China raises rates and why the Chinese economy is a paper tiger.
While nobody was surprised by China's move to tame it's inflation via a rate hike yesterday , I think it provides a great opportunity to demonstrate a contrary view to China's strength. There are two "facts" that are currently being accepted and discussed in the main stream that deserve some mention. First, everyone is convinced that China is deliberately suppressing the value of their currency, the Renminbi (RMB), in order to achieve superior exporting results. Secondly, everyone is convinced that the Chinese "miracle" will turn into an economy that will overtake that of the United States. Even though I once subscribed to the former, I see no evidence to suggest it is actually true and in fact there is a very good possibility that most people are wrong. In terms of the latter, I think there is ample evidence to suggest that the exact same financial problems we are experiencing in the United States are happening in China and a crashing halt is a f