Sunday, September 13, 2015

NATO Military Committee Conference - Joint press point

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good evening ladies and gentlemen thank you for coming to the press conference
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of the Military Committee conference first the chairman of the NATO military
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committee to know better but we'll update you on the discussions that took
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place during the conference after that general who has a car
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Chief of the General Staff of Turkish Armed Forces will deliver his statement
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after the statements there will be an opportunity for questions and answers
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once again I'd like my life
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major points from our conference today in Istanbul opening today's meeting we
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have paid tribute tribute to our fallen soldiers operations around the world we
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also all the nations who participate in our operations around the world we
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started our deliberations with a briefing by Turkey on regional security
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with a focus on nato's southern flank and terrorism terrorism poses a direct
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threat to the security of NATO and to international stability and prosperity
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more broadly and will remain a threat to force it for foreseeable future the
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security of the Alliance is indivisible and we stand in solidarity against
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terrorism of any kind
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its root causes and its wider consequences in this first issue than 80
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chiefs of Defence took stock of progress in the implementation of revenues action
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plan adopted in Wales is on track and on time
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the conditions are said
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for other ever to be delivered in time for a summit the chiefs of Defense also
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stressed the need to ensure that nato forces and equipment can move rapidly
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across the alliance as nato's greatest responsibility is to protect and defend
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our allies the 28 member states against any threat nato continues to adapt and
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respond to the challenges in both eastern and southern flanks keeping all
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countries say in the second session of the day the chiefs of Defence focused on
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nato's future posture and the nato so long term strategy and adaptation the
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chiefs of Defence
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emphasized the need to ensure a NATO command structure remains robust and
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able to counter any threat or challenge we discuss the necessity for NATO forces
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to maintain an adequate readiness and needed to conduct nato's full range of
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missions including aggression against the nato allies and defending nato
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territory aim is to have the right horses in the right place and at the
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right time during the results support session the chiefs of Defence reiterated
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their commitment to the mission and their confidence in the Afghan Defense
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Forces who continue to rise to the challenge of protecting their own
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population results support is still our largest mission and it shows are
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determined determination to preserve the gains we have achieved two gether
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guns nato's prisons post resolute support also featured in our
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deliberations the chiefs of Defence underlined that a successful transition
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from Resolute support into the civilian presence needs to be conditioned place
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in the Western balkanization NATO chief of Defense received a briefing by Greece
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which served as the basis for a discussion on ways of enhancing nato's
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partnerships
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in this strategically important region we stressed our continued commitment to
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regional stability including through kforce presents corporation and
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euro-atlantic integration finally the chiefs of Defence have elected the next
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director general of the International Military Staff elected with Dutch
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general young groups and he will take his position next summer in some it has
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been a very productive meeting and we look forward to presenting the
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conclusions of our discussion to the nato defense ministers next month in
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conclusion let me thank to general a car for hosting this military committee
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conference in Istanbul Turkey is a lie and committed ally we have always
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appreciated the generosity of your people and the chance to discover
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Istanbul thank you for your hospitality and I will pass the Florida
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first I would say in English in Turkish for the members of the national press
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and media
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assimilation distinguished members of the press before I pass on to nato
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issues I would like to draw your attention to one particular topic as you
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all know our security forces are shoulder-to-shoulder fighting against
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terrorism in and out of our country in a resolute Manish from our many journeys
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to the highest ranking officers Turkish Armed Forces will continue to think its
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commitments its tasks with great sacrifice heroism and perseverance night
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n day and under all weather conditions on altering and will continue to do so
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on this occasion I would like to express may God bless their souls of those who
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have fallen during our fight against terrorism soldiers police officers
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religious cards and are innocent citizens and I hope that our brave
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veterans get well soon
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distinguished members of the press military comedy conferences organized
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every year in a NATO member country and is not being held in our country as
