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China's European Bailout (And TBTF) Bid Hits Overdrive, As Wen Jiabao Is Now In The Market For Hungarian Bonds

Tyler Durden's picture


In continuing its recent pursuit of "white knight on full retard tilt" policies vis-a-vis the endless European bailout, and throwing good money after bad after horrible after totally lost, today Chinese premier Wen Jiabao said that not only would China do everything in its power to preserve the EUR (after all that CNY needs to be cheap against some currency) and "work for expeditious recovery and stable growth" but also unveiled that it is now preparing to go ahead an buy Hungarian bonds. As if owning Greek, Portuguese, Spanish and Irish debt was not enough. It seems China has learned from the best, and either knows something others don't (except for the SHIBOR market of course) or is actively preparing to become Too Biggest To Fail by making sure that should something bad happen to it literally the entire world will follow it into the depths of hell. Which, as Jamie Dimon, Vik Pandit, Lloyd et al have known for the past 3 years, is not a bad strategy. Look for China to keep buying up ever more European debt as it intertwines its fate with that of the rest of the central planning cartel: a development we can only compare to the ever deteriorating Spanish Cajas desire to buy up as many semi-healthy banks as they possibly can to prevent a policy determination to shut them, and their billions of bad debts, down.

More from Reuters:

Chinese Premier Wen Jiabao said on Saturday he was "still confident" that Europe can overcome the debt crisis and said China would remain a long-term investor in Europe's debt market.

The Chinese Premier spoke at a press conference with Hungarian Prime Minister Viktor Orban during a visit to Hungary.

"I have confidence in European economic development," he said. "China is a long-term investor in Europe's sovereign debt market. In recent years we have increased by a quite big margin holdings of euro bonds."

"In the future, as we have done in the past, we will support Europe and the euro," Wen added.

He said China stood willing to help Europe "work for expeditious recovery and stable growth," but did not give exact figures on how much euro zone sovereign debt China might buy.

Wen also said China was willing to buy a "certain amount" of Hungarian government bonds and aims to boost bilateral trade to $20 billion by 2015. He did not specify the amount of Hungarian bonds China would be willing to purchase either.

In a smart move, Jiabao is now touring his latest vassal purchases: aka peripheral Europe:

The Chinese premier is visiting Europe as the euro zone grapples to contain Greece's worsening debt crisis and possible default which analysts fear could roil global markets and trigger another financial crisis.

China has large holdings of euro-denominated assets in its vast $3.05 trillion foreign reserves and is desperate to do what it can to preserve the value of its holdings, though analysts say the extent to which China may commit fresh funds toward purchasing distressed European debt as a market-calming gesture, will likely be limited.

Wen Jiabao, the first Chinese head of government to visit Hungary for 24 years, is also seeking to explore greater trade ties with the country given its strategic location and increasing role as a logistics and trade processing hub in Eastern Europe for Chinese goods.

Hungarian Prime Minister Viktor Orban said China's buying of Hungarian government bonds would increase the security of debt financing for Hungary in the medium term.

"The purchase of government bonds is also important for Hungary as Hungary is able to finance itself from markets but the fact that China will buy further will bring huge security," Orban said.

Bottom line: only someone on the verge of desperation, and for whom cost basis is completely irrelevant, is willing to throw
as much good money after bad, as China has done in the past half year.


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Sat, 06/25/2011 - 12:51 | 1401106 cossack55
cossack55's picture

I see Jim Willie thinks the Chinese are buying all this paper with the intention of trading it back to the nations concerned for all their gold.  Damn smart.  Are the Chinese accepting immigrants from failing western fascist republics?

Sat, 06/25/2011 - 12:56 | 1401121 Ahmeexnal
Sat, 06/25/2011 - 13:50 | 1401210 Thorlyx
Thorlyx's picture

bailout, bitchez......

Sat, 06/25/2011 - 18:03 | 1401611 morkov
morkov's picture

what's "good" money anyway? LOL

Sat, 06/25/2011 - 15:29 | 1401380 Al89
Al89's picture

I see the nations concerned are selling China all this paper with the intention of laughing smugly and certainly not going for a paper to gold swap when the shit hits the fan. Damn smart.


Sat, 06/25/2011 - 18:56 | 1401679 Chuck Walla
Chuck Walla's picture

The Mother of all Foreclosures is coming.  Will the Chinee toss all the Europeans out into the snowy street? Yeah, I think so.

Sun, 06/26/2011 - 02:44 | 1402458 Roger Knights
Roger Knights's picture

"I see Jim Willie thinks the Chinese are buying all this paper with the intention of trading it back to the nations concerned for all their gold."

That would make sense--especially since the eurocrats China is dealing with have no respect for gold and would think they're getting a good deal. They should be asked in parliament, and by the european press, if they'd informally assured China that they'd make good any losses on bonds with compensation in gold.

Sun, 06/26/2011 - 07:19 | 1402583 Reptil
Reptil's picture


It seems to them (the EU burocrats) owning gold is consequential (since the Central Banks are buying up gold again, and the ECB has gold as asset on their balance sheet), but they're on a course to preserve their euro currency house of cards at all cost.
This is of course a feeble attempt to kick the can further down the road.

