Weakening the Yuan

Everyday there's a new thing comin'
The ways of an Oriental view
--Doobie Brothers

Over the past two days, the last large country holdout to the currency weakening strategy, China, has commenced to weakening the yuan. Why now? China's economy is declining quickly and its policymakers, like all bureaucrats, seek export advantage by lowering the number of foreign currency units required to buy a Chinese good.

The problem, of course, it that all nations are pursuing the same beggar-thy-neighbor policy, blanketing the world in a virtual paper blizzard of currencies as one nation tries to drive the value of their currency lower than the others.

Gold is higher on the news. Stocks and other risk assets are lower, as many carry trades counting on a stable yuan come apart.

position in gold, SPX