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It's Official: China Is The "Mystery" Daily Buyer Of Billions Of Euros
Over the past two weeks, we have been suggesting, tongue in cheekily, that despite the relentless desires of everyone to sell the EUR, it has continued to drift higher, due to some inexplicable force with bottomless pockets, which, after some deductive logic, we assumed was China. It turns out we were correct. Naturally, figuring out what China does with its $3 trillion in foreign reserves is sometimes more complex than brain surgery (except what it does every time it sees a barrel of oil for sale: then it is pretty much guaranteed what it will do). But when it comes to preserving its 3 rounds of horrendous European down payments, it was pretty logical that China would do everything in its power to prevent a waterfall effect that would result in Europe imploding in a ball of illiquid singularity. The WSJ has confirmed that China's SAFE is actively doing all it can to transfer billions of its dollar-denominated holdings into euros. And while this does not mean the EUR is the new reserve currency, it certainly means that China has now become the deciding factor as to just who is (much to the chagrin of Markel, and delight of Geithner... for the time being).
China's deep pockets are momentarily keeping the euro supported.
But with Greece's financial future still uncertain even after lawmakers passed an austerity package on Wednesday, and the single currency's long-term prospects far from assured, Beijing risks learning a lesson about trying to fight a market more inclined to sell than buy.
For months, whispers of "Asian official buying" have permeated markets when the euro fell below certain levels. That talk has kept euro/dollar hemmed into a tight seven-cent range since late May, even as fears of a Greek default make traders disinclined to hold the single currency.
China, the world's biggest holder of foreign-exchange reserves, has pledged financial support to the distressed euro-zone periphery while touting its economic links to Europe.
And with the PBoC not having a bloated balance sheet, courtesy of trillions of Chinese bad debt being held off balance sheet, nobody dares to step in front of a train whose EUR buying capacity is, at least in theory, limited only by the notional amount of how much garbage America's gadget-addicted middle class will buy from a very mercantilist China. To wit:
There are perils to China's strategy, however. Most market observers agree that it is never a good idea to fight the market. Just ask the European Central Bank which spent months buying distressed periphery bonds to calm markets--only to have yields surge amid fears of a Greek default.
However, investors appear reluctant to go against China's vast economic resources.
China holds more than $3 trillion in foreign-exchange reserves, with an estimated 60% of those in dollars. Its strategy toward the beleaguered euro zone helps it accomplish two goals: expanding its global reach and satisfying the need to diversify its vast reserves.
Anyone who has followed the EURUSD on an intraday basis will be familiar with the following trading pattern:
"The market is inclined to sell the euro on rallies [whereas] China wants to buy it on dips," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "It maintains the current range-bound conditions until we get clarification on the long-term outcome for Greece."
How much EUR is China buying (and how many USD is it selling)? A lot.
Analysts point to official data showing that Chinese U.S. Treasurys holdings have fallen by at least $300 billion recently. Analysis of flows by Bank of America-Merrill Lynch shows that monetary authorities have been net sellers of dollars over the past four weeks, translating them into euros.
By looking at the rate of China's foreign-asset accumulation, Woolfolk estimates that authorities sell about $2 billion per trading session, with roughly a third converted into euros.
That dovetails with research by Douglas Borthwick, a managing director at currency broker Faros Trading.Based on asset-allocation trends by the China Investment Corporation (CIC), he estimates the country could invest 500 billion euros ($722 billion) overall in Europe over five years, with 20% devoted to euro-zone peripheries. "That would buy a large amount of goodwill and lubricate other sensitive purchases throughout Europe," he said.
That doesn't mean China's largesse comes without limits.
And just as we have suggested before, the only thing that will prevent China from layering more money after bad, is a terminal event, which however China will do everything in its power to prevent by entwining the fate of Europe's banks with its own, as we suggested over the weekend.
Analysts see a remote but growing possibility of two worst-case scenarios. Greece dropping out of the euro, or fears about insolvency bringing the troubled economies of Spain, Ireland or Portugal to their knees.
If either of those come to pass, it may give China pause about throwing good money after bad.
The irony is that it is no longer the US which is pursuing a weak dollar, but its currency pegged partners, for whom a strong euro is just as critical important, China, that is doing all it can to boost US exports, which, however it knows, do not exist (aside from financial innovation of course).
The question now is: how long before Germany says it has had enough of China manipulating the European currency to a level that would almost make more sense for Germany to get out of the currency (which is costing the CDU and Merkel endless political credibility) and just return to the DEM. Alas, since Germany's banks are just as reliant on China as they are on the Fed, Merkel, or rather gher export sector, has now found itself between the Fed FX swap line Scylla and the Chinese mercantilist model charybdis.
Good luck with that Angela.
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Gomer Pile: "Surprise, surpise, surprise."
http://www.youtube.com/watch?v=J6_1Pw1xm9U
Amazing what aquiring the U.S. manufacturing base will do for your purchasing power.. Mystery solved boys...
As Peter Schiff puts it, "It just goes to show you how worthless treasuries are in their eyes that China would rather own PIIGS junk.'
Greece has been saved.
It's down to PIIS.
We get Cash4Gold, China get Gold for Cash...
http://dont-tread-on.me/we-get-cash4gold-china-gets-gold-for-cash/
Once again, a moment of cognitive brilliance.