The chinese have a totally different idea, they're thinking in longer strategic leaps, and clearly weigh the probabillity of their interaction not only as a medium term return, but as an opportunity to gain a foothold. Their move is not without risk, but the gold issue might mitigate that risk.

It's presented here as "China remains faithful in the euro"
Which might be off the mark, given the gold issue.

Sat, 06/25/2011 - 12:55 | 1401111 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

All your worthless paper are belong to us, ah!

Sat, 06/25/2011 - 12:55 | 1401118 ElvisDog
ElvisDog's picture

Full retard is right. If the Greeks aren't going to pay back the German banks, why are they going to pay back the Chinese? The idea that the indebted countries will turn over their gold and other physical assets to the Chinese rather than simply defaulting on the loans they can't pay back is laughable at best. Is the Chinese army going to march 3000 miles to enforce their claims?

Sat, 06/25/2011 - 13:52 | 1401214 Thorlyx
Thorlyx's picture

make that 5000 miles....

Sat, 06/25/2011 - 14:46 | 1401307 cossack55
cossack55's picture

No. Their submarines might.

Sat, 06/25/2011 - 15:28 | 1401382 Al89
Al89's picture

That's exactly where mutually assured nuclear destruction comes into play. So no, China are being fucking retarded. The tiresome myth of Chinese invincibility needs to be exposed once and for all.

Sat, 06/25/2011 - 18:33 | 1401648 kito
kito's picture

China is throwing money towards domination. They are far from retarded. They will own every sovereign asset when the world can't pay them back. You can't pay me? Fuck you. Pay me. Give me the Eiffel tower. Give me the Spanish steps. Give me the drilling rights to your national Parks. Always better to be the creditor. Always

Sun, 06/26/2011 - 08:43 | 1402629 A Man without Q...
A Man without Qualities's picture

Domination my arse.  The Chinese have two big problems - the leverage in their own economy and their exposure to the US.  Europe is China's biggest trading partner, with much stronger bilateral trade that with the US.  Translated that means that Europe makes stuff the Chinese like to buy - the US not so much.  The imbalance of trade with the US lead to high Dollar surpluses, that were recycled back into US assets until the Chinese suddenly realized there was no way the US was ever going to honor these obligations except by money printing.  Now the Eurozone crisis (which is brought to a head because the ECB cannot or will not monetize debt as the Fed does) is giving China a decent exit with the demand for US assets and the rationale of saving Europe.  It also helps support Eurozone demand for Chinese goods.

It may turn out to be a mistake, but at least you are hearing concrete plans for dealing with deficits in Europe, whereas the noises coming out of Washington suggests utter deadlock and confusion.  There doesn't even seem to be a consensus that there is a problem, the idea being you can always just print more money.

When the Chinese were buying trillions of US assets (treasuries and agency debt), nobody suggested they would end up owning Mount Rushmore, so nobody should imagine they are going to end up owning the Parthenon now.


As for Hungary, this is a key weakness in Europe.  Too much foreign denominated debt (c. 70% of mortgages were in Swiss Francs back in 2007), recent moves to cap the exchange rate moves by the central bank have not removed the risk, and the Swiss banks but also Austrian banks have big exposures.  Austria is AAA rated and any risk would throw the functioning of the ESFS/ ESM into doubt, so supporting Hungary is very important for Europe, in many ways, more so that Greece.


Sat, 06/25/2011 - 20:10 | 1401789 meizu
meizu's picture

if those countries default on the loan, the european union implode, banks across europe collapse, chinese will loose a few billion dollars, i think it's a good gamble.

Sat, 06/25/2011 - 13:00 | 1401128 Lazarus Long
Lazarus Long's picture

the Chinese are buying good will with depreciating dollars. When this all ends they will have the moral high ground to blame the US and the European governments

Sat, 06/25/2011 - 13:38 | 1401142 Ahmeexnal
Ahmeexnal's picture

When Ecuador read the fine print on the chinese loans, they were insulted and rejected China's "help".

But the eurozone will accept any demands only to kick the can a few months more.

That alone tells you the current state of affairs.

Sat, 06/25/2011 - 21:03 | 1401888 kito
kito's picture

Viva Ecuador!!!!

Sun, 06/26/2011 - 07:12 | 1402576 Antipodeus
Antipodeus's picture

What kind of 'Chinese military aircraft' costs $110M each?

Sat, 06/25/2011 - 13:17 | 1401160 wisefool
wisefool's picture

Exactly. Why hold onto Doallars/Euros that are in a race to the bottom? And unlike in the past, history will not be written by one side only. (winner or loser)

As they legally aquire more and more of the worlds assets, they aquire more and more legitimacy to stop (or start) military intervention around the world.

Tibet and NK are now off limits to the west, soon they'll be deciding the fate of Africa. And they wont have to do it with the very expensive western ways (build the puppet aristocracy, maintain the aristocracy, when the aristocracy gets to full of themselves, remove the aristoctracy, repeat)

The Chinese will simply do cash over the barrell transactions, and not worry one bit how the money ripples through the local economies. 