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previously planned during this conference nato supports two turkeys
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fight against terrorism has once more been the Internet to be obscene Alliance
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solidarity and support for our fight against terrorism I personally believe
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that today's fruitful discussions and was again
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crude thats nato's it's committed itself to deal with emerging risks and threats
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today nato has been facing serious challenges emanating from the southern
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and eastern flanks in the eastern flank instability in Ukraine adversely effects
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to regional and global security as for the southern flank crises in Iraq and
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Syria had become Georgia's turns hosting more than two million Syrians and iraqis
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and has spent more than six million dollars to refugee problem is constantly
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escalating and has adverse implications not just for the region but also for the
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whole world
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furthermore the pkk MPU idea terrorist organizations have been posing a grave
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threat to the security in the region
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ladies and gentlemen emerging threats in nato's eastern and southern flanks
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demand result and solidarity of the Allies more than ever
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discussions we have advanced our understanding of the challenges and
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opportunities
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lying ahead thank you very much
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there are any questions from the press corps if you could please state your
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name and your media affiliation Ryan asking your question
9:26
the gentleman and great figure out turkeys support from NATO to create a
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hundred and nine kilometres see-saw its border with Syria is that a concerted
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plan for need to to help turkey driving a day of the year
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emphasizing his support
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fighting against their terrorist activities and the border security again
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within this
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conferences as a conference as you hold the american mediator in the discussions
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and more than that you lived in the bilateral discussions and they've got a
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similar similar
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intentions as you know your dividend this year the within the efforts there
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is no ordinary are planning on the whole plan against you in the equities
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activities do we have another question gentlemen over there is police
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and distinct things really section plane was initiated in Wales due to a Russian
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dancer in Ukraine and it was created as a reaction that you need for assurances
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for Eastern European countries members of nato threatened him I and
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unpredictable behavior is close to their borders so this plan consists of two
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major sites of measures once it is assurance measures aimed at ensuring
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global population that they do is ready and willing to assist if necessary the
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other part of our nation measures which have in mind
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long-term adaptation of nato to new security environment in terms of russian
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military deployment to Syria nato is of course very carefully the development
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and the point nato as an institution is not involved in anti I saw there is no
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measure taken by nato
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this new development I think we will have to wait which will be a concrete
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intention of russia in the region lady in the front row
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information to use chemical weapons do you have any information reports
13:34
indications of use of chemical weapons provided through a different sources
13:42
including open sources of media and organizations presented organizations
13:48
present in Syria these are not concerned at this point we cannot take any measure
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of course as with the case of other events in the region we are monitoring
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the situation we have the centre of excellence for chemical heir ideological
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and biological weapons they are assessing the possible impacts of such a
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user once confirmed so that nato is ready and can offer adequate solutions
14:26
gentleman in the back behind the camera
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the course of action and defense capabilities are they going to be again
14:56
deployed it as you wish is being translated so whatever language you the
15:08
very beginning Nov are fighting against the advertiser to terrorist
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organizations because they are what they are doing
15:15
similarly do the same against your day so far we did it the security issues but
15:23
additionally until recently we participate in their coalition forces
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and the open space and a basis as well
15:33
acting by operating activities coalition against them and the other from the very
15:40
beginning of the country without making any changes with India fundamental India
15:44
palace of Turkey you continue to fight against every cause of the terrorist
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organizations
15:56
yes
16:07
countries might get contribution support to show the audience solidarity between
16:14
the turkey and NATO and then the civilian identity as some changes in the
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upcoming months but arrived after that also keeping the contact with our in
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daylight countries so the year depending on the negotiations or contacts and they
16:33
will support us in any way a defense missile defense we will take another
16:43
question do you have any plan of the land of variation in northern Iraq guest
16:54
ticket again fighting against the secretary constantin nations and then
17:07
the VRU taken the necessary precautions depending on the conditions
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the letter in the situation for the safe and secure environment for our country
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the Carey Hart initial reactions we will take a last question an additional
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question to be expecting to a key to open up more bases in the future as well
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at the moment I would like to thank the media for the person the generalists
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will not depart and I'm going to stay behind should you have any additional
17:59
questions or need for clarification thank you very much again for coming to
18:04
this press conference

