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Jim O'Neill's Weekend Just Got Really Bad, As China Prepares To Nullify Local Government Loan Guarantees
The horrible news hits just keep on coming for Goldman's Jim O'Neill. First the BRIC acronym creator (soon to be largely forgotten when confronted with much more awesome comparables as CRAP and STUPID, the latter of which has already been subsumed for general consumption by CNBC) is rumored to be getting the boot from Goldman due to his involvement in the Red Knights group which is seeking to acquire the Red Devils (aka Manchester United), and now China just announced it is about to pull the rug out of the entire lending concept when it announces it is nullifying loan guarantees by all local governments. Just to put this in perspective, the impact of this is akin to what Obama did to Chrysler's secured lenders, multiplied by about one Fed dollop of MBS holdings (i.e., trillion), with debtors not even getting the courtesy Steve Rattner K-Y reacharound. The total potential impact: $3.5 trillion smackers. And some large, recently bailed out bank, has been seen as claiming the CNY is about to get revalued. HA HA HA. Oh, and goodbye BRICs.
From Bloomberg.
China plans to nullify all
guarantees local governments have provided for loans taken
by their financing vehicles as concerns about credit risks
on such debt surges.
The Ministry of Finance will also ban all future
guarantees by local governments and legislatures in rules
that may be issued as soon as this month, Yan Qingmin, head
of the banking regulator’s Shanghai branch, said in an
interview. The ministry held meetings on the rules on Feb.
25 with regulators including the China Banking Regulatory
Commission and the People’s Bank of China, Yan said March 5.
China’s local governments are raising funds through
investment vehicles to circumvent regulations that prevent
them from borrowing directly. A crackdown on local-
government borrowing, estimated at about 24 trillion yuan
($3.5 trillion) by Northwestern University Professor Victor
Shih, could trigger a “gigantic wave” of bad loans as
projects are left without funding, Shih said this month.
Not really much commenting needed here:
A few cities and counties may face very large
repayment pressure in coming years because of debt ratios
already exceeding 400 percent, a person with knowledge of
the matter said in January. The ratio is of year-end
outstanding debt to annual disposable fiscal income.
The financing vehicles of large coastal cities are
well-funded as most have publicly traded subsidiaries that
can raise capital from the markets and rely less on bank
loans. Entities in northern and western China are of
particular concern, the banking regulator’s Yan said while
attending the parliamentary meetings.
The 1998 collapse of Guangdong International Trust &
Investment Corp., which borrowed domestically and overseas
on behalf of southern China’s Guangdong province, left
creditors including Dresdner Bank AG of Germany and Bank
One Corp. in the U.S. with $3 billion of unpaid bonds. It
marked the first time that Chinese authorities failed to
bail out one of the nation’s state-owned trusts.
And as if that wasn't enough, China's foreign minister was heard saying yesterday that China's US relations are now "seriously disrupted." The blame - squarely on president Obama.
"The responsibility does not lie with China,"
Beijing
The
It's all good though - the Fed will just keep. on. printing, even as the global prisoner's dilemma game is rapidly approaching its unwind phase.
said Yang, speaking at a news conference on the sidelines of the annual
session of China's parliament.
and Washington have recently gone through a rough patch, with quarrels
in January and February over Chinese Internet censorship, trade
disputes, U.S. arms sales to Taiwan, and President Barack Obama's
meeting with the Dalai Lama, the exiled Tibetan leader.
United States "must respect China's core interests" on Taiwan and
Tibet, Yang added. "I believe the United States understands very well
China's core interests and major concerns.
»
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oh wait... which way the dolla now ?
It's not about FX. It's going to be about cash (any cash), bitches.
Who's got it and who don't. The big money will be pulling out of equities in 10..9..8...7...
And then we'll see who's got cash and who got left holding an empty bag...
Wonder how much of the debt in question is in foreign hands, and in which hands?
Oh yes, wasn't the risk trade back on last week? We'll see how well that holds up this coming week.
For better or worse, China is taking proactive steps to deal with its overcapacity and recent debt issues - also may be a more subtle way to effect a competitive devaluation of the currency.
I never, for the life of me, could comprehend the arms sale to Taiwan.It appeared to me
that tensions between Taiwan and China were
cooling a bit and $5B in arms ain't going to
help Taiwan if China attacks.
So why did we risk pissing off our biggest
purchaser of US debt?
Could we possibly be that stupid???
Or could there exist a purpose to selling arms
to the Taiwanese that is above my level of understanding?
