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Chinese USD Diversification Continues: First Euro Bonds, Now JGBs

Tyler Durden's picture




 

Even as the peanut gallery debates whether or not the dollar is the reserve currency of choice for the world, China continues to diversify away from the USD. After last week's news that Beijing had not had enough of Portuguese bonds, in a repeat of the same scenario from January 2011, and was preparing to bid up Eurozone bonds across the curve (aka double down) we now learn that China, or rather third-party London-domiciled banks doing its bidding, is now the actor behind "massive Japanese bond buying" seen over the past month. Per Reuters: "Foreign investors have flocked to Japanese government bonds in the past five weeks, finance ministry data shows and market sources say China was among the main buyers, although a large part of buying was made through banks in London." That said, even Reuters appears unable to get its story straight: "Foreigners bought a net 4.696 trillion yen ($57.7 billion) of Japanese bonds in the five weeks to May 20, a record amount of purchases for any five consecutive weeks since data began to be compiled in its current form in 2005. One source said China appears to be buying the four to five-year sector after having sold a large amount of short-term bills earlier in the month. But other sources said foreign investors, including China, were buying long-dated bonds with less than one year left to maturity, effectively the same as buying short-term bills." Wherever in the curve China is focusing, the fact that it continues to actively buy JGBs after 5 consecutive months of declines in its UST purchases (coupled with the news broken by Zero Hedge that Fed custodial accounts of foreign UST holdings suffered the largest one week drop in almost 4 years) is sending a very clear political message to the US. One that certainly got some airplay when the Treasury once again declined to brand China an FX manipulator, despite rhetoric out of very brave Geithner at the first possible opportunity this week, that China is precisely that.

More from Reuters:

One likely trigger for the shift to the short-term yen market is the fall in yields for dollar government bills since April.

The foreign binge on Japanese government bonds started in the week of April 18-22, shortly after a squeeze in U.S. bills pushed U.S. bill yields lower.

A new deposit insurance rule sparked a torrent of buying in government bills, pushing the U.S. three-month T-bill yield as low as 0.01 percent in early May and below Japanese government bill yields.

The yield spread between the two countries widened to around 0.09 percentage point in early May although it has since come back to around 0.05 percent.

Then came a sharp fall in the euro, which may have also prompted investors to move funds to the yen.

"As the euro started to suffer from debt problems again, some reserve managers could have shifted some of their euro-denominated to assets to the yen," said Makoto Noji, senior strategist at SMBC Nikko Securities.

This was similar to last year when China's foray in the short-term yen market coincided with worries about Greece's ability to pay back debt.

But China quickly moved out of that position, selling a large amount of yen bills in August to take profits after the yen rose. Market players said at that the time China was unlikely to keep a large amount of funds in the yen because yields were low.

Slowly China is realizing the joy of an interlinked fiat world: at best it can rotate out of one insolvent regime into another. The bottom line is that all regimes are insolvent. So the only question is whether or rather when, just like back in April 2009 China dropped the bomb that over the past 6 years it had accumulated secretly 454 tons of gold, will China announce that while it has been rotating in and out of paper, the ultimate source of its $3 trillion in USD reserves will be non-dilutable commodities which handily double up as currencies.

 

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Sun, 05/29/2011 - 21:29 | 1321575 AUD
AUD's picture

China was among the main buyers is only hearsay, I'd say the speculators are buying since they still see Masaaki 'easy' Shirakawa as the chump who will give them their 'profits' risk free.

Sun, 05/29/2011 - 22:50 | 1321709 IdioTsincracY
IdioTsincracY's picture

Exactly right!! The leeches will have their feed anywhere there is a Quantitative weakness.

China, on the other hand, will be compelled to prop up the indebted economies in order not to loose customers, just like a pusher keeping his customers going with the next dose ....

Sun, 05/29/2011 - 22:58 | 1321719 Renfield
Renfield's picture

China, on the other hand, will be compelled to prop up the indebted economies in order not to lose customers...

A plan that worked so well when they were doing this with the US.

Now they have a reeking pile of worthless US debt, and their next step is to pile up another steaming pile of Euro debt...

Logical. Aren't Asians meant to be *good* with numbers?

Sun, 05/29/2011 - 23:06 | 1321734 disabledvet
disabledvet's picture

you forgot "the JGB's."  depending on how the US plays its cards "it could simply default" and "offer Japan the best nuclear experts on the planet."

Sun, 05/29/2011 - 23:31 | 1321772 IdioTsincracY
IdioTsincracY's picture

I do not think that they are worried about everybody defaulting .... their main goal is raising their standard of living ....

In the end all the doom and gloom will not happen.

Most likely, there will be a global rebalancing ... with a decrease of the standard of living in the western nations, and an increase in the BRICS ones ....

The most 'difficult' part of this will be for the USA to accept the fact that it will lose its first place in many fields ....

as for the rest, we will see if the middle class has the strngth  to demand a reduction in the income disparity between the top 10% ad the rest of the people, to make up for decresing wages, decreasing standard of living, decreasing everything basically, but with increasing costs ....

 

Sun, 05/29/2011 - 23:40 | 1321786 traderjoe
traderjoe's picture

Yes, and all of that will happen peacefully... /s

Mon, 05/30/2011 - 12:01 | 1322570 DosZap
DosZap's picture

Most likely, there will be a global rebalancing ... with a decrease of the standard of living in the western nations, and an increase in the BRICS ones ....

