ML-Implode News - Doug Noland - The King of Dollar Pegs

Already suffering from massive overcapacity, slim profits and heightened financial stress, Chinese manufactures are now exposed to a severe global slowdown and acute pricing/competitive pressures. The bloated Chinese financial sector could be even more vulnerable. Keep in mind that Chinese bank assets are projected (Autonomous Research's Charlene Chu) to end 2014 with assets of $28 Trillion -- an astounding triple the level from 2008. And don't forget the now substantial Chinese "shadow banking" sector that has apparently been a bastion of high-risk lending.
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Curiously, Chinese International Reserves dropped $81bn in September -- and are now down $106bn from June highs. How much "hot money" flowed into China over recent years, enticed by the Chinese "miracle economy," by high yields, by global liquidity excess and a currency tightly linked to the U.S. dollar? But with the China story turning sour and the temptation to devalue on the rise, why would "hot money" not be looking to exit? Has an important reversal in speculative finance already commenced? Might this have marked a momentous inflection point for the Chinese and global Bubbles? How stable is The King of Dollar Pegs?

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Doug Noland - The King of Dollar Pegs