Friday, July 22, 2005

Red China Realignment

Paul Krugman opines on the Chinese announcement this week to de-link the Yuan from the Dollar. Krugman's analysis provides some interesting perspective on the perverse policy underpinning the nearly decade-old Chinese dollar fixation and its effects. He warns of discomfort ahead in the housing markets if interest rates rise on a falling dollar.

Read for yourself -- but there is significant possibility of dislocation if the Chinese currency is revalued too quickly may send cause a spike in consumer prices in the US. This could destabilize the US economy and thus, the world economy. Bad things could happen.

1 comment:

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