 

Yes sir, and the U.S. is pre-empting the mass exodus already.

Most have noticed a foreskin,and a first born is required now for a new PASSORT.

Sun, 05/29/2011 - 23:51 | 1321804 kito
kito's picture

another one that can't see past his nose. creditors become masters. for china, money lost in the short term is power gained in the long term. just look at greece, the imf will now dictate their domestic policies and own all of their prized possessions. cant wait till maui becomes mao-i

Mon, 05/30/2011 - 00:21 | 1321833 Renfield
Renfield's picture

"creditors become masters. for china, money lost in the short term is power gained in the long term"

Oh, is that right?

"If you owe the [Chinese] $100 that's your problem. If you owe the [Chinese] $100 million, that's [China's] problem."

(With apologies to J. Paul Getty)

I appreciate your admission about the length of your nose ;-) but I'm sure you're a handsome bloke regardless.

Mon, 05/30/2011 - 00:32 | 1321855 Stormdancer
Stormdancer's picture

Does it really matter if, once the reset comes, you own a manufacturing powerhouse capable of producing real goods the world wants and needs?

American manufacturing has been decimated by this dumb like a fox mercantilist gambit and it will take a long hard slog to replace it.  Without it, we have little to trade with the rest of the world once dollar hegemony is broken.

China on the other hand will have a solid foundation from which to launch into the next phase of global trade.  All built with a "dead end" mercantilist strategy.  Dumb like a fox...if they can keep their own imbalance from imploding just a short while longer than the west. 

Even if they implode first, they still have the factories, machine tools, plant and equipment to rebuild with while we're starting from almost from scratch.

 

They're playing a dangerous game, but then the stakes are quite high.  Some risk is warranted by the potential rewards.  It's interesting that their political and economic interests  are aligned for the moment in the monetary realm.  Purchasing bonds issued by their primary competition for global export business (Germany (EURO), Japan, and Korea) strengthens those currencies, making their exports costlier when compared to Chinese exports whose values are pegged to the dollar.

3 dimensional chess...and they're pretty good at it.

Mon, 05/30/2011 - 01:04 | 1321880 Renfield
Renfield's picture

Actually I agree that they are in a better position than the 'western' world, due primarily to as you say, their productive manufacturing foundation.

Shifting piles of debt-paper from here to there becomes little more than a game of musical chairs in this competitive devaluation game.

But productivity is always the foundation of a REAL economy, and the country that makes real 'stuff' that people want and use - as opposed to 'services' and FIRE 'industries' - can survive even a global fiat paper implosion. The Chinese also have this reputation for exchanging that debt-paper for real 'stuff' like commodities all over the world, which of course is also good for a real economy, based on productivity. Then they 'win' by making real products that people want and use. It's just a matter of finding the right price (even if that price looks a little 'deflated' after the fiat games are over).

'Stuff' wins over 'services'. If this is what you're saying, then I agree with you.

Mon, 05/30/2011 - 01:49 | 1321924 Stormdancer
Stormdancer's picture

...'Stuff' wins over 'services'.

Yes, that was the gist of my argument.  The Chinese are mathematicallly astute enough to have figured out long ago that a fiat currency based on debt is dependent on continuously increasing debt creation for survival.  Implosion is inevitable.

They've been preparing for the inevitable for twenty years at least.  They've done their best to use the dollar system while it lasted.  They've used it to position themselves to dominate the system that replaces the dollar.

It remains to be seen how successful they'll end up being.  They've paid a very heavy toll environmentally.  But, it does seem that the Chinese have an increasing number of tools, strategies and directions to choose from while the west in general and the US in particular have fewer choices.  They strategize while we can do little more than react to the crisis du jour.

Mon, 05/30/2011 - 01:51 | 1321925 Sock Puppet
Sock Puppet's picture

 Renfield

+1

your analysis makes me quiver.

Mon, 05/30/2011 - 07:40 | 1322124 Crab Cake
Crab Cake's picture

China will be demonized, and their production base destroyed. They, the Chinese, will have to wrest control from the same evil bastards we live under. Make no mistake, the US conglomerate empire is on a direct collision course with China. When the shit gets deep they will be the external go to threat, you watch. The oligarchic globalist corporate structure, paired with the US/NATO complex, does three things exceedingly well.... propaganda, espionage, and bombing shit. China will be easy to destabilize, but impossible to truly defeat. My hypothesis is ww3 and nuclear exchange, if trends stay online, and revolution doesn't take hold first. This will be an interesting decade.

Mon, 05/30/2011 - 10:59 | 1322397 disabledvet
disabledvet's picture

"the only path for a policy that devours itself."

Mon, 05/30/2011 - 12:11 | 1322595 DosZap
DosZap's picture

Even if they implode first, they still have the factories, machine tools, plant and equipment to rebuild with while we're starting from almost from scratch.

 

I still am amazed that people assume, that TPTB,have/want us to Re-Start from scratch.

They  are/have torn us asunder on purpose, and there is no way we're getting up.

They (the NWO) crew will never allow it.

Mon, 05/30/2011 - 13:03 | 1322727 Stormdancer
Stormdancer's picture

Point taken.  I don't believe they'll get everything they want.  There's no assumption on my part that they want anything but total control of a much reduced population.  I just think they'll fall somewhere short of that goal :). 