Certainly $5B for US doesn't make a dimes worth of difference to our debt level...
all those weapons keep lots of people employed in the good ole usa.
basic military/industrial complex 101.
That must be the explanation.
Naive on our part....
Well look at what the USA has done in the last 30 years. This goes back to reagan and the switch over from Japan as our main electronics purchaser to tawain and korea and then lastly china. So it's like sicking Japan on taiwan for taking their role in affairs. It's just the way these shit stirrers work.
It is in our interest to piss & hinder our direct and uncooperative/uncompromising, especially when it comes to the free trade competitor. If we were any smarter, we would sell x 5 weapons for every billion in announced sales.
Next century might be the Chinese century, however it does not mean that world has to revolve around them nor that they will become an ultimate and single politico - economic powerhouse.
Now it the WW1 would not occur, the first half of the 20 century would probably be German & Austro- Hungarian, especially when it comes to the technology & science.
You'd rather allow the Chinese to push us around, I gather. $5 billion isn't much in the scheme of things, but it sends a message. The Chinese are arrogant racists. They need to understand we'll stand up to them, even bat them down, when necessary. This is a good thing in the long run.
Also, there are laws on the books in America that say we must support Taiwan. The rule of law is a good thing. We can't just chuck it because you feel we must cower in the corner.
>The rule of law is a good thing.<
Do let us know when rule of law is restored in the US.
'The "rule" of law....'
That's the funniest thing I've heard all decade...
We are all racist and arrogant Paladin,
But when someone has your balls in a vise,
your movements are very limited....otherwise
the pain is excrutiating...
If you think the Chinese have our balls in a vise, you're not paying attention. I believe the situation is quite the opposite.
Which ones are racists?
The ones with the pig tails or the ones that say "Ho!So solly,Charie!"
Long CZI
Is your IQ higher than room temp?
We don't need to chuck it. All the current administration needs are federal judges that will ignore it.
You wouldn't......unless you wanted to bring down the system on purpose.
Many blacks in this country have a racist attitude towards yellows. I have a Japanese fellow working for me in LA got attacked by a black man in a supermarket for absolutely no reason. (Those were the days just after a black shop lifter was shot dead by a Korean woman).
Obama's highly provocative actions , one after another, roots in his dim view of the Yellow men.
Read Rick Rozoff for military perspectives that play
a role with China.
How much debt is China going to be buying as our unemployed purchase less and less trinkets from them? Hasn't a large portion of their reduced buying of treasuries been a direct result of our decreased consumption over the last couple of years?
This news is bound to trigger some "Risk Off" trades this week, just in time for Options Expiration Racketeering Week.
Yep, another outright panic buying orgy of U.S. Dollars and U.S. Treasuries.
Just in time for another round of colossal new debt offerings being proffered up by the U.S. government.
No doubt, another batch of treasuries will be floated off at near 40-year record low interest rates.
Wash, Rinse, Repeat
Agreed.
Last week, scorch the put premium.
Next week, nuke the calls.
How else can Goldman make $100 mil per day in a trendless market?
If you have it figured out, trade accordingly. See you at the yacht lot.
Right on the money, Fritz. The market was in a big hurry to vaporize March OTM puts Friday.
Also auctions Tuesday thru Thursday, especially 10 and 30 year Wednesday and Thursday.
That gives them all day monday to manipulate. But now most of us know the game, isnt that in itself a game changer?
Also interesting - perhaps it means nada - is which equities took field trips below the 200 ema right around said Feb 25th meeting.
Perhaps it is all coincidental. Or perhaps it is a thread that has a big spool. Is it a signature of who owns whoms debt?
Anyone care to post how the US media will present this news as a positive story? Can't wait to read it.
foreign assets to be repatriated into us stocks...
that's obvious, isn't it.
s&p target 1250 on monday on the ultimate buying rampage with all time high volume.
Downside surprise...
What news?
Interesting. If I am reading this correctly, all of the talk over the past few decades about China being like the US in 1900 -- far into the black, with a huge pool of savings to tap/fall back on, is incorrect? And they are, in fact, about 1.5 trillion dollars in debt? This doesn't sound like it'll be China's century after all.
Don't tell Thomas Friedman... he'll be crushed.
Very interesting article by Michael Pettis on why China may be going the way of 1980s Japan and 1920s US:
http://mpettis.com/2010/02/never-short-a-country-with-2-trillion-in-reserves/
RE China
On utube DavinciJ15 posted a vid this morning. Someone in China making a report on conditions there. Sounds Very upbeat, like the 50s usa, love affair with the car and all that comes with it.