Sat, 06/25/2011 - 16:32 | 1401490 ElvisDog
ElvisDog's picture

Ridiculous. So according to your theory, the African nations will trade their resources for increasingly worthless Chinese paper (of whatever variety). This will cause rampant inflation in the African countries, which will make it even a worse deal to trade their resources for more worthless paper. And somehow this will be okay to the people in these African countries because the Chinese have a "legal" right to these resources according to someone's definition?

Sat, 06/25/2011 - 16:45 | 1401507 sun tzu
sun tzu's picture

Since when did the people in the African nations have any input into what their governments do? Even in the supposed civilized nations, we are led around by our noses

Sat, 06/25/2011 - 23:18 | 1402115 wisefool
wisefool's picture

Chinese paper will never be worthless. They have the manufacuting capability to always have something on the shelves for africans to buy. It may be inferior goods, but they will have goods on the shelves. The western powers really can not do that anymore. Sure, there is highend and food, but toys, clothes, everything in a Walmart is manufactured in china.

The arcades never run out of stuffed animals redeemable for game of "chance" vouchers.


Sat, 06/25/2011 - 15:29 | 1401388 Al89
Al89's picture

They have no moral high ground. The West can simply turn around and inform China that they don't feel the need to pay back totalitarian dictatorships who sponsor rogue states like N.Korea. China already aren't exactly loved by their Asian peers. They have zero advantage right now.

Sat, 06/25/2011 - 18:39 | 1401655 three chord sloth
three chord sloth's picture

China wants to be the Big Cheese when the US is done, and they think they are buying goodwill towards that goal. They are mistaken. The US built up a bankroll of goodwill with the other powers of the day through actions, like WWI and WWII, not money. The money came later. And having the sons of Germany, sons of England, sons of Italy, etc... throughout the US power structure helped as well.

China has done neither. It is mistrusted now, will only grow more distrusted as they grow in power. All their planning and spending will go for naught.

Sat, 06/25/2011 - 13:04 | 1401137 falak pema
falak pema's picture

precisely they are exchanging devalued USD for in trouble Euros; its called risk diversion. As the USd credit pump is their main export earner, they need to continue pumping out USD to buy Euro bonds. Simple.

Sat, 06/25/2011 - 14:56 | 1401327 Boston
Boston's picture

Still, the USD looks like it's beginning to turn.....UP, at least for a few months.  

This would mesh well with a risk sell-off, and one final (and massive) push lower in US Treasury yields.

All of the above would reverse as soon as the Fed pre-announces QE3 (OT2, etc).

Sat, 06/25/2011 - 15:01 | 1401338 ivana
ivana's picture

Maybe will not reverse even after QE3 (besides normal drop of USD)

Sat, 06/25/2011 - 18:53 | 1401673 Hedgetard55
Hedgetard55's picture

That is the trillion dollar question. Does QE3 necessarily juice the stock market again like 1 and 2 did, or has the junkie developed a resistance to the junk?

Sat, 06/25/2011 - 13:11 | 1401140 Debt Rolling
Debt Rolling's picture

This is a frustrating strategy to witness, but it is unfortunately the best for China. By supporting Western sovereign bonds, they maintain their exports and become totally unattackable under a military viewpoint, for such a move would mean the economic end of the West. 

When will China stop buying the shittiest sovereign bonds? When their GDP will be >90% domestic. Then they allow the western collapse and import cheap goods. 

Machiavelic and brilliant. 

Sat, 06/25/2011 - 13:47 | 1401212 dearth vader
dearth vader's picture

I agree, DR. The Chinese are buying influence and market protection with their stack of toilet paper. It's a shame, defaults will no longer be possible where defaults are due.

Sat, 06/25/2011 - 14:28 | 1401282 The Profit Prophet
The Profit Prophet's picture

No worries boys....just another floor on the global house of cards.  I'm thinking the Chinese are now placing the final two cards that form the roof of the structure....and there's a Greek toddler slowly crawling towards the base of the stack.

T.E.I.N. everyone! 

Sat, 06/25/2011 - 13:05 | 1401141 Fukushima Sam
Fukushima Sam's picture

It is hard not to see this as bullish for something.

Sat, 06/25/2011 - 13:11 | 1401144 P-K4
P-K4's picture

"The idea that the indebted countries will turn over their gold and other physical assets to the Chinese rather than simply defaulting on the loans they can't pay back is laughable at best. Is the Chinese army going to march 3000 miles to enforce their claims?" 

No, but they may delay (indefinitely) shipments of critical components, strategic minerals, help your enemies, send in rogue ex-CIA/KGB/THRUSH agents for hire, etc. To think the Chinese won't extract a price for default is a gamble that may prove detrimental to your nation in the long run. Ya' think they didn't learn anything from the US ?

Sat, 06/25/2011 - 15:38 | 1401400 Al89
Al89's picture

The game is to see how long China can stand inflation generated by a depreciating dollar, something that is also weakening their export sector. 

 The protests in China indicate that they will be crying uncle a little earlier than the U.S.

Sat, 06/25/2011 - 16:35 | 1401494 ElvisDog
ElvisDog's picture

Except that what you wrote won't work so well for a Mercantilist economy with little evidence of increasing domestic demand. They would be killing their own export markets.

Sat, 06/25/2011 - 22:45 | 1402045 Hulk
Hulk's picture

"Is the Chinese army going to march 3000 miles to enforce their claims?" 