Mon, 05/30/2011 - 01:37 | 1321916 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+1,

Loans are assets...for some god forsaken reason.

Mon, 05/30/2011 - 10:34 | 1322345 blindfaith
blindfaith's picture

China has always wanted to OWN Japan.  Gee, anyone really think the Chinese are doing to simply to make a few bucks or play nice guys.  The Chinese are far and again smarter that westerners dare to admit or realize.  You don't BUY debt with the idea that it is going to loose value or be diluted....not here in this case.  A default, or such massive un-payable debt will force sovereigns to sell off public assets to them.  Don't forget there is more spit on the streets of Beijing than there are guns in Japan, Portugal, Italy, Greece, and the rest of the 'to much in debt to bail' nations, including us...the USA.

Sun, 05/29/2011 - 21:30 | 1321577 Ahmeexnal
Ahmeexnal's picture

It only costs 5 yuan to dig an ounce outta the ground!

Sun, 05/29/2011 - 22:53 | 1321716 JW n FL
JW n FL's picture

you can NOT eat 5 Yaun!

Sun, 05/29/2011 - 23:00 | 1321727 Orly
Orly's picture

I did that once...but I was hungry ten minutes later.

:D

Sun, 05/29/2011 - 21:27 | 1321578 High Plains Drifter
High Plains Drifter's picture

http://www.dailymail.co.uk/news/article-1391868/This-city-built-million-...

12 square miles of brand new empty buildings. another masterpiece brought to you by the chinese.........

Sun, 05/29/2011 - 21:35 | 1321586 HamyWanger
HamyWanger's picture

Yes, because it never happened, and couldn't happen in the US. Ah, these rednecks... 

Sun, 05/29/2011 - 23:53 | 1321812 meizu
meizu's picture

All brand new buildings are empty, hundreds of millions chinese are still living in old crumbling buildings, these new buildings will be needed when old ones are torn down

Mon, 05/30/2011 - 00:10 | 1321821 High Plains Drifter
High Plains Drifter's picture

well i guess they want to create a chinese middle class in order to be able to afford this type of housing etc. but how can they do this?  i mean why did all of these manufacturers move their factories there for in the first place?  cheap wages and no benefits , right?  chinese middle class?  oh please.....it will continue to be like it always has been, the rich and the poor , just like it will be here very soon.

Mon, 05/30/2011 - 01:52 | 1321930 Sock Puppet
Sock Puppet's picture

Look deeper my friend.  The Chinese are planning for future war or calamity, earthquakes, etc.  Their goals are two fold, create jobs and prevent social unrest.  Look at Japan no housing for displaced Fukishma residents.  China will not have that problem.

Mon, 05/30/2011 - 08:45 | 1322183 High Plains Drifter
High Plains Drifter's picture

i don't think there is any benevolent ideas in the chinese government about its peoples. to them, as it is here, they are merely cattle to be used. now sure, they have more cattle than we do and with their abortion programs in place, they have had some success in stopping or at least attempting to halt their run away population explosion. but the chinese oligarchs in my opinion, the same ones who own this property(probably)since in any communist system there are those who are in control and there are those who are poor, that these men build this stuff because they have to build in order to increase their profits. there seems to be no big plan afoot about all of this. heck , it has been shown on this blog, how the chinese are now tearing down perfectly good buildings and highways so they can build other stuff. it makes no sense. but to them it does.it is like you have said, however, that their peasants need work, or unlike us, they will riot and matter of fact , have rioted many times.  i think they are building to build.  to the chinese , this is like war is to us. if they stop building the entire facade known as the chinese economy would collapse, since this building expansion is a big part of it, and for the united states, we must fight to survive, or at least this out of control government does, because the day war stops and peace comes, the so-called peace dividend, shall we say, is the day this thing called fiat, will die. but war to us, is, at this point, merely a extension of the time of our economic death for any fiat regime that has ever existed only lasted not more than 100 years. that would put its final death in the year 2013 since it started in 1913. ah yes, that good old number 13 again........

Mon, 05/30/2011 - 14:13 | 1322857 meizu
meizu's picture

In china old home prices are inflating along with new home prices, more and more chinese living in old homes are selling their old crumbling homes and buy up new homes.

Mon, 05/30/2011 - 12:17 | 1322613 DosZap
DosZap's picture

I hope they were intelligent enough to use some other countries sheetrock.

Mon, 05/30/2011 - 01:38 | 1321917 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

When the Japanese realize they are living in a high radiation zone, they will move there.

Mon, 05/30/2011 - 08:47 | 1322186 High Plains Drifter
High Plains Drifter's picture

japanese mongolians?  genghis would turn over in his grave......when i saw this article , i thought the same thing however..........it may have to happen..... 100 million japanese leaving their island for a new home.......

Mon, 05/30/2011 - 11:02 | 1322404 disabledvet
disabledvet's picture

my guess is "the number is around 30" (million).  there is only one nation on earth capable of accepting that level of humanity.

Mon, 05/30/2011 - 12:19 | 1322619 DosZap
DosZap's picture

The US could easily..........

Mon, 05/30/2011 - 14:12 | 1322848 BattlegroundEur...
BattlegroundEurope2011's picture

Austrailia ;)

Mon, 05/30/2011 - 06:27 | 1322089 schizo321437
schizo321437's picture

A city with no people?