I hear Gomer is going to be in on the September humanitarian ground invasion of Libya.
Tuco Benedicto Pacifico Juan Maria Ramirez
You can call me blondie.
I know the name on the grave.
ahem...I was the one who suggested that China would become a surrogate dollar liquidity provider with their war chest.
They are undeniably in league with the FRB
Listen to the words of THOSE WHO DO GOD'S WORK
http://www.youtube.com/watch?v=UpBfhhrsFXM
Some notes to this piece of modern gospel (all hail to the Great and Holy Squid)
- some good could come from crisis (hehehe)
- now it's the time for an EU Finance Ministry, even if it's unpopular in the UK (they will do as told)
- Policy Makers don't have any imagination (so GS has to step in)
- UK has to close the ranks with a Union of States (EU needs more centrality!)
- how can you have a monetary union if the single credits are treated differently (reminds you of CDO's?)
- why didn't they (stupid EU countries) agree to a common bond?
- surely Germany does not want it (the common bond) but they might have no choice (hehehe)
- Germany has some highly complex internal politics (we will find a way to get rid of those hurdles)
- time for an EU Finance Ministry, with someone with a powerful, influencing voice (of course a GS Alumni would be perfect, he can shop-talk with the next ECB head Draghi)
- then the screen blends the EUR Chart, with the title: "Some Nations Want Euro Weaker Than Dollar Parity" (EUR currently shown at 1.44, up 18%)
- then the screen blends in the subtitle: "Low Probability of Euro Break Up"
- China will soon be more important to Germany than all other partners
http://www.youtube.com/watch?v=UpBfhhrsFXM
Amen.
ahem...I was the one who suggested that China would become a surrogate dollar liquidity provider with their war chest.
They are undeniably in league with the FRB
They are caught in the web of their own previous rise as world factory over their double decade outsourced "miracle". The China strategy since QE-2 started is crystal clear; as I and others have pointed out here since January/february. They are now in a hotted up by FED currency war trying to protect the one region which is NOT directly pegged to dollar like THEY are : the Euro zone. Now they are in it full swing since the sovereign crisis makes US oligarchy schizophrenic play suicidal for the world economy. BB + Oligarchy markets (50 trillion sloshing around in corporates/oligarch/PDs off shore funds) have flooded the world with USD. China is now the white knight to bring the rest of the world out from USD hegemony, without killing off the USD. But their own economy is in overheat, as their muni situation is out of control. So prudence all around, the monetary war will kill all protagonists. Its a crazy race to the bottom right now...Who will throw in the towel first to call this game to close? Back to sanity and financial casino royal regulation.
Tyler, I'm a great fan of ZH. It rocks. I sent some PayPal currency and suggest everyone to do the same, monthly.
I still disagree on "that despite the relentless desires of everyone to sell the EUR". Yes, Greeks are selling EUR (or hiding them under their bed) because they fear a forced conversion to a new Drachma. A lot of bad press in english speaking mass media has sparked a selling in many (english speaking) countries.
If you write "everyone" and you don't include the Eurozone, the Indians and the Chinese, then you are ignoring the same people that are buying gold at every freaking dip. OK, OK, the US is doing a lot in the field of physical silver (for historic reasons US & Chinese love silver, too). But face it, while the EUR/USD manipulations by the BigBoys are obvious, this "excluded from everyone peoples" are putting quite a lot of gold and euros on the side. It's the "saver" countries and they are trying to diversify their savings. Yes, it's mostly "common people" but it does have some impact.
Am I wrong?
Thanks trav7777, I usually don't understand what you are writing about, still, I love your icon.
Gomer Pile is da BOMB!
Buying IOU's, with IOU's, with more IOU's to promise payment later.
That works as an explanation,as long as you don't look to closely.
There's gold there - that's why they are buying.
You can't buy a kingdom...it's leased it until the next prince.
You know why you've never heard of an Irish Prince? Cause they died 1300 years ago with the arrival of British sea pirates. Want to see how long China hold's a position in europe without Oil in ten years. About as long as the Mongols held Poland.
Not long.
That's not their end-game. TPTB's end-game is to merge a European Union with other Unions into a Grand Union (or NWO). China is merely helping to keep the European Union together for them until the merger (ie. after the fall of an independent US). Germany's export prices are irrelevant to China in that grander scheme.
Ah! but what will they take when they leave.....think on this.....The Beijing Louvre?
If I properly read the article, the goal of China is to make sure the western powers comes down with them if something bad is ever to happen to the chinese economy. It looks like a remake of "mutualy assured destruction"
China is already on the verge of implosion, power, or at least the illusion of it is much like holding a fist full of water to a thirsty man. The only thing that is unending is the rage and thirst. Eventually both wants die with the man.
China is grabbing at straws like everyone else and has oversold their own internal position. If it sounds familiar stop me, the UK, US, EU oversold themselves to demographics.
As mentioned in other threads....if anyone is unde rthe age of 35 in any country I've listed. ...
DO NOT BE THE GREATER FOOL.
If you are a youn person making good cash...that is you hold a job that pays, not a welfare POS...guess what?
YOU HAVE BARGAINING POWER.
Use it. Save with it. Invest with it. (and right now I do not recommend stocks or equities of ANY kind.)