The journey of 3 thousand miles begins with a single step...

Sun, 06/26/2011 - 18:52 | 1403768 Iam_Silverman
Iam_Silverman's picture

"The journey of 3 thousand miles begins with a single step..."

and only goes as far as the supply line can be stretched....

Sun, 06/26/2011 - 02:02 | 1402432 manure
manure's picture

The Chinese have all the collateral they can dream of within their own borders and firmly anchored in their own soil: all the capital, knowledge and technology invested by America and Europe in China over the last two decades. China does not need to march one inch to get what they want.  

Sat, 06/25/2011 - 13:09 | 1401148 Oh regional Indian
Oh regional Indian's picture

It's quite clear that WWIII planning is in full effect. 

These are the moves, under various guises, of capital, people, technology.... look at the patterns over the past two decades.

And China does not act alone. It is firmly under the Rothschield/Rockerfeller thumb. Has been since British East India Company did in the Opium number on them.

To not take that into consideration is to totally deny a reality. We are just seeing the last-ish act now.



Sat, 06/25/2011 - 13:30 | 1401185 Franken_Stein
Franken_Stein's picture


That doesn't make sense.

Against whom and why ?

WW3 would be nuclear, but then TPTB would poison themselves from the fallout.


Sat, 06/25/2011 - 13:38 | 1401200 Oh regional Indian
Oh regional Indian's picture


It's already underway actually. We are living in the time of asymmetric warfare. It's happening as we speak.

And why? I don't think the PTB have any survival issues. Especially not THE PTB.

But more than anything else, war is a matter of cycles, time, planetary alignments, the degree of madness in the system, the degree of fear in the system, the degree of greed in the system, the degree of apathy in the system and the destructive capability of the system.

It's just time and a whole lot of other esoteric and ordinary reasons.

Have you heard of Albert Pike?


Sat, 06/25/2011 - 22:47 | 1402047 Hulk
Hulk's picture

WW4 will be fought with sticks and stones... Made that one up myself too!

(actually, attributed to Einstein)

Sat, 06/25/2011 - 13:09 | 1401151 Deepskyy
Deepskyy's picture

I for one welcome our new Ant... er... Chinese overlords.


Sat, 06/25/2011 - 13:13 | 1401162 eurusdog
eurusdog's picture

"white knight on full retard tilt" Spit my breakfast all over the place laughing!

Sat, 06/25/2011 - 13:22 | 1401172 DeadFred
DeadFred's picture

The Chinese are at a very interesting point in their history. At the peak of their power, but with the cracks starting to show in the system, what will they do? If you try to put yourself in the mindset of an autocratic ruler of the Middle Kingdom (a disturbing thing to do) what would you do now? The West is off balance, do you try to start a scrap that will likely end with you on the top of the heap? Several times in Mao's Little Red Book are sayings to the effect that war is not to be feared because the Party gains power after every war. The leaders have all read that book. I'm very suspicious that the Chinese leadership is looking at the possibility of starting an economic conflict for their gain.  They now own enough paper to collapse the dollar and the Euro if they so choose, it would suck from their point of view to go to that trouble only to have to compete with the Hungarians for world dominance (sarc). I'm just saying be very suspicious of the Chinese for the next couple months or until this unsettled time stabilizes, assuming it ever does.

Sat, 06/25/2011 - 13:25 | 1401182 IQ 101
IQ 101's picture

The Chinese wont march they will drive, it is faster

and it is Biblical.

I dont think it will happen because of unpaid debts,but resources,

they will at some point desire to protect the investments they have made in Africa,M.E.and Europe.

Sat, 06/25/2011 - 22:38 | 1402030 Bindar Dundat
Bindar Dundat's picture

All of you ABOVE are freaking NUTS!!


In 3500 years the Chinese have NEVER had territorial ambitions and they will not for the next 3500 years either. You are all NUTS!

Sat, 06/25/2011 - 13:32 | 1401183 TruthInSunshine
TruthInSunshine's picture

This is idiocy to the infinity.

Europe is far more fractionalized than are the United States, and the integrity of the Eurozone is very much in doubt.

China is now behaving as Japan did at the peak of its confidence and hubris, which if any moment marked the top, it was the 1989 purchase of much U.S. Real Estate, things such as Pebble Beach Golf Course, and American Companies such as Columbia Pictures by the Japanese, when the Nikkei had hit 40k.

The main difference is that Japan had leading edge technology and fabrication capabilities, and could dominate export markets bases on technological prowess - even after its internal economy broke (for a variety of reasons).

China is a slave labor factory for the world. It can't even properly steal technology when it's under its nose in the form of multinational manufacturing plants and R&D facilities!

If China doesn't get its own people into the 'we love debt' mindset, and given cultural resistance to this line of reasoning (good for the Chinese) - this will not be easy if even possible, it is not going to be able to break away from its cheap export model, assuming it wants to grow its economy at a fast enough pace to keep employment (its biggest challenge) stable.

China will never be as technologically proficient as Japan.

China will not be able to retreat from its long standing reliance on cheap labor (no matter a few marginal incidents in currency markets and even labor rates in the last year or so) if it wants to continue to grow its economy.