Friday, September 4, 2015

NATO Secretary General -( Important for World Peace) Remarks at inauguration ceremony of the NFIU in...

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Bloggers Note: Important speech for World Peace
What do you think ? ....is Russia being corralled into having to react with force to enforce its borders....

What do you think ?.... As the Warsaw Pact is being absorbed into NATO... How can a new Russian ensure some degree of comfortable security for itself  ....

We put a Bear, back to the Wall and expect it to give us a Hug.... 

I would like to see Canada diminish its aggressive Russian policy ....and become a more constructive course ...as the path we are one leads to conflict.
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NATO Secretary General - Remarks at inauguration ceremony of the NFIU in Lithuania, 03 Sep 2015.  


Wednesday, August 12, 2015

UPDATED see link>> IMF Signals Delay on Adding China to Currency Basket #CHINA #CurrencyWar #IMFNews

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UPDATE see   imf china currency     https://www.google.ca/#q=imf+china+currency


 IMF Signals Delay on Adding China to Currency Basket    http://abcnews.go.com/Business/wireStory/imf-signals-delay-adding-china-currency-basket-32883883

The staff of the International Monetary Fund is recommending that China wait until at least October 2016 to join an exclusive club of the world's top currencies.

China wants its currency, the yuan, included in a basket of currencies used in IMF operations along with the U.S. dollar, euro, British pound and Japanese yen. It was hoping the yuan could be added this Jan. 1.
 
The IMF board will consider later this month the staff's recommendation for a delay until Oct. 1 of next year.
 
China believes it deserves to be included because it boasts the world's second-biggest economy. But the yuan is not as widely used or freely traded as the other four currencies.
 
The IMF staff said in a report released Tuesday that it was also worried that adding a new currency Jan. 1 might rattle financial markets on the first day of trading next year.
 
There have been estimates by some private economists that the Chinese economy will get a major boost if its currency is added because the IMF seal of approval will encourage more foreign participation in China's financial markets.
 
Since mid-June, the Chinese stock market has been plunging in value despite efforts by the government to end the free-fall.
 
The currency club China wants to join is known as the IMF's Special Drawing Rights basket. This is a virtual currency the IMF can use for emergency loans and IMF member countries can use to bolster their own reserves in times of crisis.
 
 
 

How #Uber Could Help Solve #NationalSecurity Problems

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How Uber Could Help Solve National Security Problems

http://www.dni.gov/index.php/newsroom/ic-in-the-news/211-ic-n-the-news-2015/1244-how-uber-could-help-solve-national-security-problems

 PDF
August 10, 2015

By Aliya Sternstein
Defense One

The intelligence community this month quietly released an unprecedented, unclassified five-year-road map charting the future of data analysis it wants commercial start-ups like ride-sharing firm Uber to read. The chart, part of a larger science and technology strategy, is aimed at encouraging unconventional makers like the car service app-developer and traditional tech contractors to help fund answers to oncoming national security problems.

The road map is an outgrowth of spring workshops with 40 companies that do classified work and a government analysis of the intelligence community's science and technology needs.

By syncing private-sector research now underway with the Office of the Director of National Intelligence's threat predictions, the right technology will be ready at the right time at the right price.

...
Continue reading at NationalJournal.com

Criteria for Broadening the SDR Currency Basket #China #CurrencyWar #IMFNews

see http://www.imf.org/external/np/pp/eng/2011/092311.pdf 
for the complete report.

INTERNATIONAL MONETARY FUND

Criteria for Broadening the SDR Currency Basket
Prepared by the Finance and Strategy, Policy, and Review Departments

(In consultation with other departments)

Approved by Andrew Tweedie and Reza Moghadam

September 23, 2011

Contents Page

Executive Summary ............................................3

I. Introduction .....................................................4

II. Background ................................................5

A. SDR Valuation Principles and Current Criteria ......5

B. SDR and the International Monetary System ....7

III. Freely Usable Currency ...............................8

A. Definition, Underlying Principles, and Past Application .........8

B. Potential Indicators Going Forward .................9

IV. A Possible New Tailored Criterion................19

V. Comparison of Indicators and Scenario Analysis ....23

VI. Exports Criterion ............................24

VII. Number of Currencies ............28

VIII. Concluding Remarks and Issues for Discussion ........30

Tables

1. International Debt Securities・Currency Composition, 2001・2011・Top 25 Currencies .17

2. Global Foreign Exchange Market Turnover・Currency Composition ...............................18

3. Global Foreign Exchange Derivatives Market Turnover・Currency Composition, 2010 ..21

4. Comparison of Possible Indicators for the Freely Usable Currency Criterion and the Reserve Asset Criterion ...........................................................................................................23