If anything...more of you and your friends you have rent bigger. Cost equals smaller. Do not squander your labour on some idiot stick's idea of this method of 'value'.
Keep renting...do...not...buy
In a high inflation environment, is it really better to rent than to own your own house?? Or only during staglation??
A house is never a 'great' investment ... a depreciating pile of idle resources sitting on an appreciating piece of land. Plus, in the present environment of desperate governments, that land (and all 'improvements' you paid for from after-tax dollars) is a sitting duck for ever increasing property taxes.
Rent what is appropriate for you at any point in time (no kids, young kids, teenagers with separate bedrooms/basement, kids gone, whatever) and invest in property only when it makes sense for the investment returns. I've only ever once [briefly] owned a place I lived in, but have owned plenty of others.
Does this mean I have to buy Sino Forest, and the other dog shit scam Chi Com stocks the SEC allows to list, in euros now on eTrade?
Well well well. My theory (previous post) might be wrong. The dumbest guy in the room just put his dunce cap on. Maybe China believes it will have better luck than the ECB or the Germans buying Greece or Ireland. Good luck with that.
What is it about large asian economy central bankers that makes them think they can manipulate world currencies and win? At least Japan stays focused on the Yen. If this is not somehow coordinated with the Fed, it might be the dumbest currency move to date.
How does China have anything to gain from weakening the dollar? And if the answer is diversification, then buy the ECB when it goes bankrupt. Not now when the Euro is still historically far above its lowest trading levels.
China is making sure that anyone who might say no to them during the next five years won't.
This isn't an investment that they are making for a monetary return. China wants to make sure when they make their next move (South China Sea?) that no one will dare to intervene. 'Throwing away' a trillion dollars for energy/commodity security/independence isn't really a loss.
China has bigger problems and much like the US is involving itself in the game too late. It's like watching a poor photocopy being copied from something that is known not to work.
What will freak people out is when the door slams shut and suddenly isolationism kicks in
Doesn't isolationism fly in the face of a one world government? I tend to agree with you, but that isn't the popular position with conspiracy theorists.
Or is your sentence incomplete and really your saying isolationism kicks in... until the NWO? That in turn would allow you to "fit in" with the masses who believe in the boogeyman.
CPL isn't your run-of-the-mill conspiracy theorist - and i'm quite happy about that.
Simply put, the concept of a single world government is up against a more powerful force than god, rudimentary math. While it is the goal of many world leaders, central banks, and the dogs that bark the loudest for table scraps, that goal will not succeed for some time. I think it is inevitable as we become more economically intertwined, but it will likely be on a different playing field... with different views and different rules from today...
If small bands of countries cannot keep their unions together, then the macro is every bit as impotent. The first rule of collusion is... Thankfully, the same self interest that guides the consolidation of world power is also the same self interest that breeds self preservation when the plan comes unraveled.
PS, you have to admire the effort though... it really has been a masterful play... and still may work out to significant advantage for many of the principal actors... just not on a world-wide scale (although micro stakes will eventually be utilized to leverage into world power).
Bye, bye Taiwan!
Tuco Benedicto Pacifico Juan Maria Ramirez
Well, the oligarchs have to create that Asian Union after all, and I'm sure the Chinese are all for the idea! What continually amazes me is that seemingly aware people continue to suggest the Chinese are acting alone. They are not. China is just another chess piece, just another puppet, and just another tool to further the global fascist agenda.
I will grant you that something like this may be in their thinking as they have been so completely shunned from many international regimes dominated by US/Europe.
From a strictly financial standpoint, however, this should destroy the whole "weak dollar/ strong US equities" correlation, as this is an example of capital flight, not productivity. If anything is ultimately a deflationary indicator for US-based Assets -- foremost among them USTs -- (unfortunately, commodity prices will be set by the world market), this is it.
ROTFL...yeah paper means so much. Can't just print up paper
The beauty of it is that euro bonds are guaranteed by the bernank.
looks like they're buying more euros tonite!
and dumping usa t-bonds? sweet!
Looks like they couldn't eat just one. Poor bastards, they're hooked now. Might as well admit defeat and just set up an IV to mainline the stuff. Watch out for that initial rush though. Wow, now that's what I'm talking about.
I tried to warn them that the $USD was a gateway drug, but do you think they would listen to me. Nooooooo.
tyler, understood. but whats this here aug. 4th date all about. magical? pray tell..
August 3rd is when the US debt ceiling needs to be raised by in order not to default. That is unless they do payment prioritization which is supposedly off the table. I'm pretty sure there's an article here about it somewhere. Don't worry. They'll raise the ceiling, keep on spending, the can will be kicked and kicked until the shoe is worn.
Pick a date, any man made economical doomsday date you like. After it passes, the sun will continue to rise and the people will continue to exist.
The biggest hoax of all is to think our life will be vastly different Sep. 1st from the way it was Aug. 1st if the debt limit isn't raised. Call me a glutton for punishment, but don't raise the debt ceiling and see what happens. Nothing... we shed a few jobs, cut our spending significantly, private sector eventually (several years) picks up the slack, and we're the stronger for having gone through it.
The Chinese are the worst capital allocators on the earth. Since China appears to be done buying our debt [which is great IMO], the economic war that China has perpetrated upon the US should be engaged immediately.