The tension between the U.S. and China on currency depegging is only going to get worse as China realizes these fundamental truths. Besides, much of this tension is really for show (to try and appear to appease certan U.S. political constituents - labor/unions under the Democrats), as multinational corporations don't want the dynamics now at play in China to change too much, anyways. They've invested way too much in long term plant & capital for manufacturing.

If China thinks that Europe is going to be a better overall market upon which it can depend, long term, for exports, it is smoking too much opium.

If China thinks interventionism in and bailing out the Euro or Eurozone is a wise use of its resources, all things being considered on the global stage, or that buyingbad Euro debt, likewise, it is smoking way too much opium.

China seems destined for a Japanese-like act of 1989-style epic stupidity - not for the same reasons and not even because China is similarly situated as Japan was in 1989 (it isn't and they aren't) - and maybe this is the red flashing light signaling a major contraction in China is about to take place.

I am confident of one thing: China is behaving desperately.


Sat, 06/25/2011 - 15:25 | 1401373 dearth vader
dearth vader's picture

Never underestimate the Chinese, TiS. They don't go for a quick win, but play for time. Did you ever see a Chinaman behaving desperately? They're a calculating lot, and like a good bet.

Sat, 06/25/2011 - 15:34 | 1401389 jm
jm's picture

Never been to Vegas have you?

Nothing lights up like the eyes of an all-in Chinese high-roller.

Sat, 06/25/2011 - 16:54 | 1401512 sun tzu
sun tzu's picture

Are you sure they were Chinese?

Sat, 06/25/2011 - 13:30 | 1401186 Racer
Racer's picture

China extends boundaries to include Europe

Sat, 06/25/2011 - 20:33 | 1401792 i-dog
i-dog's picture

A pithy comment ... and, IMO, the most accurate of the whole thread!

Most commenters are looking at individual moves on the chess board from a position of isolated self-interest rather than seeing each move in relation to TPTB's overall game plan: To destroy national sovereignty and social cohesion and thereby implement a One-World Government, or 'New World Order'.

China is an integral part of that strategy. It is their model of plutocratic authoritarian rule (Russia was their previous [failed] attempt) and now - thanks to Western investment and technology transfer over the past 35 years - it has sufficient industrial and financial capacity to make the US and Europe redundant for TPTB. Indeed, they can return Europe to a network of feudal palaces and hunting estates, unsullied by industrial polution, while the Chinese peasant toils in the factories and wallows in their poisonous byproducts. America will simply become a resource-extracting prison farm. Then they will chemically 'trim' the world population back to a 'manageable' level.

All that remains for TPTB to achieve their goals is to merge the consuming periphery with their financial and industrial 'centre' and it is 'game over' for the former middle and working classes of Europe and America!

Every freedom-loving individual on the planet needs to wake up from their drug- and propaganda-induced slumber and contribute as best they can to stop this headlong rush by TPTB to obliterate nation state boundaries and impose a central world planning committee over a significantly reduced world population.

End the Feds!! (Federal Reserve &
End the European 'Experiment'!! (EU & EUR)

Sun, 06/26/2011 - 01:53 | 1402423 Oh regional Indian
Oh regional Indian's picture

Good call all around i-dog.

But an msm and chemically induced stupor is really difficult to over-come. So, people will gladly flash-mob for a party or a sex-with-strangers meeting.

But for something meaningful? I really have my doubts. I think I'm short humanity right now. 


Sun, 06/26/2011 - 08:26 | 1402492 i-dog
i-dog's picture

Thanks, ORI. But I personally don't think any "flash mob" solution is the way for us to go, anyway. Mobs are easily distracted by shiny objects and agents provocateurs and they lack both direction and vision.

I believe we can roll things back to a homo-sapiens-friendly situation simply by removing TPTB's primary means of control -- the mega-state -- and reverting to the creative environment of competing nation states, each competing for capital and social advancement along a multitude of parallel paths that offer choice. Give them all a nuke each and they'd probably stop fighting each other, too!

Of course, as an an-cap myself, I would prefer to see the total demise of the thieving State, but this will realistically have to wait until homo sapiens has had time to regain some thinking capacity after their long slumber - nestled warmly in the arms of the bloated, wealth-munching, power-hungry socialist nanny state.


End the Feds!!
End the European 'Experiment'!!
De-fund the IMF!!

Sat, 06/25/2011 - 13:29 | 1401188 trx
trx's picture

The European Council on Foreign Relations estimates that 40% of Chinese investment in the EU is in eastern Europe and the peripherals, excluding Ireland.

  • In Greece the Chinese shipping company Cosco in 2008 signed a 35-year lease on a container port in Piraeus.
  • Jiabao’s deputy Zhang Dejiang visited Greece in 2009 with more offers of investment.
Greece Ends Week In Absurdum
Sat, 06/25/2011 - 13:31 | 1401189 snowball777
snowball777's picture

You'd think after the 3rd guy that was pulled under by a drowning man they'd hip to the situation.

Quite possibly the worst vulture investors ever.

Sat, 06/25/2011 - 13:53 | 1401192 Quinvarius
Quinvarius's picture

Stick with gold and ignore the noise.  It s pretty obvious China has to strat rapidly loosening.  They never should have tightened in the first place.  Their problems are 100% their currency peg and have nothing to do with internal banking policies.  Now they get another chance to do the right thing.  Cut the dollar loose and let their economy grow.