Sounds like Utopia.

Sun, 05/29/2011 - 21:35 | 1321585 BillyBoy22
BillyBoy22's picture

Can someone explain to me what China's endgoal is?  If the euro in general and portugal in particular are about to tank, then what use is it to buy loads of g-bonds from the ecb and portugese banks?

 

Sorry for noob question.

Sun, 05/29/2011 - 21:34 | 1321591 HamyWanger
HamyWanger's picture

Profiting from high yields, maintaining their exports and being able to kill the entire West in one shot when they decide to. 

Sun, 05/29/2011 - 21:37 | 1321601 BillyBoy22
BillyBoy22's picture

"Kill the entire west" as in a massive bond sale/dump right?

Sun, 05/29/2011 - 21:39 | 1321603 RockyRacoon
RockyRacoon's picture

You do make occasional sense, like now.

Better watch out, folks may start to take you seriously.

Sun, 05/29/2011 - 22:25 | 1321673 cowdiddly
cowdiddly's picture

Thats what I thought, First post he ever wrote worth reading. There is hope.

Sun, 05/29/2011 - 22:29 | 1321686 seek
seek's picture

There's always been hope, he's breaking out character right now. The crazy posts from him are all parody. He's one of us, with a twisted, satirical sense of humor that not everyone gets.

Sun, 05/29/2011 - 22:42 | 1321704 Derpin USA
Derpin USA's picture

I have noticed this too. It's an amazing troll.

Mon, 05/30/2011 - 01:54 | 1321935 Sock Puppet
Sock Puppet's picture

All I can say is Hammy inspired my creation.

Sun, 05/29/2011 - 21:59 | 1321639 Manthong
Manthong's picture

Don't forget control as many hard/strategic commodities as possible.

Mon, 05/30/2011 - 12:20 | 1322627 DosZap
DosZap's picture

Oh, they do, and are.

They are buying, have bought farmland globally, and mines, you name it.

All the raw materials needed to RULE the world.

With USD Bingo bucks.

Now, who's the FOOL?.

Sun, 05/29/2011 - 22:52 | 1321712 CompassionateFascist
CompassionateFascist's picture

5+ unjunks for the Wanger. Well said.

Mon, 05/30/2011 - 00:30 | 1321853 High Plains Drifter
High Plains Drifter's picture

the same masonic goy network runs china just like it runs almost all, if not all countries in this world now. since that is the truth, then china does not make any unilateral moves unless its heirarchy puppets are given the go ahead to do such. anyone that thinks china is on some quest to feed their nationalistic hopes is dreaming. there is no such thing as nationalism when you have a internationalist infiltration of all goy governments via the masonic networks.

http://www.whale.to/b/12_masonic_signs.html

http://www.freemasons-freemasonry.com/chinese-masonic-society.html

all of these masonic networks in all of the countries of the world, feed back to one place and one source. all leaders in government who are masons cannot be trusted and are most probably traitors. when you see their lips move and as they speak and you watch them move their arms and legs, just remmeber they are puppets on the strings, being manipulated by the hidden hand on the stage of life......this has gone on now for 3000 years. they are pushing hard now for one world government. they are close now. such is life in the 21st century.

Mon, 05/30/2011 - 03:07 | 1321981 old naughty
old naughty's picture

In-deed, they do, HPD. And you are wise.

China, after all is on the 33 parallel.

Planning and executing according to the agenda. Veep will visit China soon, to be followed by 5G-designate to reciprocate.

In the meantime, keep the merry-go-around turning.

Sun, 05/29/2011 - 22:02 | 1321640 YHC-FTSE
YHC-FTSE's picture

Not a bad question at all. It's merely the extension of the economic cooperation the countries in the EU and China have been developing for decades. I remember going to China in the 90's and seeing VW cars rolling around all over the place. A favour for their favourite customer. 

 

If you think that China's end-goal is global economic domination, the imposition of their culture, the enslavement of the human race through ideology, and debt, then I'm going to guess that you're American, and you're projecting your own deeds and desires on to China. I reckon the end-game of the Chinese is the same as everyone else: Survive, live well, and get out of poverty while everyone else seem to do the opposite. Clever chaps those Chinese. They were sea-faring merchants when most of Europe lived in caves, and they are still merchants at heart. 

Sun, 05/29/2011 - 22:47 | 1321707 Ted K
Ted K's picture

Go back to your QQ program and see if you can find a venereal disease filled cunt to bring home to Mommy would you??? Then you can break out the phemaldehyde flavored beer, some greasy noodles, and decided which brand poisoned baby's milk to buy your child from your favorite Beijing Bureaucrat.  Let us now if your Mom was willing to pay extra for your new wife's hymen restoration surgery.  Be careful, if you don't pay the Chinese doctor his bonus "bribe me so I don't 'accidentally' fuck this surgery up" it could be messy on the surgery room floor.

Sun, 05/29/2011 - 22:52 | 1321718 Harlequin001
Harlequin001's picture

A gibberish response to a sensible answer, unfortunately...

Mon, 05/30/2011 - 06:36 | 1322096 schizo321437
schizo321437's picture

Trade war propaganda.