Start the trade war already, and commence selling ridiculous rips on the Euro...selling straight into Chinese stupidity.
China on Wednesday reiterated that it has “indisputable sovereignty” over islands in the South China Sea after the United States pledged to help the Philippines, which has its own claims in the area.
A spokesman for China’s Taiwan Affairs Office, Yang Yi, also repeated the government position that safeguarding the sovereignty of the area’s potentially resource-rich islets was a “common responsibility” for Beijing and Taipei.
“China has indisputable sovereignty over the South China Sea islands and their surrounding waters,” Yang told reporters, according to an official transcript.
China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan have overlapping claims to parts of the South China Sea, which is believed to have vast oil and gas deposits, while its shipping lanes are vital for global trade.
I couldn't agree more. It's like watching the middle east buy everything in sight during the Carter years. This is going to end on the same note.
Everyone is going to be pissed.
So does that mean we'll Stuxnet their nuclear reactors next?
Just asking in case we need to evacuate Banzai7 in a hurry.
http://en.wikipedia.org/wiki/Stuxnet
WB7, I've got a mother-in-law apartment you're welcome to.....if you're able to get my mother-in-law out of there.
Umm...yes, I think we are still in pretty good with that particular contractor.
However, the only weapons we really need are tariffs.
Cdad is old school.....bitches. :>)
Cdad has his game on. Keep ass slaping em Cdad! Yen.
Selling euro's and ... buying dollars?? Let's wait and see what the more stupid trade is. I honestly don't know right now.
Tyler, you have been warning for weeks.
let me see -they have $7 trillion dollars and so buying euros is dumb ? can any of the "smarter" posters pinpoint when their winning streak ended ?
probably the world is not going to come to an end so take a breath
China - who knew, and why? FOFOA did!
http://fofoa.blogspot.com/2011/06/from-treasure-chest.html?showComment=1...
++++++++
Euro got a GELOC to refinance its debt!
Honestly, the Eurozone is so far ahead of you DC guys on this it's not even funny. They mark their official gold reserves to the market price every quarter, and they just voted to make gold a system-wide acceptable collateral asset. [2]
OMG! Can it be that a collateral asset that is consistently rising in free market value makes boatloads more sense than ones you have to prop up with quantitative easing and open market "print to purchase" operations??
http://fofoa.blogspot.com/2011/06/open-letter-to-ron-paul.html
Well actually....
From June 4: Rumor China is buying Euros
How is China going to enforce its claims?
This is nuts.
Umm, maybe the collateral? I wonder what they might use... oh that's right - http://www.ecb.int/press/pr/wfs/2011/html/index.en.html
http://fofoa.blogspot.com/2011/01/reference-point-gold-update-1.html
Its fun to pretend the euro isn't different, but it is, and hoocoodanode? China!
Same way they'll enforce the claims on US. I don't know, but we'll find out.
probably stick guns in the hands of the 60 million womenless men loitering around China right now.
You can pay someone shit if they know they are getting pussy at the end of the fight. The future is good looking half chinese babies. The Brits did it. The Americans....well all slave owners do it until the slaves get out of line.
Now slaves, white and black, get back in line.
The PBoC is going to put the {Turd Burglar] on that Effin; Gilligans Island looking
[Suchi launcher] they bought from the RUSKIES!!!
The second Greece fucking section begins tomorrow.
http://www.reuters.com/article/2011/06/30/businesspro-us-markets-forex-idUSTRE74U02L20110630
new slogan: DONT FIGHT THE RED..
china will lend all the dollars euroland needs
as long
as the repayment is in gold or euros
anything but dollars....
Shades of the "Foundation X" story in the House of Lords from a few months back?
http://www.youtube.com/watch?v=QaA-5_IjkeE
Cross Merkel with Bernanke and you get Hitlar!
China and US' currency policies are aligned - weak USD means weak RMB means strong euro and strong commodities. Bernank prints so china can amass reserves to buy european bonds and german audi/bmw/mecedes/ferraris. At the end, Bernank is bailing out the eurocrats. Merkel and Sako has no time to get angry with chinese propping up the euro as long as they keep buying zillions of audis/bmws/mercedes/airbuses, thansk to uncle sam's generosity.
Someone spotted US import prices should be far higher with RMB's appreciation vs the USD and wage inflation at home, well the exporters are selling more in Europe and elsewhere where the RMB has actually weaken vis-a-vis other currencies. Ditto the Koreans and Taiwanese and Malaysians. So RoW are helping Bernank keep US imported goods prices low by selling cheap in US and catching up on currency front elsewhere - and Bernank would be happy continuing to print. Don't we love Chimerica?
I do not see eventhe great China having enough $ to prop up the Eurozone indefinitely, which becomes the problem with ALL efforts at currency manipulation. At some point, Euro will have to be pushed out of the nest and fly on its own.
But something tells me that Bernanke has already discussed with the world's central bankers when he will allow that time to be, i.e. when banks have capacity to buy USTs.
Press Conference on the Concluding Statement for Annual Report on U.S Economy
Article 4 --Spill Over Report, final report to be released just prior to Aug 2, 2011 US debt ceiling Romper Room vote.
http://www.imf.org/external/mmedia/index.aspx
Fuck the Central Banks. Eat your unsustainable appetite to expand your balance sheet to cover your ass.