Sat, 06/25/2011 - 13:41 | 1401198 richard in norway
richard in norway's picture

which banks are exposed to Hungarian debt, i have a feeling that italian and Greek banks are most exposed there, but I'm not sure

Sat, 06/25/2011 - 13:56 | 1401225 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

We should comb Reggie's archives.  I would not be surprised if France is too.  France is the Pig no one is discussing.

Sat, 06/25/2011 - 13:59 | 1401229 rokakoma
rokakoma's picture

I'm from Hungary, actually the total foreign bond holdings are around 13 billion euros, as of 22nd June.

For foreign banks the bigger risk is CHF exposure, since they have lent a lot of money (mainly mortgage) in CHF and getting into trouble with those since CHF is skyrocketing.

The good news is Hungary has a trade surplus around 7% (yes, seven!) of the GDP and current+capital account is in a surplus around 4% as well.

So I think China's bond buying is more likely PR than actually an investment.

Sat, 06/25/2011 - 14:00 | 1401232 dearth vader
dearth vader's picture

Actually, the most exposed to Hungarian debt are Austrian and Swiss banks - Hungarians took out mortgage loans in Swiss francs, when Hungary joined the EU.

Sat, 06/25/2011 - 14:17 | 1401256 Urban Redneck
Urban Redneck's picture


Austria is on the Euro and the SNB doesn't want to repeat the previous CHF devaluation effort.  Convenient time to step in and prevent PIIGS from becoming PIIGSA (again), except this time China might be picking up the bill. 

CYA maneuver on their big EUR migration.

Sun, 06/26/2011 - 09:10 | 1402660 A Man without Q...
A Man without Qualities's picture

Yes, Austria is the clear leader - much of the CHF mortgage deals were originated by Austrian banks.  Mentioned this above, but the AAA rating of Austria would be threatened by an Hungarian crisis, which would have massive implications for the ESFS/ ESM mechanism.  Hungary is far more important that you might think, so it's a smart move here.  Selling $20bn of US treasuries to buy Hungarian sovereign debt may not appear a profitable trade, but it can reduce a lot of systemic risk.  

Sat, 06/25/2011 - 13:41 | 1401202 Pelosis Usless Brain
Pelosis Usless Brain's picture

China is manuvering to become the world's reserve currency.

Sat, 06/25/2011 - 16:55 | 1401513 sun tzu
sun tzu's picture

They have less credibility than Bernanke

Sat, 06/25/2011 - 13:53 | 1401219 slewie the pi-rat
slewie the pi-rat's picture

i am thinking of an idea for a story of why china took tibet.

they found a 4,000 year-old lease agreement which hadn't been paid in 1800 years.

so they evicted them.

Sat, 06/25/2011 - 14:04 | 1401236 trx
trx's picture


Sat, 06/25/2011 - 14:04 | 1401241 hungarianboy
hungarianboy's picture

Shit we're doomed. China is buying us out. Damn! I wished Obama was here instead of China. 

Sat, 06/25/2011 - 14:09 | 1401243 reader2010
reader2010's picture

The Chinese are expecting EU will eventually give them much needed EU's military technology in exchange for debt forgiveness. 

Sat, 06/25/2011 - 15:48 | 1401412 Al89
Al89's picture

You have to be fucking kidding me. 

Sat, 06/25/2011 - 16:52 | 1401514 sun tzu
sun tzu's picture

EU military technology? Bwahahaha

Sat, 06/25/2011 - 14:10 | 1401244 kaiten
kaiten's picture

China understands the basic reality that ANY european debt is better than US Treasuries. Pure and simple.

Sat, 06/25/2011 - 14:29 | 1401288 The Profit Prophet
The Profit Prophet's picture

Just another drug dealer trying to prevent one of his best customers from going cold turkey because he can no longer afford the smack.

T.E.I.N. everyone!

Sat, 06/25/2011 - 14:36 | 1401296 ivana
ivana's picture

Read all above and can tell you this is going to be danm interesting next year or 2. Chinese will not stop.

Powerz still need to find way to stop this. Cause it was not predicted in scenario

Even if they will have to crash down evary peripherial EU gov - one by one!

Before that: trade wars, capital controls etc

Sat, 06/25/2011 - 14:41 | 1401301 Eireann go Brach
Eireann go Brach's picture

The goal of the Chinamen is to put the Spanish and the Greeks to work in the rice fields with the ultimate goal of shagging all their women to improve their ugliness gene, because lets face it they are ugly fuckers aren't they?

Sat, 06/25/2011 - 15:47 | 1401416 Johrny Bravo
Johrny Bravo's picture

Not exactly douche

Goled to $200. Buried canned ham in the backyard Bitchez!

Sat, 06/25/2011 - 17:21 | 1401536 slewie the pi-rat
slewie the pi-rat's picture

i say unto you, neither put your light under a bushel nor bury your canned ham in the back yard.  not kosher. 

Sat, 06/25/2011 - 15:13 | 1401310 ivana
ivana's picture

Related to :

Bottom line: ... whom cost basis is completely irrelevant, is willing to throw as much good money after bad, as China has done in the past half year.