Mon, 05/30/2011 - 11:03 | 1322419 disabledvet
disabledvet's picture

i like it.  "smack talk prior to the smack down."  professional wrestling might be fake in "the mainstream" view--you are free to "jump in the ring" anytime of course.

Sun, 05/29/2011 - 23:12 | 1321733 Harlequin001
Harlequin001's picture

The Chinese are doing exactly what you would expect them to do, they have turned a fake economic system forced upon them by the West against the very perpetrators of lies and deceit.

By following a policy of currency manipulation, (yes the same one followed by every other country on the planet) and maintaining a strong dollar policy whether the US liked it or not they forced America and the West to rely on appreciating assets for growth and expanding liquidity.

Now that those stagnant wages are now all spent up on credit and the dollar finally has to devalue so the West can borrrow and spend more, the Chinese can print as much new yuan as they like and buy other countries assets by way of forcing the maintainance of exchange rate parity. The problem is that they can create as much or as little new Yuan as they wish to buy any country's bonds, just sufficient to keep market based interest rates just high enough to keep the West indebted for life if necessary.

The more Bernanke prints to weaken the dollar the more money China can create to buy Western assets and the more the West has to weaken its currency to export. The Chinese can and will continue this path indefinitely, but the West can't.

It's the way the system works. China is doing this because it can, and because it benefits for as long as it can get away with it, which is until such time as the West reintroduces a gold standard which is the only means by which we can stop it.

Mon, 05/30/2011 - 00:47 | 1321866 YHC-FTSE
YHC-FTSE's picture

That's an astute assessment. Asset (Non-debt) backed currency is probably the only way to stop the potential cycle, as well as ultimately not issuing any debts for them to buy! 

 

In my opinion, there are two other strong pressures that keep the dollar in demand, and therefore artificially strong that has nothing to do with China or anyone else buying bonds. The pricing of the world's commodities and the SDR.

 

As literally all of the world's commodities are priced in USD, the demand for it is as strong as the demand in commodities. A quick glance at the LCH.clearnet sheets will confirm that assertion. 187 countries are members of the IMF, each required by the rules to have SDRs in reserve as well as to make contributions in the SDR.

The make up of the SDR is 41.9% USD (Was 44%), 37.4% EUR, 9.4% JPY and 11.3% GBP. Those 187 countries buying up the SDR and making contributions year-in year-out creates the demand in these 4 currencies which make them artificially stronger against others, including the CNY. 

Mon, 05/30/2011 - 03:58 | 1322003 Harlequin001
Harlequin001's picture

Its just more ammo for the Chinese, who are quite happy to buy everything up they can with magic money whilst we chase our tails trying to stop politicians from destroying our countries for the sake of 'looking good', if you can say that anything looks good these days...

Mon, 05/30/2011 - 04:04 | 1322005 Harlequin001
Harlequin001's picture

With regard to commodities the dollar is just a yard stick.

If I wanted to buy Aussie coal from Australia I would pay for it in Australian dollars, only the derivative contract is priced in USD. 

It is the derivative contract which is used to manipulate prices lower, which is in turn the only way you can print money for as long as the West has without causing rising prices and inflation. End derivatives and the whole charade ends because real commodity prices will become instantly apparent, and they are a lot higher than they appear today.

It's the reason we buy gold...

Mon, 05/30/2011 - 10:50 | 1322377 YHC-FTSE
YHC-FTSE's picture

Thanks and I agree about the derivatives contracts - I've loathed these shadow financials ever since I learned about them. As for the "dollar is just a yard stick" in commodities contracts, I might argue about it some other time, but I think it's a common misconception. I mentioned LCH.clearnet for a reason - it is Europe's largest clearing house and final settlements are denominated in the USD for a vast majority of the overseas and even local contracts.

Mon, 05/30/2011 - 03:05 | 1321983 Urban Redneck
Urban Redneck's picture

As Bernanke destroys the value the dollar he also in effect diminishesthe future value & profitability of firms who have engaged in forward dollar denominated supply contracts with the Chinese, making those companies less expensive takeover targets in the future.

Mon, 05/30/2011 - 03:56 | 1322002 Harlequin001
Harlequin001's picture

It's not just your companies you should be worried about Redneck it is your very existence, because sovereign funds funded by governments which simply create money from thin air are going to be buying up your defaulted real estate and just about everything else.

There is no way you can compete with that. If you want to survive you need a gold standard to put a very firm end to this irresponsible money printing, the likes of which we have seen nothing yet...

Mon, 05/30/2011 - 09:12 | 1322224 Urban Redneck
Urban Redneck's picture

I don't worry about my existence.  I have no debt, and in the spring of 2007 I cut myself down to 50% time to focus on engineering and implementing some upgrades to my personal property so they can function in a self-sustaining manner indefinitely. 

The problem is on the business side, as business requires paying customers in order to keep employees.  I'm innovative (to the point of eccentricity), diversified, flexible, and well positioned, but in the event of other global credit freeze, if customers can't get credit then it' only matter of months before the choices are to start lopping heads off payroll or cut pay across the board (there is no way in hell I am getting into the business of actually providing credit as opposed to helping customers get it from somewhere else - I might as well just go back to banking or get a banking license and open my own bank).

Sun, 05/29/2011 - 23:43 | 1321788 thefedisscam
thefedisscam's picture

Very well said. Americans like to project their own deeds and desire on to others, especially on to Chinese. They cannot be more wrong!

