Is China's European Rescue Just A Big "Bait And Switch"?

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Thu, 01/13/2011 - 09:04 | 872550 Popo
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Straight out of Goldman's playbook.

Thu, 01/13/2011 - 09:13 | 872563 zaphod
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The question is what happens when they hit $4T in FX reserves and fiat paper starts to go. No country has ever come close to this, even on an inflation adjusted basis. No one, not even China or GS, can know how it will finally play out. Either way they are sure to be suprised in the end.

Thu, 01/13/2011 - 09:21 | 872576 Richard Weed
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Erratum:

The Euro area is China's number 1 trading partner, not number 2.

The US was surpassed as China's biggest market (aka dumping ground) a full 3 months ago.

Let us all stop buying cheap Chinese krap.

Thu, 01/13/2011 - 09:26 | 872583 Spitzer
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The answer is yes, it was a bait and switch. Contrary to popular belief, the Euro is in better shape then the USD. Europe is a net creditor.

Thu, 01/13/2011 - 10:18 | 872764 youngman
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At least they are cutting expenses...we are just printing money.....

Thu, 01/13/2011 - 12:16 | 873137 Ahmeexnal
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"Europe is a net creditor."

 

Actually, that has absolutely no relevance.

Once again, this is not about money.

It's about power. 

Thu, 01/13/2011 - 17:08 | 874281 Old Europe Avan...
Old Europe Avant-Garde's picture

+1

Thu, 01/13/2011 - 09:06 | 872553 westboundnup
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China is known for being savy when it comes to formulating long-term national strategy.  Assuming the accuracy of the article above, what are they thinking?  I've always wondered how "in tune" the PRC is with peak oil and what its strategic response will be. 

Thu, 01/13/2011 - 09:24 | 872580 jus_lite_reading
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I was thinking along the same lines...

When I first saw China getting on the big horn about "supporting the EURO" I knew it was not out of generosity or goodwill. Their intentions are well known.

Thu, 01/13/2011 - 09:42 | 872637 AnAnonymous
AnAnonymous's picture

Really? They look more like peeps trying not to burn their fingers with hot money...

Thu, 01/13/2011 - 09:08 | 872556 doomandbloom
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can i apply for chinese citizenship?

Thu, 01/13/2011 - 09:16 | 872571 David99
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Marry a Chinese girl

Thu, 01/13/2011 - 09:27 | 872581 doomandbloom
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:) I am considering that...

 

hmm..settling down in a quiet Chinese village..eat chinese food...learn a bit of kung fu, taichi....teach a bit of english...get chinese medicine when i grow old...

Thu, 01/13/2011 - 09:46 | 872652 malikai
malikai's picture

Sorry, but marrying a Chinese girl does not grant one Chinese citizenship. It does, however put one in a position to hedge domestic risk against foreign risk. This is a smart play IMO. But in reality, one should marry who you love. Lest you want to find yourself hating your life and wife in 10 years, which would be terrible if you're also living in a foreign country where you do not speak or read the local language.

Thu, 01/13/2011 - 10:19 | 872768 youngman
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luv u long time.....

Thu, 01/13/2011 - 11:27 | 872972 Common_Cents22
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happy ending!

Thu, 01/13/2011 - 12:21 | 873155 Ahmeexnal
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If after living 10 years in a foreign country you have not learned to speak or read the local language, you should not blame anyone but yourself for your life's misery.

Thu, 01/13/2011 - 10:04 | 872711 chinaguy
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Um, you might try just visiting a "nice quiet Chinese Village" first before making any life chances....not as idyllic as one might hope.

Thu, 01/13/2011 - 11:01 | 872873 ZakuKommander
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Especially if you're going to be labelled a "foreign devil."  Which for most Westerners is a deserved appelation.

Thu, 01/13/2011 - 09:49 | 872667 Dr. Engali
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Good luck with that. There are 120 men for every 100 woman in China. Leaving 24,000,000 single horny men for one gigantic army.

Thu, 01/13/2011 - 11:18 | 872938 longjohnshorts
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Okay, so marry a Chinese guy. Or, become his concubine.

Thu, 01/13/2011 - 09:09 | 872557 Bigger Dickus
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Either way, seeing the markets magically levitate makes me want to kick myself for having closed my trading account a year ago and piled into precious metals and cash. It's the cash part that bothers me. Those motherfuckers!

