This morning news of the Chinese saying they would begin to look at re-valuing the Yuan higher shot stock futures out of the gate. But with no concrete details or magical solutions sobriety crept back into the markets this afternoon.
After all, a stronger Yuan will not do anything to prop up that bastion of bullish hope: Chinese exports. And we already know that domestic demand continues to be weak pretty much everywhere today. Individuals who squandered their own financial well-being the past few years to consume on credit are one by one switching to frugal habits and protectionist ideals. I noted several examples of this on the weekend, where I heard radio ads and commentators encouraging people to make their own household items and decorations. Even the housing channels are introducing new shows based on refurbishing run down properties with local artisans and labour rather than mass produced wares from other places.
The fact is what is best for the individual now is to pay down debt, consume less and retrain personal habits to a local and more personally self-sustaining focus. Economists will assure us that this is not good for the global growth machine and that protectionism elongated the Great Depression; but it is human nature to pull in and protect oneself when under threat. What was best for global profits in the credit boom was bad for individual health and stability in the western world. Those that gouged profits out of the system will have to live on less for a while. What is best for individuals will be negative for global profit growth. Reduce, re-use, recycle is here to stay for a few years.
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