Mon, 05/30/2011 - 00:49 | 1321867 YHC-FTSE
YHC-FTSE's picture

Thanks :)

Sun, 05/29/2011 - 23:49 | 1321802 i-dog
i-dog's picture

+1

Mon, 05/30/2011 - 03:11 | 1321985 old naughty
old naughty's picture

@1321640
Just one point to add, And they play the obedient slaves rather well.

Sun, 05/29/2011 - 22:31 | 1321689 duo
duo's picture

To destroy Japan as the high value-add and high technology manufacturer in East Asia.  Chinese bond purchase drive up the yen until their factories shut down, then they bail.

Mon, 05/30/2011 - 02:06 | 1321946 donpaulo
donpaulo's picture

The earthquake/tsunami has already accomplished this.

 

However if you took a closer look at Zaibatsu ROI programs you would know that the Japanese already exported their base production to China over the previous decade or two.

 

 

Mon, 05/30/2011 - 01:42 | 1321919 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Europe has access to mid east and Russian oil.

Sun, 05/29/2011 - 21:37 | 1321593 BlackholeDivestment
BlackholeDivestment's picture

...what was that movie, oh yeah, China Syndrome.

http://www.youtube.com/watch?v=_iPGXyXLjts

Sun, 05/29/2011 - 21:45 | 1321605 mynhair
mynhair's picture

Wake me when the World ends.  This is boring without the Amazing Race.

Sun, 05/29/2011 - 22:08 | 1321648 Jasper16
Jasper16's picture

Looks like the Chinese have replaced Japan as the new Axis power in the East. The Axis and the Samurai is now the Axis and the tiger. They now squeeze Russia and take Siberia or face the USA on a single front.

Sun, 05/29/2011 - 22:13 | 1321655 mynhair
mynhair's picture

USDHUF is up less than EURUSD is down, might as well jump in.

1 contract again.  -yawn -

Stop @ 186.7

Sun, 05/29/2011 - 23:53 | 1321811 Muir
Muir's picture

"Wake me when the World ends.  This is boring without the Amazing Race."

I like your World view.

Sun, 05/29/2011 - 22:25 | 1321680 gwar5
gwar5's picture

Even rotating in and out of insolvent currencies to piss off Timnanke still seems like a puzzler to me.

China already had the winning strategy of buying hard assets. This is totally in GeitBen's face. I realize China has a mutual need to prop up their export markets --- but that could be more public, helping a neighbor in time of need. Unless Japan is squeamish about making TimBer look impotent and weak and stupid by smooching it up with China. 

And never hurts for China to make friends and strategic allies for the upcoming BladeRunner future. They'll be able to park those sporty new aircraft carriers in Tokyo Bay for a little R&R in-between protecting their tanker and container cargo ships from pirate attacks off the coasts of Somalia and California.

Sun, 05/29/2011 - 22:37 | 1321694 YHC-FTSE
YHC-FTSE's picture

+1

"pirate attacks off the coasts of Somalia and California."

LOL. Wonderful acerbic wit. 

Sun, 05/29/2011 - 23:00 | 1321728 CompassionateFascist
CompassionateFascist's picture

Man, the prophets are out tonight. Chinese hate Japs and are out to CONTROL them and everyone else except US; US they fear and hence will attempt to destroy. Here's hoping they suceed.....then: Civil War II begins July-August 2012.

Sun, 05/29/2011 - 22:30 | 1321687 disabledvet
disabledvet's picture

"handily double up as currecies" eh?  really? "then why pop the greatest real estate bubble in human history?"  seems really crazy now that all us at Zero Hedge and no other financial media outlet in world know that "nuclear power is a ticket to national economic annihilation."  hmmm--"i wonder why the media..." forget that thought--it'll take care of itself. in the meantime "panic buying of corn"? seems odd.

Sun, 05/29/2011 - 22:34 | 1321693 Dave
Dave's picture

I wonder how much non-dilutable commodoties the principals of Golden Sack and The Morgue have stashed away where it can't be seen. Not that it matters but the Chinese bankersand financial experts aren't the only savvy players. Rothschild, Soros, say one thing do the opposite. Screw the hell out of the monarch and end up with it all. Never lose sight of  "The Golden Rule". The one with the gold rules. Always has, always will.

Sun, 05/29/2011 - 23:18 | 1321738 cowdiddly
cowdiddly's picture

JPMs silver gig is just a front. What they are really doing is buying up all the Platinum bars on the planet (The really rare shit)to fill their new vault. Buying 50 ounce bars under the radar as fast as they can.

http://seekingalpha.com/article/263252-why-is-jpmorgan-so-eagerly-acquiring-bars-of-physical-platinum

Sun, 05/29/2011 - 23:17 | 1321754 JW n FL
JW n FL's picture

Yes! China is to Blame the America Loaned out $15 Trillion Dollars and Printed another $3 Trillion in 3 Years just for the fun of it! It is on T.V. and you know about it! It must be the Problem!

Sun, 05/29/2011 - 23:36 | 1321783 Atomizer
Atomizer's picture

Some BRIC characters are talking in an Obama open transparency award dialogue. You can catch my drift.

