Home > Main > Hugging PIIGS: Why China is “helping” the Eurozone Sovereign debt Crisis

Hugging PIIGS: Why China is “helping” the Eurozone Sovereign debt Crisis

December 21, 2010

In the last few months, China has announced several times that they are helping the Eurozone with their debt crisis.

Oddly, China has not taken any steps to let the Yuan float. So – why help the Eurozone?  And why bother announcing it?

The only reason that makes any sense is because the EUR gets hammered by the debt crisis, and Germany drinks China’s milkshake when the Euro is below 1.3500 or so.   9% export driven German growth caught everyone’s eye, and China wants some of that juicy export driven growth.

Viewed through the lens of the ongoing Currency Conflict, this help does not seem to help the Eurozone as it does China.  They cannot lock the Yuan to two different currencies at the same time, but they can loudly proclaim they are purchasing PIIGS debt.  Hug a Pig!

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