5. Exports and Financial Inflows: Top-20 Exporters ...............................................................29 2

Figures

1. Composition of Foreign Exchange Reserves: 2001 and 2011 .............................................14

2. International Banking Liabilities・Currency Composition (2000-2011) ............................15

Boxes

1. Principles Guiding SDR Valuation Decisions .......................................................................6

2. Assessing Freely Usable Currencies ....................................................................................11

3. Currency Composition of Official Foreign Exchange Reserves (COFER) .........................13

4. Inertia in the International Use of Currencies ......................................................................16

5. Trends in the Use of Currencies: Scenario Analysis ...........................................................26

Appendixes

I. Scenario Analysis ..................................35

II. Data Issues......................................43

Appendix Tables

1. Countries Holding More than 5 percent of their Foreign Exchange Reserves in Each Currency ............32

2. Average Daily Foreign Exchange Spreads between Spot Bid and Ask Quotations against the US Dollar in New York ......33

3. Over-The-Counter (OTC) Derivatives: Currency Composition, 2001・10 ......34

I1. Illustrative Scenarios: Global Foreign Exchange Market Turnover (Methodology 1) ......37

I2. Illustrative Scenarios: Derivative Transactions (Methodology 1) ......38

I3. Illustrative Scenarios: International Debt Securities (Methodology 1) ......39

I4. Illustrative Scenarios: Global Foreign Exchange Market Turnover (Methodology 2) ......40

I5. Illustrative Scenarios: Derivative Transactions (Methodology 2) .........................41

I6. Illustrative Scenarios: International Debt Securities (Methodology 2) ...................42 3

Executive Summary
 
 
This paper discusses a number of reform options for the eligibility criteria for the SDR currency basket.

It responds to a request by the Executive Board, and to calls by the IMFC and the G-20 Ministers for developing a criteria-based path to broaden the composition of the basket. The paper is guided by long-standing principles underlying SDR valuation and by considerations related to a stable evolution of the international monetary system.

The paper explores the pros and cons of maintaining the current "freely usable currency" criterion, and clarifies indicators for assessing it.

The freely usable concept and its two key elements・currencies should be ―widely used‖and ―widely traded‖are set out in the Articles and serve important operational purposes. A formal requirement for a currency to be freely usable was adopted for SDR valuation only in 2000, although considerations relating to this concept had been taken into account earlier. Indicators for assessing freely usable currencies were first discussed in 1977, and are updated to reflect subsequent developments in financial markets and data availability. The paper suggests as indicators for ―wide use‖the currency composition of foreign exchange reserves, international debt securities, and international bank liabilities; and for ―wide trading‖it proposes foreign exchange spot market turnover.

As an alternative to the freely usable criterion, the paper discusses a new criterion tailored explicitly to the reserve asset characteristics of the SDR.

This reserve asset criterion would be based on three key characteristics: liquidity in foreign exchange markets; hedgeability; and availability of appropriate interest rate instruments. Four indicators are proposed to assess these characteristics: currency composition of foreign exchange reserves, spot and derivatives market turnover, and an appropriate market-based interest rate instrument.

Scenario analysis suggests that the possible new criterion, while safeguarding the reserve characteristics of the SDR, may provide scope to broaden the SDR basket within a shorter time frame.

 Reflecting to some extent inertia and network externalities that influence the ―wide use‖of currencies, meeting the possible new criterion, while challenging, may be achievable for some currencies within a shorter time period.

Issues related to a size-related criterion, and to the number of basket currencies are also examined.

The paper concludes that, while it would be desirable in principle to augment exports with financial flows, current data limitations suggest that it may be appropriate to maintain exports as the size criterion at this stage. The paper also argues that there are merits in not pre-judging the number of currencies in the SDR basket. The issue of whether a new currency would replace or be added to existing SDR basket currencies could be assessed on a case-by-case basis. 4


I. INTRODUCTION1
1 This paper was prepared by Messrs. Kumar, De Broeck, Rossi, Kohler, Rodriguez, Perez, and Ms. Bacall (all FIN) and Ms. Mateos y Lago, Ms. Maziad, and Mr. Wang (all SPR).

