China commentary on currency war and its preparation for same....

http://www.zerohedge.com/news/2013-03-02/china-central-bank-says-it-fully-prepared-looming-currency-war


(  In addition to gearing up to compete with the US in the Drone sales market , China is gearing up for the currency war... )

China Central Bank Says It Is "Fully Prepared For Looming Currency War"

Submitted by Tyler Durden on 03/02/2013 08:06 -0500

• Central Banks
 
• China
 
• fixed
 
• International Monetary Fund
 
• Monetary Policy
 
• None
 
• People's Bank Of China
• Quantitative Easing
 
• Recession
 
• Yen

Just in case Lagarde (and everyone else except for the Germans, who have a very unpleasant habit of telling the truth), was lying about that whole "no currency war"thing, China is already one step ahead and is fully prepared to roll out its own FX army. According to China Times, "China is fully prepared for a looming currency war should it, though "avoidable," really happen, said China's central bank deputy governor Yi Gang late Friday." We look forward to the female head of the IMF explaining how China is obviously confused and that it is not currency war when one crushes their currency to promote "economic goals." Of course, that same organization may want to read "Zero Sum for Absolute Idiots" because in this globalized economy any attempt to promote demand (by an end consumer who has no incremental income and stagnant cash flow) through currency debasement has no impact when everyonedoes it. But then again, this is the IMF - the same organization that declared Europe fixed in 2009, 2010, 2011, 2012, 2013 and so on.

More on China's FX troop deployments:

Yi, vice governor of the People's Bank of China, made the comment amid widespread concerns that the world's major economies would drive down their units to gain a trade advantage through monetary easing policies. 

A currency war could be avoided, Yi said, if policymakers in major countries observed the consensus, reached at the recent G20 meeting, that monetary policy should primarily serve as a tool for domestic economy.

G20 members promised that they would not wage a currency war, but none have shown signs of scaling back monetary easing that has injected a flood of cash into global markets. They worry that removing the stimulus will plunge their economies into another recession.

"China is fully prepared," Yi said. "In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."

What probably requires clarification is whether the PBOC will tie up its currency, already pegged to the USD, to the Yen, or the Pound, or whatever is the worst performing currency du jour, and adjust the CNY trading band on a daily basis.

What certainly demands clarity is just how will crushing the Chinese currency prevent the kind of soaring energy and food inflation that led to an explosion in civil unrest and disobedience in 2011, and when it took an abrupt end to the devaluation of all central banks to prevent an inflationary conflagration first in China, and then across the world.

We hope to get the answer to both soon, because once you pop (the first FX war shot), you don't stop, until someone's currency hits rock bottom.

and from Dagong ......

http://www.sino-us.com/69/Dagong-releases-2013-Global-Sovereign-Credit-Risk-Outlook.html

Dagong releases 2013 Global Sovereign Credit Risk Outlook

Author：   Source：Dagong  Update Time：2013-02-26   

Dagong Global Credit Rating Co., Ltd believes in the year 2013, the overall development of the global sovereign credit risk is on an ascending trend.

the company releases the annual report of “2013 Global Sovereign Credit Risk Outlook” on February 26 to analyze the global sovereign credit risk tendency under the circumstances of global credit war.

The conduct of the highly indebted developed countries to save their creditworthiness through seigniorage will cause the rising of the global sovereign credit risk, and the global credit war characterized by surging money supply and currency depreciation with undefined amount and duration will drag the global credit crisis in the highly indebted developed countries into the second stage, currency crisis.

Confronted with the shock from the credit war, the emerging economies and low-income countries again resort to loosening monetary and fiscal policies in order to prevent the deterioration of the regional economy, which will pose new challenges to their sovereign credit risk.

Specifically, the 2013 global sovereign credit risk shows the following three major trends according to Dagong's report:

I. The credit risk of highly indebted developed countries will continue to rise. The seigniorage is still the main theme to save the sovereign credit crisis and the origin of the world credit war. The collapse process of their national currency systems will evolve into a new stage.

II. In view that the emerging economies are fighting against regional economic deterioration through loosening their monetary and fiscal policies once again, the stability of sovereign credit risk will be confronted with new challenges.

III. Highly indebted developed countries’ countermeasures to the severe increase of sovereign credit risk will drag the global credit crisis into the second development stage, namely currency crisis stage.