Even I couldn't agree with you more (crying over my "good" money savings earned by hard work overseas) , "good" & bad money is becoming irellevant after trillions printed. And trillions waiting to be printed. That stands now as argument on souvereign level. On personal familiy level, when deflation wave hits again, I hope to be ready and transfer cash into something tangible.

Everyone knows that now, especially chinese.

2013 earliest we are going to have major monetary reform in western world.

Sat, 06/25/2011 - 14:51 | 1401325 Printfaster
Printfaster's picture

They will sell the bonds, buy Hungarian real estate with them, and put hundreds of thousands of Chinese in them, just as they are doing with the US, buying single family homes and stuffing almost 50 illegals in them.


Sat, 06/25/2011 - 15:28 | 1401385 cosmictrainwreck
cosmictrainwreck's picture

Now, I don't have any doubt this is going on, but, Tyler - has this already been covered on ZH, and I missed it or do you plan to report details?

Sat, 06/25/2011 - 16:57 | 1401518 sun tzu
sun tzu's picture

Stuffing 50 chinese illegals in a house? Where the hell do you live? The only illegals stuffed into houses around here are hispanics.

Sun, 06/26/2011 - 19:10 | 1403811 Iam_Silverman
Iam_Silverman's picture

"The only illegals stuffed into houses around here are hispanics."

What if we re-wrote it to say that the Hispanics are crammed into Chinese owned houses?

Then you'd both be right!

Wouldn't that be insidious?  China promoting an internal revolution by secretly aiding illegal immigration?

Sat, 06/25/2011 - 15:07 | 1401351 TruthInSunshine
TruthInSunshine's picture

China was the Middle Kingdom for thousands of years, highly advanced and developing the premier technology of the time.

They even took the Roman model of diluting currency to the extreme, by issuing PAPER currency, aka fiat (whereas the Romans were 'merely' cutting back on the % of precious in their coins).

And what did the Middle Kingdom do with their status as what was then the largest power on the globe? The end result was they built a great wall, to try and keep a horseman and his gang out.

There is a demographic time bomb in China that makes all other demographic time bombs absolutely tame by comparison; a mind warpingly large mass of youth now looking and who will soon be looking for income producing employment.

Some experts claim it now takes China a minimum of 8% GDP expansion annually in order to NOT see unemployment rise.

Why do any of you think China has been goosing their economy with LARGER amounts of monetary and fiscal central bank stimulus (on a proportional basis to the size of their GDP) than any other nation on earth, and have consequently created what are now the largest asset bubbles (within China) now existing in the world today?

Leaders in China will resort to any silliness to delay the type of ugliness that will result when 75 million to 125 million young, strong men can't find work at any wage, the military is no longer accepting new entrants, and the central planners can't get the consumers of their trading partners to want to buy incrementally larger pools of Chinese made goods (let alone reduce their consumption).

Sat, 06/25/2011 - 20:28 | 1401814 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Another of their failures a few centuries ago was to not build ships.

Sun, 06/26/2011 - 19:13 | 1403816 Iam_Silverman
Iam_Silverman's picture

"Another of their failures a few centuries ago was to not build ships."

<sarc/on> Why should they build ships?  Can't they just contract with some Greek shipping company like the rest of the world? <sarc/off>

Sun, 06/26/2011 - 23:39 | 1404634 TruthInSunshine
TruthInSunshine's picture

They could've built ships had the Phoenicians set up manufacturing plants in China, and left the schematics out in the open for the Chinese to use, saving the Chinese from original thought when it came to novel ideas, R&D costs and developing any domestic manufacturing prowess of their own (absent intellectual theft from outsiders).

But then, the ships would have been out of square, warped and defective in about a thousand other ways, and they would have had to ship the ships back to the Phoenicians to be repaired properly, before the Phoenicians would accept delivery of them or would have judged them as 'sea worthy' or 'ocean worthy.'

Mon, 06/27/2011 - 08:33 | 1405015 Iam_Silverman
Iam_Silverman's picture

Yeah, but the lead paint really helps prevent hull fouling!

Mon, 06/27/2011 - 02:33 | 1404788 i-dog
i-dog's picture

"Another of their failures a few centuries ago was to not build ships."

Cheeses, that's a dumb comment! The Chinese were sailing the globe and trading with distant shores back when Europeans still thought they'd fall off the edge of a flat Earth if they sailed out beyond sight of land!

Sat, 06/25/2011 - 15:36 | 1401394 americanspirit
americanspirit's picture

With over 40 new mega-cities standing empty my guess is that China's setting up their next move which will be to invite European governments to forcibly export all their unwanted millions of non-europeans immigrants ( you know - Turks, Algerians, Indonesians, etc) in a move reminiscent of that good old 'final solution'. 

The deal - we buy your bonds, and you send us all those troublesome immigrants. Look for "Final Solution - Part Two" coming sooner rather than later. A couple of million slave laborers in each of those Chinese Ghost Cities ought to provide enough of a workforce (heh-heh) to attract foreign mega-corporations to set up shop. Many birds with one stone.

Sat, 06/25/2011 - 15:39 | 1401396 PulauHantu29
PulauHantu29's picture

For every financial instrument, there is at least one sucker out there.