2 The Acting Chair’s Summing Up, Review of the Method of Valuation of the SDR (11/17/2010) http://www.imf.org/external/np/sec/pn/2010/pn10149.htm.

3 The Chairman’s Summing Up, Enhancing International Monetary Stability—A Role for the SDR? (2/04/2011) http://www.imf.org/external/np/sec/pn/2011/pn1122.htm.

1. At their April 2011 meetings, the IMFC and the G-20 Ministers called for further work on a criteria-based path to broaden the composition of the SDR basket.

This followed earlier Board endorsement of a work program on issues relating to SDR valuation and the SDR interest rate basket.2 Directors have also noted that expanding the SDR basket to major emerging market currencies under appropriate conditions, and based on transparent criteria, could further expand the role of the SDR in the international monetary system (IMS).3

2. Against this background, this paper reviews the eligibility criteria for the SDR currency basket.

Since the 2000 decision on SDR basket composition, the basket consists of the four currencies that are: (i) issued by Fund members (or monetary unions that included Fund members) which are the largest exporters, and (ii) have been determined by the Fund to be ―freely usable‖(FU). While exports have played a role since the adoption of the SDR basket formula in 1974, the requirement for a currency to be freely usable・a concept that lies at the core of the Fund・s operations since the Second Amendment of the Articles in 1978・was added as a formal criterion only in 2000.

3. The paper discusses reform options for the eligibility criteria as well as indicators to assess them. Building on the informal Board briefing in July and a note prepared for the G-20 last month, it discusses the existing FU criterion and a potential new alternative criterion・tailored to preserve the reserve asset status of the SDR and one that could help promote a smooth evolution of the IMS. The paper also explores indicators that could be considered to assess these two criteria. In addition, it reviews issues relating to the current export criterion, which provides a size-based condition for SDR basket inclusion, and to the number of currencies in the SDR basket. More operational issues, notably those related to currency weights in the SDR basket and the SDR interest rate, will be covered in a subsequent paper.

4. The paper is organized as follows. After providing background in Section II, Section III discusses the concept of a freely usable currency and potential indicators to assess this criterion. Section IV describes a possible alternative to the FU criterion for SDR basket selection, and Section V compares the indicators under the freely usable criterion and the possible new alternative criterion. Sections VI and VII discuss issues relating to the exports


5

criterion and the number of currencies in the SDR basket, respectively. Section VIII provides concluding remarks and issues for discussion.

II. BACKGROUND



A. SDR Valuation Principles and Current Criteria
 
 
5. SDR valuation has been guided by several long-standing principles. These principles aim to enhance the attractiveness of the SDR as a reserve asset (Box 1). Based on these principles, regular 5-yearly reviews of the SDR basket have been conducted, covering the currencies to be included in the SDR basket and the weights of those currencies. The reviews have been based on criteria adopted by the Executive Board, which the Board has the authority to modify.4

6. In practice, there has been a high degree of stability in the method of SDR valuation. As the SDR valuation principles have remained broadly unchanged since the SDR basket・s inception, revisions in the valuation method have been linked to major changes in the roles of currencies in the world economy. These included the current criteria for SDR valuation, which were adopted in 2000 following the introduction of the euro. The 2000 decision, in turn, modified criteria that had been in place since 1980, when the SDR valuation basket was streamlined from 16 to 5 currencies.5 The high degree of stability also reflects concerns about the effect of changes in the SDR basket valuation framework and the SDR basket composition on official users of SDR. In particular, SDR users have stressed to staff that changes in the basket affect their risk exposure until portfolios or hedging activities can be rebalanced to reflect a new basket.