SIFI (Science Fiction) is a great name for your supervision role. FSB is going to be exposed shortly. Oh fuck, why wait... just go back to my earlier ZH posts.
SIFI/FSB
If Bernanke were to raise rates the Chinese would be Screwed.
And FXCM retail clients are net short the EURUSD almost 2:1. Ouch!
And FXCM retail clients are net short the EURUSD almost 2:1. Ouch!
if you want to study the fx market. read cot charts from Ducasopy. and study every reputible outlet. Or Buy a terminal. Personally Bloomberg is slipping.
The CFTC has completely destroyed the futures market in the United States.
Who takes delivery? 2% maybe? My overseas accounts are fine, and no one is complaining. Barney Weiner Smoker is an ASS CLOWN!
Sooooo....China's just buying Europe on the cheap, right? I mean, they an own whole countries. Talk about BTFD.
"they got the whole world...in their hands...
they got the whole world...in their hands...
they got the whole world...in their hands...
they got the whole-world-in-their-hands"
from day one we have all known we are all speculators here so i know i should preface all my comments, remarks and articles with the phrase "if true"--and that is especially "true" in this case. this preface of course requires another preface namely "there is no such think as truth" so "may we speculate accurately!" i cannot speak to the accuracy of this article but clearly "it has the smell of factuality." Clearly "Greece burning as a consequence of a vote" means "the vote is not being done lightly." These are not people like the USA "voting for 750 billion" and then miraculously "coming up with the dough." These are represtentatives voting their nation into obivion. This is clearly not done lightly and so cannot be explored enough. Neither can the impiciations of this article IF TRUE. (And of course--to be included--"the varying degrees of truth. Or in the famous words of George Bush "truthiness.")
Hey the name of the game is "Export Export Export"
A few years one way or another doesn't affect your long term view. China has to defend their five year old mercantilist interests in the new colonial empire. No exports then no Eurostores and no imbalance of trade and no spare Euros to use for future influence. Dang and I was getting used to those cheap trinkets - shades of "Made in Japan" in the 60's!!
The situation is as follows about their harbor in Timbaki in Crete. To confirm just googol[sic] the misssspelling of "promised" - it is pretty unique :-):
"they got the whole world...in their hands...
they got the whole world...in their hands...
they got the whole world...in their hands...
they got the whole-world-in-their-hands"
1.45 and rising like the red tide.....
How does the knowledge that China is propping Euro up NOT break the strong Euro/higher equities correlation? Market a forward discounting mechanism? Yeah, right. Maybe 24 hours forward.
Sooooo....China's just buying Europe on the cheap, right? I mean, they an own whole countries. Talk about BTFD.
That's right, they're going to buy whole countries with fiat. /sarc
I encourgae them to buy more mining companies...that is until the hosting nation "nationalaizes" the mine and wipes out Chinese ownership....
Avinash Persaud - The Role of the Financial Stability Board (FSB) and the G20
Avinash Persaud discusses the debate on financial regulation, the role and mandate of the Financial Stability Board ( FSB) and its relationship with the G20 at CIGI's Issues for 2010 Summits conference (May 2010). Avinash Persaud is the Chairman of Intelligence Capital Limited, which he established in 2005.
http://www.youtube.com/watch?v=kqnz-MjFtHY
Saved you some time in searching. Learn sheep's, your not going to be effective once they have everything in place. See above Article 4 IMF post.
I just read a post that inspired me to donate (again) to ZH. I've been advocating for a couple years now to my friends/family that they should pull their money out of wall st and #1 save it themselves; #2 buy PMs; #3 invest in themselves (hobbies, personal companies, side projects); #4 invest in their local community; #5 grow a garden; #6 invest in what interests you.
The poster's comment made me realize that I should give some more money to ZH as I hit f5 on this site daily. It wasn't a large sum but it was something. What shocked me (and hence the reason for this follow up post) was that my transaction ID was #2116. That seemed too low for me... I donated another $1 to check. Sure enough, the ID was #2117. That lead me to believe one of two things... one, they started over the transaction IDs (or have a different format); two, even worse, only 2115 people (I've donated 3 times) have ever given money to ZH even though this site gets a ton of traffic. Now I know that they get money from the ads they are running all over the screen but that can't be a fortune. What I'm getting at is this... if you find yourself using a site often (and I know a LOT of you do), you should either increase their ad revenue by clicking the ads or you should DONATE. It's a simple as that. Don't take ZH (or any other site you visit regularly) for granted. Put your money where your mouth is. This site has a great thing going for it and the more WE donate the less they are dependant on outside funding.
+10000.
Thanks for this post.
everyone floows this pattern, it it drops below certain levels everything will drop with asset correllation. so theya re also helping their own stock market as well. since thi is the most followed thing, doing this to effect other assets makes the most sense.
Hmm...overloaded in a devaluing USD, so they sell USD's and hedge with natural resources/PM's, after they think they're well on their way to completing the hedge, they take some extra (you know they got a lot) and play some risk with the added benefit of being able to tell the EU what they can and can't do for a change. If the EURO goes, likely the USD goes and they're holding all the cards. it's a clean sweep...or WWIII (least likely). Sounds reasonable. I'd do it if I were holding what China's got.