Sat, 06/25/2011 - 16:19 | 1401470 zaknick
zaknick's picture

This is reminiscent of banksters in gov visiting southeast Asia to flex muscles against China except the shoe is now firmly on the other foot.


It's the whole world versus the dollar and the KKK/Zionista Empire!

Squeal all you want like a little biatch, Tyler Durden; time for all AmeriKlansmen to pay the piper.

The new Rome indeed!


Sat, 06/25/2011 - 16:57 | 1401520 sun tzu
sun tzu's picture

dey beez raysis muhfuggas

Sat, 06/25/2011 - 17:33 | 1401560 gwar5
gwar5's picture

Central Question: Why should the banks be allowed to assume they're too big to fail? If banks are too big to fail then they should just be nationalized and sold off by the taxpayers when they become insolvent, not the other way around. 

It should be the stated policy of every responsible government that if a bank fails, they'll be nationalized and either run by the Treasury or sold off by the taxpayers to recoup loses. The FDIC does that all the time to other banks, and it's the big banks that are the proven risk to national security by admitting they are "too big to fail".

If these were oil or tobacco companies holding nations hostage, people wouldn't give it a second thought. Or, if governments were coining their own currency like they're supposed to, these banks would have already been toast, just like they were in the past.


Sat, 06/25/2011 - 18:23 | 1401632 PulauHantu29
PulauHantu29's picture

As long as they have control of the priting presses and can print (or be handed) Mega Million Dollar Bonuses (or Yuan) why not buy as much junk as possible.

Seems to be the new Fad.

"Why steal Less, when you can steal More."

Wall Street's Mantra

Sat, 06/25/2011 - 18:27 | 1401644 mynhair
mynhair's picture

So many have wondered why I play USDHUF.  Maybe now they know.

Canned bacon, bitchez!

Not to mention brass base 100W incandescent light bulbs rated 130V!

Sat, 06/25/2011 - 18:35 | 1401654 slewie the pi-rat
slewie the pi-rat's picture

sumbudy on another string thought gold was going to $200 and was burying canned hams.

those light bulbs can be used in either the 85mm mortar or cannon, depending on the cinfig, right?

Sat, 06/25/2011 - 18:45 | 1401659 mynhair
mynhair's picture

Recommend 4 in a cannon with 1 lb of black powder.  Min barrel length of 51 inches.

As for canned hams, only have experience with the DAK brand from Holland which has an acidic component rendering them useless after 7 yrs.


Sat, 06/25/2011 - 18:49 | 1401668 TK7936
TK7936's picture

Interessting. Im in the market for Hungarian Blonds. :)


Sat, 06/25/2011 - 19:00 | 1401684 mynhair
mynhair's picture

Go to Kiev.  They gots some green-eyed killers there.  Hungary, not so much.

Sat, 06/25/2011 - 19:45 | 1401736 Bansters-in-my-...
Bansters-in-my- feces's picture

More and more ,it seems to me the only people with any common sensE are the UNeducated people.

The ones who did NOT,go to universities,and Higher education.....


Sat, 06/25/2011 - 19:58 | 1401765 lizzy36
lizzy36's picture

Risk management is soooo 2006.

Why spend money on risk management when it is far more profitable to buy a congressman or 12 and a bunch of lobbyists.

Sat, 06/25/2011 - 20:08 | 1401787 manure
manure's picture

Did it ever occur to anybody here at ZH that America and Europe have far more claims outstanding on tangible assets within Chinese borders aka factories, R&D facilities, joint ventures, intelectual property rights etc then China has on paper crap within the western borders???. It is obvious that China is buying souvereign debt from totally bankrupt deadbeats like USA, UK and Europe fully aware of the coming default because that default by the west is exactly what they are looking for. This default by the USA and th rest will lead to the "debt for equity swap" so much desired for by China. Basically the USA and the rest will be given a stack of heavilly used toiletpaper and China will be owning outright the biggest badass industrial machine build and developed by the West, free and clear of any foreign claim. Before you gun toting Mac Rednecks start bitching about the military option, guess what??? there is none.

Not bad for a, I admit, bud ugly Chinaman. Don't you think??? 


Sat, 06/25/2011 - 22:41 | 1402046 Bindar Dundat
Bindar Dundat's picture

IN 3500 years the Chinese have never had territorial ambitions.

It is not their style.....your all freaking nuts.

and did I say paranoid too ?

Sun, 06/26/2011 - 09:33 | 1402684 i-dog
i-dog's picture


Sun, 06/26/2011 - 06:20 | 1402557 chump666
chump666's picture

china is just distracting the market, they are a c-hair away from a full blown liquidity crisis  foreign investors have been dumping Chinese stocks en masse for the last 3mths...check the shanghai b.  china's meltdown is now in full swing

Sun, 06/26/2011 - 23:42 | 1404641 TruthInSunshine
TruthInSunshine's picture

Chanos, who I'd bet my money on any day of the week and twice on Sunday, has staked the greatest case ever as to why China.bubble will rival the Dutch tulip bubble collapse, and possibly overshadow it, when the Chinese 'miracle' (built on greater levels of fiat² central bank injections) comes crashing down like a glass (or paper [tiger]?) skyscraper.

Sun, 06/26/2011 - 20:52 | 1404152 officeone
officeone's picture

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