4 Article XV, Section 2, provides: ―The method of valuation of the special drawing right shall be determined by the Fund by a seventy percent majority of the total voting power, provided, however, that an eighty-five percent majority of the total voting power shall be required for a change in the principle of valuation or a fundamental change in the application of the principle in effect.‖

5 Decision No. 12281-(00/98) G/S October 11, 2000. 6 Box 1. Principles Guiding SDR Valuation Decisions
While not stated in any decision of the Fund, a number of broad principles have guided Board decisions on the valuation of the SDR since the 1970s with the aim of enhancing the attractiveness of the SDR as a reserve asset. According to these principles, the SDR・s value should be stable in terms of the major currencies, and the currencies included in the basket should be representative of those used in international transactions.
In addition:
 the relative weights of currencies included in the basket should reflect their relative importance in the world’s trading and financial system;
 the composition of the SDR currency basket should be stable and change only as a result of significant developments from one review to the next; and
 there should be continuity in the method of SDR valuation such that revisions in the method of valuation occur only as a result of major changes in the roles of currencies in the world economy.

Some say "China cannot risk the global chaos of currency devaluation"

Bloggers note: I say YES! yes they can ....as a revenge.... the IMF has provoked China by delaying if not denying its entry into world currency club..for more on this https://www.google.ca/#q=IMF+delayed+decision+china+currency+club IMF delayed decision into currency club https://www.google.ca/#q=IMF+delayed+decision+china+currency+club  

ALSO see BRIC NOW BRICS bloc(k) rising? BrazilRussiaIndiaChinaSouthAfrica       http://myglobalunderstandingfiles.blogspot.ca/2015/06/bric-now-brics-block-rising.html
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Article http://www.telegraph.co.uk/finance/economics/11799504/China-cannot-risk-the-global-chaos-of-currency-devaluation.html 

China cannot risk the global chaos of currency devaluation

China has nothing to gain from triggering a deflation shock. Its economy is recovering as stimulus builds, creating 1.2m jobs a month

 
 
 
 
 
 
   
"The world economy is sailing across the ocean without any lifeboats to use in case of emergency" Photo: Bloomberg
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If China really is trying to drive down its currency in any meaningful way to gain trade advantage, the world faces an extremely dangerous moment.
 
Such desperate behaviour would send a deflationary shock through a global economy already reeling from near recession earlier this year, and would risk a repeat of East Asia's currency crisis in 1998 on a larger planetary scale.
 
China's fixed investment reached $5 trillion last year, matching the whole of Europe and North America combined. This is the root cause of chronic overcapacity worldwide, from shipping, to steel, chemicals and solar panels.
 
A Chinese devaluation would export yet more of this excess supply to the rest of us. It is one thing to do this when global trade is expanding: it amounts to beggar-thy-neighbour currency warfare to do so in a zero-sum world with no growth at all in shipping volumes this year.


It is little wonder that the first whiff of this mercantilist threat has set off an August storm, ripping through global bourses. The Bloomberg commodity index has crashed to a 13-year low.
Europe and America have failed to build up adequate safety buffers against a fresh wave of imported deflation. Core prices are rising at a rate of barely 1pc on both sides of the Atlantic, a full six years into a mature economic cycle.

One dreads to think what would happen if we tip into a global downturn in these circumstances, with interest rates still at zero, quantitative easing played out, and aggregate debt levels 30 percentage points of GDP higher than in 2008.

"The world economy is sailing across the ocean without any lifeboats to use in case of emergency," said Stephen King from HSBC in a haunting report in May.

Whether or not Beijing sees matters in this light, it knows that the US Congress would react very badly to any sign of currency warfare by a country that racked up a record trade surplus of $137bn in second quarter, an annual pace above 5pc of GDP. Only deficit states can plausibly justify resorting to this game.

Senators Schumer, Casey, Grassley, and Graham have all lined up to accuse Beijing of currency manipulation, a term that implies retaliatory sanctions under US trade law.

Any political restraint that Congress might once have felt is being eroded fast by evidence of Chinese airstrips and artillery on disputed reefs in the South China Sea, just off the Philippines.
It is too early to know for sure whether China has in fact made a conscious decision to devalue. Bo Zhuang from Trusted Sources said there is a "tug-of-war" within the Communist Party.

All the central bank (PBOC) has done so far is to switch from a dollar peg to a managed float. This is a step closer towards a free market exchange, and has been welcomed by the US Treasury and the International Monetary Fund.