I have to disagree with the premise here. If the Euro falls there would be a huge flight to safety. Everyone everywhere would pile into the dollar.
guess who else is buying USD and EUR right now? Jim Rogers
China buying those Euros is no mystery! I't been going on for several months.
This is just for fun. That strategic release is Driving Retail sales, off of lower gas prices!
Risk on Higher euro and aussie. Ha Ha what a joke!
I can't believe the number of narrow-thinking, sinophobic idiots posting in this thread about China "taking over" Europe (or America, or the South China Sea, or wherever).
China and Russia (remember them?) are simply economic and resource pools for TPTB's takeover of the whole fucking world...the New World Order!
Notice: they don't call it a 'New World Superpower' or a 'New World Dictator' ... though the NWO could justifiably be an acronym for 'New World Oligarchy' (same as the old world oligarchy, but with a written charter)!
China is propping up the EU (via the Euro) for reasons other than simple imperial expansion. Widen your view or you'll hit the wall!
End the Feds!! (Federal Reserve & Fed.gov)
End the European 'Experiment'!! (EU & EUR)
De-fund the IMF!!
The Euro is backed by the full faith and credit of the Chinese Treasury:) And that is reality.
the US dollar is backed by lead and uranium.
China is braindead, they just imported more inflation via EUR buying. Oil bid, USD sold = China rice price just goes up into hyperinflation.
Dumb asses
If China is not using this period to exploit the devalued EUR/USD to buy physical gold and move it to Beijing, then they deserve another hundred years of humiliation.
How can these PBOC - FINMIN shrivs read the sanmin zhuyi and Sunzi and not go physical?
The CR is over.
Who cares if your paying USD10,000/oz for gold, when the very governments that print it are covering quadrillions of notional derivatives. Perception is reality.
Machines and gold build a reserve currency.
China: Take the hint. They didn't appoint a Chinese person to head the IMF.
The US/Europe will screw China. You better have THE gold inside your territory when that happens.
If the world's largest gold depository is not in Beijing by 2020, then the CPS is churning out some real morons.
Might as well teach the cadre to sell more rubber dog shit to Mister Charlie in Kowloon, because that is what the USD will be worth after Obama's second term.
Simple economics.
The Euro marketplace is made up of over 500 million consumers with savings and access to credit.
The US marketplace is made up of over 300 million consumers of whom most are flat ass broke and have no more access to credit.
What's not to understand?
Stick a fork in it. She's done.
True. At the end of 2010 the Germans alone had savings of nearly 5,000 Billions EUR. What is Greece with 100 Billions in the hole ?
+1 Sad. True.
Not saying this from personally being in the Country..but a close friend just returned in the last 6 months from living in Greece and opened a new thought for me on this topic. There is a fact that makes the Nation of Greece a bit different in some ways than first obvious. The Orthodox Church pretty much owns all the real assets of Greece, mostly backed by a LOT of Bullion gold that is "off record" and has been for centuries..plus about 70% of the real estate of any value within the borders of the Nation is Church owned also. China is not going to get the Church powers to cow down to them, ever! NOT going to happen unless China attempts to invade Europe militarily. Financially the Orthodox is bulletproof. Its the Greek GOOVERNMENT that is flat ass broke. You think the Catholic Church in Ireland (or anywhere for that matter) is broke? Not a chance. Again.. Governments are broke, but not the true power that is. I bring this up because as much as it pisses them off, China's Central Party has no influence on the real powers involved, none...zip....nada. And they are now being pulled into a suckers game by pumping the Euro, just like the States did to them selling Monopoly Money backed Treasuries. China is heading down a black hole big time, and I'd say when the implosion finally comes, Tibet will probably be the first to remind them that "Karma's a serious Bitch!"
i might disagree with the 70% figure, but yes, it's an enormous amount. the church also is the biggest owner of the 'national bank of greece', which until the 1920's was the central bank (replaced by the 'bank of greece' in that role).. they have some significant exposure there.
Also, the church has been since WW2, stripped of a lot of property, in government imposed property redistributions. There were several in the 20th century, the age-old answer to the age-old accumulation of property in few hands. Last one was in the 50s. Since then agricultural land lost any economic meaning in greece, which is why nobody's cared or needed to fight over farmland since then. If anyone starts to seriously question the legitimacy of government actions in basically trampling property rights all over, i wouldn't be surprised if the church started pushing hard to get back property it owned before the war!
The church generally has been conservative in managing their wealth, and when it comes to land, they will rent it out, but they don't sell. They have been a lot better at preserving the estate from being plundered by insiders, than the state has (mind you, bishops and other church bigshots live _very_ comfortably, but they tend not to plunder the store to build a secret fortune on the side. they're in for life).
Not sure how much gold there would be, then or now. There's not much historical support for there being any huge amount of gold in their hands. The orthodox church was never as rich in the way the catholic church was. The main source of wealth all through the byzantine and ottoman empires was accumulation of real estate, and protecting that real estate by playing their social/political influence on the masses very expertly. But, they lost the greatest share of their estates in the post-ottoman 20th century world: kemal's militarized turkish state confiscated huge amounts of it, and the commie regimes in the balkans after ww2 confiscated huge amounts of it as well (the different churches in many of those countries have their own property and are totally unrelated, but the greek church had estates throughout the territory of what was once the byzantine and then later ottoman empires).
also, ownership of church lands and property is not so centralized like it is with the catholic church. Individual monasteries usually are the entities which own the majority of this kind of property, but there is very little power that, say, a bishop, has over what the monastery does with its property.
the greek government, yes, flat ass broke. the people, most of them are also pretty broke now. Those who do still have savings are against the wall (except the big shots who took all the money to start with, same as everywhere else). Greeks do still have probably a fair bit of savings in off-record places, too. and a fair bit of that would be in good old gold sovereigns, which are still _the_ form of gold there, and even quoted daily in most newspapers. There is basically no time in history when greeks actually trusted banks, actually.
