March 8, 2010

As evidence mounts that the European Union will aid Greece in its debt troubles, the Euro and other currencies (ex-Japan) rallied against the Dollar. Separately, Shanghai Daily, China's largest English Newspaper, reports that the central government is set to announce that it will void all load guarantees made by regional and provincial governments (given China's political environment, we suspect that this "inside scoop" comes from very reliable sources - freedom of the press is interpreted differently there than it is in the west). This is most likely being done to further stem real estate speculation and the rapid rise in real estate prices over the past few years. This type of nullification has happened once before in China, in 2003. As a result, foreign banks who made the loans, where left with roughly $3 billion in worthless loan portfolios.
In related news, China's Commerce Secretary announced that the Government will "slowly" move in letting its currency appreciate against the dollar.