The immediate effect was a 1.84pc fall in the yuan against the dollar on Tuesday, breathlessly described as the biggest one-day move since 1994. The PBOC said it was a merely "one-off" technical adjustment.

If so, one might also assume that the PBOC would defend the new line at 6.32 to drive home the point. What is faintly alarming is that the central bank failed to do so, letting the currency slide a further 1.6pc on Wednesday before reacting.

The PBOC put out a soothing statement, insisting that "currently there is no basis for persistent depreciation" of the yuan and that the economy is in any case picking up. So take your pick: conspiracy or cock-up.

The proof will now be in the pudding. The PBOC has $3.65 trillion reserves to prevent any further devaluation for the time being. If it does not do so, we may legitimately suspect that the State Council is in charge and has opted for covert currency warfare.

Personally, I doubt that this is the start of a long slippery slide. The risks are too high. Chinese companies have borrowed huge sums in US dollars on off-shore markets to circumvent lending curbs at home, and these are typically the weakest firms shut off from China's banking system.


Hans Redeker from Morgan Stanley says short-term dollar liabilities reached $1.3 trillion earlier this year. "This is 9.5pc of Chinese GDP. When short-term foreign debt reaches this level in emerging markets it is a perfect indicator of coming stress. It is exactly what we saw in the Asian crisis in the 1990s," he said.
Devaluation would risk setting off serious capital flight, far beyond the sort of outflows seen so far - with estimates varying from $400bn to $800bn over the last five quarters.

This could spin out of control easily if markets suspect that Beijing is itself fanning the flames. While the PBOC could counter outflows by running down reserves - as it is already doing to a degree, at a pace of $15bn a month - such a policy entails automatic monetary tightening and might make matters worse.


The slowdown in China is not yet serious enough to justify such a risk. True, the trade-weighted exchange rate has soared 22pc since mid-2012, the result of being strapped to a rocketing dollar at the wrong moment. The yuan is up 60pc against the Japanese yen.
This loss of competitiveness has been painful - and is getting worse as the shrinking supply of migrant labour from the countryside pushes up wages - but it was not the chief cause of the crunch in the first half of the year.

The economy hit a brick wall because monetary and fiscal policy were too tight. The authorities failed to act as falling inflation pushed one-year borrowing costs in real terms from zero in 2011 to 5pc by the end of 2014.


They also failed to anticipate a “fiscal cliff” earlier this year as official revenue from land sales collapsed, and local governments were prohibited from bank borrowing -- understandably perhaps given debts of $5 trillion, on some estimates.

The calibrated deleveraging by premier Li Keqiang simply went too far. He has since reversed course. The local government bond market is finally off the ground, issuing $205bn of new debt between May and July. This is serious fiscal stimulus.

Nomura says monetary policy is now as loose as in the depths of the post-Lehman crisis. Its 'growth surprise index' for China touched bottom in May and is now signalling a “strong rebound”.
Capital Economics said bank loans jumped to 15.5pc in June, the fastest pace since 2012. "There are already signs that policy easing is gaining traction," it said.

It is worth remembering that the authorities are no longer targeting headline growth. Their lode star these days is employment, a far more relevant gauge for the survival of the Communist regime. On this score, there is no great drama. The economy generated 7.2m extra jobs in the first half half of 2015, well ahead of the 10m annual target.

Few dispute that China is in trouble. Credit has been stretched to the limit and beyond. The jump in debt from 120pc to 260pc of GDP in seven years is unprecedented in any major economy in modern times.

For sheer intensity of credit excess, it is twice the level of Japan's Nikkei bubble in the late 1980s, and I doubt that it will end any better. At least Japan was already rich when it let rip. China faces much the same demographic crisis before it crosses the development threshold.

It is in any case wrestling with an impossible contradiction: aspiring to hi-tech growth on the economic cutting edge, yet under top-down Communist party control and spreading repression. That way lies the middle income trap, the curse of all authoritarian regimes that fail to reform in time.

Yet this is a story for the next fifteen years. The Communist Party has not yet run out of stimulus and is clearly deploying the state banking system to engineer yet another mini-cycle right now. One day China will pull the lever and nothing will happen. We are not there yet.