Thu, 01/13/2011 - 09:32 | 872591 WestVillageIdiot
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"It's the cash part that bothers me."

 

I think there are millions and millions of Americans that would envy your hardship.  Be glad you have a cushion and enjoy your life.  A lot of people are sitting on a razor's edge. 

Thu, 01/13/2011 - 13:28 | 873365 Missiondweller
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Yep, especially the 15 million unemployed, many of which, are also underwater on their homes.

Thu, 01/13/2011 - 09:47 | 872655 AnAnonymous
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Depends on what reason you left the markets.  If you left them to chase for what is declining faster than cash, then good hunting in sight.

If you got out just to get out, that is another story.

Thu, 01/13/2011 - 09:11 | 872560 Bigger Dickus
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Something in the grand scheme of things is fucked. The correlation between eur/usd and the European markets that has been active for the last two years has broken up in the last two weeks. Could this mean Brian Sack is losing control?

Thu, 01/13/2011 - 09:22 | 872562 Chappaquiddick
Chappaquiddick's picture

Here's a fancy question:

 

What is the dollar value of all of the currency (all currencies not just dollars) currently in circulation on the Earth?

 

Thanks

 

 

OH - BTW: http://online.wsj.com/article/SB10001424052748703889204576078421845404258.html?mod=googlenews_wsj

Thu, 01/13/2011 - 09:28 | 872586 bobert
bobert's picture

Interesting queston. Sorry I don't have a quick answer for you.

Check the Federal Resere site for total US currency in circulation and then divide that by the US to global GDP ratio to get a rough idea.

Maybe your question leads to another question about the prospect of global inflation. This is the issue of the year really. Are we going to inflate, deflate, or both?

And I have a question for you. Is it possible for silver as priced in US dollars to decline over the period of a month while silver as priced in Australian dollars goes up during the same period of time?

Best regards.

Thu, 01/13/2011 - 11:52 | 873034 Chappaquiddick
Chappaquiddick's picture

Trick question??

Ans YES - as the dynamic depends on the pair rate of the usd:aud

 

Back to the first question - perhaps the best estimate might be global GDP.

 

Thanks. - No problem, you're welcome! - Well thanks to you too - Cheers!

Thu, 01/13/2011 - 09:13 | 872564 David99
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China is a very clever country and will take advantage of the bad situation in Europe /USA

China is a winner

Thu, 01/13/2011 - 09:38 | 872614 WestVillageIdiot
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"China is a very clever country......China is a winner"

Yes, I always admired the cleverness of their Cultural Revolution.  Those little red books were ingenius.  Slaughtering each other and dying of famine was also brilliant.  I especially loved the tales of regular citizens trying to make steel in their backyards.

The Chinese ascendancy has taken place during the biggest credit bubble in the history of the world.  The collapse is nowhere near complete.  Let's see what strange ideas they fall prey to as we go back into a 2008 type spiral.  Despotism and China go hand in glove.  Time will tell how much they have really won.

Thu, 01/13/2011 - 09:57 | 872687 tmosley
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I love how you can't tell the difference between the decline from communism of the Cultural Revolution, and the boom caused by industrialization.

Fact is, they will prosper according to the level of their capital accumulation, and according to the restraint their government puts on spending.  Their government currently spends 20% of their GDP, whereas ours spends 40+%.  Clearly, they are in a much better position than we are.  Of course, the US became a superpower by spending less than 2% of GDP on government, save in times of war, when that spiked up to between 5 (foreign wars) and 10% (civil war).

Thu, 01/13/2011 - 10:16 | 872759 fajensen
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I think that the Chinese generally are morons!

I have the misfortune of working on minor project deliveries to Chinese contractors.

*Everything* is done brute-force with hundreds of people sitting on-site for weeks in shit-hole countries, like f.ex. Sudan, waiting for the higher-ups to order people about or for the local Sales Team, a.k.a. The Gods, to derail the entire project schedule because they happen to need input for a presentation ToMorrow. As soon as orders are given everybody jumps and start shouting at each other; then everyone contacts everyone they know to say "make work faster" - at the same time no-one, event hough they are perfectly capable, dares to do even the simplest tasks, like fitting a missing power cable. Better to wait 20 hours for orders and then scream for 3 hours in meetings (and on every communication channel available) because the schedule has now slipped the 20 hours and some of us gweiloo have planes to catch and visa's that expire.