China will own all the worthless paper in the world!!!! King China!
Dear old Sun Zhu would be turning in his grave.
China has to keep the Euro/Dollar rate within a limited channel.For the reason of the fixed Renmimbi/Dollar peg.
If the Dollar becomes to cheap the Chines imports to Europe are getting to cheap too, thus creating pressure on European producers and pressure on politics to stop such "unfair" competition. Plus Euroland exports to China would be hurt badly.
If the Dollar becomes to expensive then it works exactly the other way round.
A price level around 1.4 US for one Euro is something Chinas exporters as well as European exporters can live with at present. China is stabilizing the exchange market in order to protect the real economy. And this makes perfectly sense since at the end of the day we all live from the real economy and not from shuffling electronic currency mountains from one heap to another and backwards.
The Chinese actions show, that they are the one who ultimately have the financial power in hands nowaday. Its the Chines now and not the US (often through the IMF) who is setting the rules.
While thinking about this matter it became clear to me that it is China who is also stabilizing the US Dollar. Of course only because it is in the interest of China not for charity reasons. Just imagine what would happen if China removes the Dollar peg from their currency. I believe the Dollar would then drop like a stone!
All countries importing goods for their daily life would sell Dollars and buy Euros, Gold, or whatever they find of worth not linked to the faith of the Dollar. The reason is, that many many goods can only be sourced from China today. Only China has presently the production capacity to satisfy the needs of manufactured goods sold around the world. And nobody can change this situation within a bearable time.
However such a move would be harmful for China too and create unforeseeable chaos. Therefore I'm sure the Chinese will continue with their policy of small steps till the US is at the final end of their self made economical destruction.
+1
I wonder if the Chinese are avoiding dumping the dollar until they feel their military is sufficiently powerful to withstand a US threat or move against them, for instance in the South China Sea. Meanwhile, they are massaging the Europeans.
Also can't help wondering if the US would consider Chinese backing of the euro a sort of mini act of war?
The funny thing is that there is no provision for exit from the Euro. Just imagine if one by one countries default and quit the euro, would then all euro based bonds become the liability of Germany & France? So what would the Chinese do then!
Maybe , the Chinese feel that since they have been damned by the dollar, they might as well be damned also by the Euro.
An escape plan? That's too innovative for 21st century thinking. China is just making sure the US and the EU ease down together so they can maximize profits on their exports and keep buying up all the gold. It doesn't do them any good if the Euro tanks and makes the USD strong. They've got iCrap to pedal to a nation of consumers that still don't quite get it.
There is no foolproof escape plan since the system is run by fools.
What China has to it's advantage is the world's manufacturing base- nearly 40% approx. This gives it an approx 3 years advantage. It's time countries learnt that their basic needs need to be produced in their own country.
Take this away from China and they have to look into their own markets.
" It's time countries learnt that their basic needs need to be produced in their own country."
Last time I checked, the US and Europe were net exporters of food. It doesn't get more basic than that. Let the Chinese eat all those Mc Books and ICrap. I'll stick to steak and fries.
^This.
And the fact that the Chinese wealth and income distribution ensures that there is no way they can build a self sustaining domestic economy without some major redistribution.
On other words aint gonna happen.
The Chinese are stuck they need to export and build ghost cities up the wazoo just to keep people from rioting, all the while paying them in yuan conjured from thin air, the inflation isn from the FED its from China.
Idiots round the world want the yuan to appreciate and for the Chinese to have a greatly increased standard of living.
Thats all well and good from a humanitarian standpoint.
But everyone else, yes you and me will have to pay for that in the form of reduced living standards via inflation.
Be careful what you wish for, lest it bite you in the ass.
This is true. But there are 5 million people coming each month into the Chinese job market. What else can that government do...
Exactly.
There isnt anything they can do, they will just keep building and demolishing while on occasion have forced wage adjustments...etc to maintain some semblence of purchasing power, all the while those in power will continue to loot and sneak the spoils offshore.
Of course we get the occasional govt sanctioned lynching but the corruption is endemic, its part of the cultural psyche, it will take generations to breed out.
I say this with no malice, merely observation through close association almost all my adult life.
The sad thing is, i believe those at the very top truly are trying to move the nation towards a better footing, but the culture of money worship and corruption is stymieing any true lasting reform.
The bureaucracy is simply too damn large.
Well, they COULD make use of the one big-ass feature of communism...... but for "some reason", every communist country i have seen so far, has not done this..... for some weird reason, keeping people busy for the sake of keeping them busy, is more important for communist countries than solving the unemployment problem. Of course, that's understandable when all the other conditions are so crappy, that people would even riot if unemployment were solved (rather than compensated). But if all that is so, what's the point of communism then anymore? What then makes them any different to bogstandard capitalism under dictatorial governance? Oh, and if we take away that scam that is representative democracy, then what makes them much different to the US (besides of them being exporters, and the US being importers)?
