Chinese Exporters Now Cling to Dollars

Or more on China-U.S. exchange rate pass through Tuesday's Wall Street Journal illustrated the conflicted nature of American views regarding real yuan appreciation. The front page article by Hilsenrath, Burkitt and Holmes argued "Change in China Hits U.S. Purse".

L.Desjardins submits: The rally in Chinese stocks is expected to pick up steam in support of the listing of Agricultural Bank of China in Shanghai and Hong Kong in mid July. All markets were up last week despite renewed worries about the global economies. Not surprisingly, financials, especially the mainland Chinese banks, did very well. Most of the gains were achieved on Monday.

World Market Pulse submits:As the global economies, businesses and market trends change momentum towards the east, the relationship between a country's economy and its currency is getting much more complicated as governments across the globe are assuming a bigger role in propping up the financial system and encouraging economic growth.

Chinese exporters who made a big push only a year ago to bill in euros are increasingly turning their backs on the wounded European currency and demanding dollars instead.

Gretchen Morgenson and Louise Story have a great piece in The New York Times about the curious fact that the greatest financial collapse in many decades has produced no prosecutions of any leading figures anywhere.

Dr. Stephen Leeb submits:The big news this past weekend was China's decision to let its currency, the yuan, trade with more “flexibility” - in other words, higher. As you know, we've been expecting such a move for some time, but with more dread than optimism. Nonetheless, this slight change is no reason to panic.

BlindReason submits: Quite a lot of vitriol from folks angry over Krugman's suggestion that a 25% tariff be applied to Chinese exports in order to force the Chinese to revalue their currency. Even the staid Chairman of Morgan Stanley (MS) argued to take a "baseball bat" to Paul Krugman for the suggestion.