There is a red-eye escape flight somewhere within this world. The question is, can they make it in time? This whole situation must be prickly for some?

http://www.youtube.com/watch?v=H0cXDXriN0w

Timmah & Ben are screaming.. you Kuntz.. you promised not to be the first to blink, we had a pinky swear.

http://www.youtube.com/watch?v=N9duSZL_-mM

Sun, 05/29/2011 - 23:43 | 1321789 walcott
walcott's picture

China is the United States bitch and so is Russia. 

They ain't got shit militarily. WW3 won't happen.

And they don't give a crap about any muslims.

Question is. How long does US stay Israel's bitch?

Sun, 05/29/2011 - 23:51 | 1321807 cowdiddly
cowdiddly's picture

Maybe so, but I bet there are still 100s of thousands of Korean and Vietnam War Veterans that would disagree. But of course we could probably afford a fourth war too that would end in a long drawn out stalemate--Again. Now, what was it that happened to those Romans? 

Mon, 05/30/2011 - 01:35 | 1321909 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

A bitch to a bitch is still a bitch.

Mon, 05/30/2011 - 11:10 | 1322442 disabledvet
disabledvet's picture

are they a beach, though?  anywho--"the US Congress almost voted no on Afghanistan just last week."  There's your answer.

Sun, 05/29/2011 - 23:47 | 1321797 slewie the pi-rat
slewie the pi-rat's picture

this is real nice of china, i think.  now we can support the euro. 

Sun, 05/29/2011 - 23:54 | 1321813 PulauHantu29
PulauHantu29's picture

Soon China will own Japan...what will they do with it? Hopefully, painful memories have faded for them:

http://www.nanking-massacre.com/RAPE_OF_NANKING_OR_NANJING_MASSACRE_1937...

Mon, 05/30/2011 - 12:33 | 1322654 DosZap
DosZap's picture

They have not forgotten, nor will they ever.

Paybacks are a bitch.

Mon, 05/30/2011 - 01:06 | 1321883 chump666
chump666's picture

China are utterly stupid with their investments.  The geniuses at the PBoC/China govt are ensuing that oil continues to be bid and they speed towards their inflation wipe-out 

Mon, 05/30/2011 - 12:36 | 1322663 DosZap
DosZap's picture

We should be so STUPID.

We buy trinkets and poisoned imports, and they us Benny Bucks to buy land, mines, and hard assets,, companies, all over the globe.

They are SO stupid.

Mon, 05/30/2011 - 01:23 | 1321894 ZimbabweTrillionaire
ZimbabweTrillionaire's picture

It feels like Bernank was short stacked, went all-in with a seven/deuce, and China is holding pocket rockets.  Now we are fixing to see the flop...

Mon, 05/30/2011 - 01:31 | 1321907 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

China ain't holding that.  All CB's are bluffing.  China has a trill invested in worthless paper and when has their CB been audited?

Mon, 05/30/2011 - 03:00 | 1321977 Urban Redneck
Urban Redneck's picture

The Chinese have worthless US government paper for XXX dollars in the future, and coincidentally they also have matching future purchase contracts for basically XXX dollars worth of crap at a given price in US dollars that expires about the same time the worthless US bond matures.

It is infinitely easier to take on a trillion dollars worth of derivative dollar hedges then it is to orderly offload a trillion dollars of US government debt without disrupting the market.

The end result is the same.

Mon, 05/30/2011 - 01:16 | 1321895 HUGE_Gamma
HUGE_Gamma's picture

figure out why the Brazilian central bank doesnt buy gold??

Mon, 05/30/2011 - 01:29 | 1321906 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Because they are idiots.

Mon, 05/30/2011 - 01:33 | 1321910 HUGE_Gamma
HUGE_Gamma's picture

i agree with that.. but its evidence that some, will never care about PMs

Mon, 05/30/2011 - 01:40 | 1321921 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Care if not to know is idiocy.  Some people do not care because they have never needed to know.

Mon, 05/30/2011 - 02:25 | 1321955 chump666
chump666's picture

All central banks are run by grade A idiots.  Most economies now are slowing down and this is with all the money these butnuts have thrown at it - which means the markets see a devaluation in money printing.  The mind boggles how braindead China are, they have shitload of reserves.  You would think they should load up on gold, but no they buy junk from Europe sends the USD down and oil goes back to 100+...and remember china is a net importer. They complain about exported inflation from the US, but start dumping the USD they get oil spike.  Should finally take out their leveraged property market.

Mon, 05/30/2011 - 10:04 | 1322292 huggy_in_london
huggy_in_london's picture

asia has a history of buying highs and selling lows.....

Mon, 05/30/2011 - 11:15 | 1322449 disabledvet
disabledvet's picture

there's always some "irrational exuberance"--but in general these investments turn out okay.  "this time is different" however--when there were only about 7 great powers (from the late 18th century in many ways until today) sovereign defaults simply never occurred (especially given the anchor of Great Britains gold standard for all those centuries.)  we're about to see the "shredding" of this concept.

Mon, 05/30/2011 - 01:30 | 1321904 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Platinum must flash crash more than any other asset.  Did again tonight.

Mon, 05/30/2011 - 02:16 | 1321951 donpaulo
donpaulo's picture

A few unrelated points

methinks les chinois are late the PM game, but not out.

Chinese policies first and foremost are guided by domestic considerations

Whatever the PRC do its with china's tranquility in mind.

Incompetance not withstanding perhaps it is a zero sum game after all...