The visa's reminds me that *everything* has to be done in the shoddiest way possible; They like people to use tourist visas "because cheaper" which is really neat except that if you have an accident, the insurance will not cover it due to Fraud and if you get nicked in customs with a suitcase full of equipment with a tourist visa ... In many countries that makes you a spy and you are lucky if you get out with just a casual beating!

China will cook off nicely once their asset bobble - the largest in the world - blows up. I can just imagine the reaction of all these totally driven, me-me-me-oriented people, who's parents sold their organs to put them through school so they could become Someone, when their "bone" is snatched away in front of them.

They might even be pissed enough to pop a nuke on someone, seriously!

Thu, 01/13/2011 - 09:16 | 872569 LongSoupLine
LongSoupLine's picture

I'll say it again, "Sun Tzu".  This is the culture the global system is up against regarding China.

"The opportunity to secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself." - Sun Tzu

Thu, 01/13/2011 - 09:26 | 872582 jus_lite_reading
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The EU/US/UK took China for a fool by betting on "mutually assured destruction." Big mistake. China knows they will win; the west will lose.

Thu, 01/13/2011 - 09:33 | 872597 bobert
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DIm outlook for the US......

Thu, 01/13/2011 - 09:51 | 872672 AnAnonymous
AnAnonymous's picture

"The opportunity to secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself." - Sun Tzu

 

You read too much in the situation. Few people know what securizing oneself means in the present context.

As neither the US or the EU will collapse, China is not able to look for that.

Looks like they are caught in the present game, forced to consume with no other reason than consuming (game imposed on the world by the US)

Their money has to circulate somewhere somehow. No other reason than that at present times.

Thu, 01/13/2011 - 10:35 | 872807 LongSoupLine
LongSoupLine's picture

"read too much into it"?

That's as 101 a strategy as you get in warfare.  You are too embedded and entwined in the lie to see this perhaps.

Thu, 01/13/2011 - 09:17 | 872572 Dr. Gonzo
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I wouldn't know the answer to your rhetorical question author. I'm stupid. I just buy gold and silver coins. Unrelated to this story but still interesting... a mining expert on CNBC this morning said it now costs $1000 to pull gold out of the ground. Wow. It seems like it was just yesterday that it only cost $300 or $400 to do it. Wonder how much it will cost next year to pull out of the ground. sidebar. I bought an oz of gold for $1000 about a year ago thinking I was being taken advantage of. Guess i was wrong about that. 

Thu, 01/13/2011 - 09:40 | 872625 ZEITGEIST
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mining expert from where..the Mining School of CIA Disinformation...all the 4Q results will be out for the miners...bet it will be around 550 ....

Thu, 01/13/2011 - 09:40 | 872626 WestVillageIdiot
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$700 of that is to bribe local governments.  Bribery inflation is a bitch.

Thu, 01/13/2011 - 10:28 | 872786 Arius
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you have to thank Goldman, JPM and the rest of the crew for keeping the price low; blame the chinese for the price going up.

strange isnt it - you would think the opposite is true. 

Thu, 01/13/2011 - 10:51 | 872846 Dr. Engali
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Gold doesn't go up. Fiat comes down.

Thu, 01/13/2011 - 09:17 | 872573 KTS
KTS's picture

Clever girl...

Thu, 01/13/2011 - 09:21 | 872577 Bigger Dickus
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Euro way up and stocks down? Gentlemen, the big bad dump has arrived. Expect HFT computers to overheat and explode and the three POMO hipsters to stab themselves seven times in the back, shoot themselves several times in the head and jump out the window.

Thu, 01/13/2011 - 09:28 | 872584 jtmo3
jtmo3's picture

I assume you're being sarcastic?

Thu, 01/13/2011 - 09:31 | 872589 Bigger Dickus
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The part about the POMO hipsters? Yes

The part about the market tanking? No. I genuinely believe the market will sell off over the next few days. I traded since I was 16 and closed my account last year to get into metals and cash. This market is a lie and anyone long this crock of shit deserves to lose their ass.

Thu, 01/13/2011 - 09:35 | 872606 bobert
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And...how do you really feel?

Thu, 01/13/2011 - 09:43 | 872640 Bigger Dickus
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Like nailing Margaret Brennan.

Thu, 01/13/2011 - 10:24 | 872777 bobert
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Understand that.

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