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Breaking the Peg
by Billmon

I got so caught up in other matters yesterday that I completely ignored the big financial news: the Chinese government finally bowed to reality and adjusted the rigid peg that fixed the value of its currency, the yuan, against the U.S. dollar.font> This is, at least potentially a very big deal -- for reasons which I've been talking about, off and on, almost since I first opened Whiskey Bar. While the financial market reaction to yesterday's move was, all things considered, relatively mild, there's no guarantee that will remain true going forward. It's possible, in fact, that we have just passed a major milestone in economic history -- and in the much briefer history of America's reign as the world's only superpower. But this may not be recognized for many years to come.

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YUAN SEEN NOTHING YET
by Elaine Meinel Supkis

All sorts of funny stuff about the sudden switch of direction from the Chinese. I am suspecting the Chinese are going to encourage the Bush/Greenspan Skull and Bonesmen to believe that China jumped the dollar shark because they were terrified of all the bellowing from America. That they are a'fearful of that ol' briar patch! Yass.

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KRUGMAN GETS SOME THINGS WRONG
By Elaine Meinel Supkis

Often I admire Mr. Krugman. I read him avidly and learn a lot from him. But sometimes he misses what is going on. I assume this is because he reads the New York Times when it comes to stuff about China. He obviously doesn't read Japanese or Chinese newspapers.

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