 

Mon, 05/30/2011 - 04:10 | 1322010 FoieGras
FoieGras's picture

China buys debt of those countries it has trade surpluses with. Not exactly a rocket science and not news.

Mon, 05/30/2011 - 04:33 | 1322017 Motorhead
Motorhead's picture

Yeah, the US gov't and the US Federal Reserve would NEVER manipulate the US dollar.

(Geez, who's calling the kettle black, LOL?!?)

Mon, 05/30/2011 - 05:26 | 1322055 Zoran
Zoran's picture

Australia's property bubble depends on China, and China is experiencing a real estate bubble bigger than any in the world, apart from Australia! By all measures (price/rent, price/income, dwellings/population) Australia's bubble is on a larger scale and even less sustainable that the China bubble! Like Australia, China is investing in pointless excessive infrastructure that nobody needs, including the huge oversupply of houses in Australia as demonstrated on www.AustralianPropertyForum.com. China is responsible for most recent global demand for commodities so when their bubble pops, Australia is doomed! China's collapse will seriously affect Australia and other countries benefitting from China demand. Coal and iron prices will plummet along with oil and other commodities. China's dramatic growth won't go on forever. Most people must realise by now Australia has an unsure future. Nobody knows exactly when the collapse will happen but there's no doubt it will happen sometime and the longer this bubble expands the worse the crash will be. China saved Australia during the GFC but when they fall over the effect on Australia will be devastating. History teaches us that diminishing resources and increasing demand always leads to disaster. China needs our resources and they might do whatever they can to secure them, even if it means war.

Zoran

Ban Negative Gearing! http://australianpropertyforum.com/topic/8489333

Mon, 05/30/2011 - 07:11 | 1322110 i-dog
i-dog's picture

Make up your mind!

Is Australia going to "crash" because of "China's collapse"; or,

Is Australia going to be attacked because of increasing demand and "China needs [its] resources"?

It can't be both!

BTW, China has never -- in 5,000 years -- attacked another country in preference to trade. (And don't trot out the straw man of Chinese communities around its border that were originally settled by Han Chinese).

Mon, 05/30/2011 - 10:00 | 1322290 huggy_in_london
huggy_in_london's picture

Well it could be both ... Just cause they crash they still might want to secure access to certain commodities.  

Australia is on a path to hell that is for sure.  Thier bond market actually looks cheap and their currency grosly over priced.  As for housing there.....well its no wonder that the AS51FIN has been getting trashed....

 

 

Mon, 05/30/2011 - 12:45 | 1322677 DosZap
DosZap's picture

Australia has it's problems forthcoming, but their raw materials, and PM's  rival anyone's on the earth.

They will land on their feet either way.

Mon, 05/30/2011 - 07:42 | 1322133 Kokulakai
Kokulakai's picture

For China the cost of bunker oil is the fly in the trade dominance ointment.

At $150 oil it is cheaper to produce US steel than purchase it from China.

Mon, 05/30/2011 - 07:50 | 1322138 Curtis LeMay
Curtis LeMay's picture

 

Tensions Worsen Between Berlin and European Central Bank

Spiegel

05/30/2011

Berlin and the ECB are deeply divided over the best way to handle the crisis. A number of influential Germans fear the threat of austerity measures could be greater than a "haircut" of Greek debt.

http://www.spiegel.de/international/europe/0,1518,765601,00.html

 

Mon, 05/30/2011 - 12:48 | 1322681 DosZap
DosZap's picture

The Germans are going to come out on top of this,guaranteed.

They will sacrifice everyone for their ultimate good.

Mon, 05/30/2011 - 10:57 | 1322398 Ferg .
Ferg .'s picture

I can understand China's desire for diversification . What I can't understand is why they'd chose to purchase bonds demoninated in euros and yen , two currencies which are at least as toxic as the US dollar . 

Mon, 05/30/2011 - 11:19 | 1322460 disabledvet
disabledvet's picture

"it's impossible to time the market."  you can of course "time it in almost the completely wrong way" however so "there's always a learning curve." and of course "maybe my incompetence can be saved by a massive spat of inflation?"

Mon, 05/30/2011 - 12:59 | 1322656 Smokey1
Smokey1's picture

I'm not a big fan of the Chinese people. Their country has shit the USA in trade for decades now. They have rigged the game in their favor.

Here's the reality. Jim Chanos is so far over his head that he is drowning. China's empty cities are harped on endlessly by ignorant Americans who don't know shit. China doesn't need SHIT from the USA. NOTHING. NADA. SQUAT.

China will keep buying hard assets with their reserves and when they are sufficiently divested, they will tell the USA to eat shit. They will then announce their support for a new global reserve currency on terms that are very favorable to them. A new currency probably backed at least in part by gold.

The Chinese have been playing chess for decades while the USA has been playing checkers. China will very definitely be the catalyst, the trigger, sometime in the next few years, for the economic catastrophe that awaits America. America will blame China, but the fault will really lie with the greedy, shortsighted cocksuckers in the American government who have colluded with the big banks to fuck over the middle and underclass.

I don't eagerly await this abortion to unfold, but unfold it will. Within at least ten years and probably five.

 

 

 

 

Mon, 05/30/2011 - 14:21 | 1322866 jm
jm's picture

China is buying JGBs to keep their currency cheap to the Yen.  Nothing more.

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