I agree, higher standard of living in China will (partly) come at the expense of the standard of living in the West. Not sure I can deal with that though...
why would country X's bonds, denominated in currency Y, be invalid or foisted on some other country just because country X left the euro? Country X would still have outstanding bonds denominated in currency Y. If greece leaves the euro, the greek bonds denominated in euros would still be denominated in euros. Now, older bonds which were drachma bonds converted to euros might be converted back to drachmas, but bonds since that time, maybe maybe not.
anyway it's all a bunch of freaking monopoly money. The eurocrats will move heaven and earth (well, they will move heaven/earth swaps, collateralized heaven & earth debt bundles, and any other damn thing they can pull out of a printer) to preserve the illusion, until they sink the whole thing together. Even if the situation in, e.g., greece, were to change entirely, even if there were a total overturning of the government, still they would do anything possible to get _somebody_ to say on the 'legitimate' behalf of greece, that he agrees to yet another round of some kind of financial circus. It's about not tipping over the boat in frankfurt and brussels, now. They will print and loan themselves funny money as much as they need, the IMF and pals will make up new rules as they need, to preserve the image, and they probably will do so even to the time that it is utterly irrelevant.
Just sell the (skueaky BIOTCHce.] nathanski!
Ever heard of cross hedging pairs? That is whata true proxy is!
Problem is that the offeror for the cross hedging must be solvent - / remain solvent- unless of course it is like AIG, the milking machine.
And for a player like China- it does need only the AIG. and at the end of it- more worthless dollars.
I've been harping on about this since at least January . The same intraday patterns have been manifesting themsleves again and again and again . Decent selling during the European and N.A market hours followed by sensless levitations during the Asian session . Of course what exacerbates the effects of these Chinese purchases is the reduced liquidity typical of those trading hours as it's much easier to induce substantial price movements .
Euro is establishing it self's as the new world currency! Chinese support and buy Euro/debt, FED support liquidity via open swap lines, and gold is marked to market in ECB's books.
Have fun buying your "base level" 5 series for 100k. have fun watching (club MED) melt down, like North Queensland because you have no game ,"other than Night Clubs".
Have fun fighting with your neighbors that work for a living. The Chinese are just playing you like worthless HARPS!
Truth confirmed by your aggressive denial.
China is hacking away this morning. My IT people have defended numerous attacks!
Hey PBoC tell it like it really is. A room full of key punchers?
China is buying time, not PIIGS. Takes time to buy up gold and resources.
George Harrison Got My Mind Set On Youhttp://www.youtube.com/watch?v=6GdeU0ww4zY
China has proven over and over to be not very good at speculating in currency.
Maybe because they're not speculating? Investing perhaps?
The PBoC is probably also diversifying into CHF? At least, this would be an explanation for the weird intraday-movements in chf/usd and chf/eur...
It seems a "former" Communist nation is trying to preserve some democracy for the people of the Capitalist states being subjected to a ruthless form of Capitalism. Could it be that China is trying to fight the global financiers? Maybe. Are they possibly aligned with the global financiers? Could be, given that "smart" money moved to China. Maybe the Chinese are trying to buy the world for Communism before teh financiers buy the world for Fascism. I think we're watching the end of Capitalism, and for that, I'm not sad. Although I don't think any nation state / political / military power has yet figured out what needs to happen to bring peace and happiness to the world's population. Surplus production through automation, in case you're wondering.
It looks that we confused SAFE with RISK. I wonder who is there to bail us out when we are in trouble.
I am working on two powerpoint slides for my PhD dissertation from the University of CNBC. (ZH is the student union/pub/job that pays the bills)
#2 was a modified image of the 8/16-Bit "Its on like Donkey Kong" image with Kong as a chinese man, throwing barrells of the various fiat currency $,£,¥,? in any of these "It's on" situations. Such an image would be highly useful over the next 3 years.
Anybody with better skills is welcome to run with the idea. Since we live in an ivory tower, I give up any attribution, royalties, credit, etc. I learned from you folks here.
Well it's been obvious for a while that neither China's nor any other central banks were buying much Treasuries given that the volume they held in Fed custody accounts practically stopped growing last November, right in step with QE2's launch. It's up a bit more than $10b in the past seven months after growing by about $360b in the previous seven.
China (and Russia, probably others) using their dollar export receipts to buy Eurozone debt probably explains how the dollars that the US exports to support its trade deficit have been finding their way to the reserve accounts of US branches of foreign banks. Chinese exporter collects dollar, Chinese central bank forces exporter to cough up dollar in return for renminbi, Chinese central bank trades dollar for some kind of Eurozone bond with some commercial European bank as counterparty, European bank downstreams dollar to US branch, which holds dollar as excess reserves in its reserve account at the Fed.
And if the USD was to be backed by PMs again, The euro's would redeem dollars, ala the french in 1970, with USD gifted via the Marshal plan.
Then europe upstreams much of the gold back to china, who uses it in the boot-strapping stage of implementing the hygine-motivator phase of worker indoctrination.
The USA has always been the plucky whipping boy of the world.