China meltdown<\/a><\/strong><\/li>\n<li><strong><a href=\"http:\/\/www.cbc.ca\/news\/business\/china-s-reminder-that-markets-are-never-risk-free-don-pittis-1.3169051\">China&#8217;s reminder that markets are never risk-free<\/a><\/strong><\/li>\n<\/ul>\n<p>The trouble is that markets do not like wild swings. And an economy that requires repeated radical intervention is one, like Russia, where no one knows what the government might do next.<\/p>\n<p><span class=\"Apple-style-span\">Until recently, the fact that China was willing to back its own economy made it seem like an giant island of stability in a volatile world. In the darkest days of the great recession after 2007, China\u00a0pumped\u00a0money into its economy by encouraging borrowing and keeping\u00a0the renminbi\u00a0undervalued.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Desperate move by China a worrying sign: Don Pittis Instead of boosting economy there is danger China&#8217;s sudden move will hurt confidence The father of Western medicine, Hippocrates, had some advice in 400 BC\u00a0that has been passed down to\u00a0today:\u00a0&#8220;Extreme remedies are very appropriate for extreme diseases.&#8221; As the world responds to this week&#8217;s extreme\u00a0andunexpected\u00a0devaluation\u00a0by the\u00a0Chinese [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2045,3544,3000,130,6941,951,1099,4936,506,1031],"class_list":["post-10931","post","type-post","status-publish","format-standard","hentry","category-economics","tag-beijing","tag-cbc","tag-cbc-news","tag-china","tag-chinese-stock-market","tag-currency","tag-currency-devaluation","tag-don-pittis","tag-markets","tag-yuan"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10931","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10931"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10931\/revisions"}],"predecessor-version":[{"id":10932,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10931\/revisions\/10932"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10931"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10931"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10931"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}