It's a pity Dr Strangelove is so misunderstood. Whoever Act's / Panics first LOSES the least !
Yes I was wondering this too. I would hate to play the Chinese in Chess. Who is playing for the US? Who is playing for China?
I think the Chinese are being proactive. God forbid that happens in the US at all.
In the US we think at through to the point that it looks good on paper. I don't think there is any risk assessment done.
Nobody is playing for the US. The US govt is playing for Goldman Sachs.
Will be interesting to learn where all the Goldman guys are planning to hide for the remainder of this century.
china
As the guarantees go up in smoke. Does wonders to instill long term confidence.
Note a peep about this currently on CNBC - but they did have this as their lead story on the Asian-Pacific news page - "China Bank Lending Has Stabilized, says Banking Regulator".
Bahaahhahahaah!
C-R-A-S-H
tomorrow!!!
great that everyone is long for mutual fund monday ;-)
Don't get your hopes up, things should have crashed in may 2009. Let me know when it happens because I have a bottle of champagne in the fridge waiting for the big day.
Well, let's see.
Debt problems in China? Maybe...
Whose mad at the US debt issuer? China...
Euro's all to hell in a handbag. Duh...
Oh my? A run to the precious metals, maybe? Maybe the Ozzie and Loonie?
And if currencies keep round-robin depreciation, commodities?
But Kudos to China. There's a way to slow down bank credit!
If there's problems in China, you don't want to run to commodity currencies. The USD and treasuries will be the only game in town.
So what happens if there's no game in any town ?
So what happens if there's no game in any town ?
The End Of The World As We Know It (R.E.M)
http://www.youtube.com/watch?v=Bmxyj6iInMc
"The total potential impact: $3.5 trillion smackers."
The sound that you're hearing is not the low spark of high-heeled boys. Game over.
Oh c'mon. The Chinese could have a bake sale and come up with that money. It's nothing compared to the 23 trillion bank bailout + 70 trillion unfunded liabilities + 12.9 trillion in national debt and who knows what else the US has.
TGD
I don't trust our government, but we can trust the Chinese Communist Fascists to tell the truth. After all they don't have a dog in the fight.... Huh ????
Yes, that is what I am saying. Why would the Chinese be doing this now? What is their end game? And that is what I refereneced above with the comment in my above post as to the person that posted "those that act first loses less". I said I didn't want to play Chess with the Chinese. And who is playing for the Chinese and the US in this match? I'm just curious about the strategy. It's interesting to watch.
TGD
You are listening to the noise. Look at the pieces on the board, without any further input. Imagine you are playing a game of Risk/Civ/Supremacy, just the pieces on the board is what I'm saying.
Geopol has some excellent posts explaining some of the American chess moves. It's all about oil, the growth machine, and supercarrier groups.
Nobody is playing for the average American people if that's what you are asking, which is a whole 'nother revolutionary ball of wax, but the American PTB are sticking and moving; you just aren't looking.
"The Iraq War is largely about oil." - Alan GreenspanRight is he the one with the Groucho Marx avatar? I know no one is playing for the American people. It is still interesting to me. I think I was more curious as who some of the "behind the curtains" people are that are moving the pieces. It's funny that you made a reference to the game Risk I was going to but I felt Chess was probably the better analogy.
Sometimes I think the game is actually Othello (aka battle reversi). Things seem to make sense, and then everything gets flipped around, just like all the tiles on the board.
"The Iraq War is largely about oil." - Alan Greenspan
And much more about protecting several governments, their central banks, their member institutions and some key industries from the need to face trillions in potential loses and liabilities. Follow the flow and know the drivers and those that can and do influence that flow...
The Chinese have all the advantage in this game. They can default on any debt that they feel cheated them. What can we do? Attack a nuclear power? Nonsense. Our military is useless.
In any trade war, China can nationalize the $ trillions in plant/equipment the fortune 500 stupidly invested in their country. They get the debt wiped out, they get the plant and equipment, and they get technology and education that would have taken 50 years to build organically.
But then they lose all of their US treasuries, and the US gets its' debt paid off too.
Pyhrric victory? for whom?
Yeah, but then the US can default on its debt to China (the almost 1 trillion in UST). Who gets the best deal?
Who is in more debt. US or China?
The US can default on the debt owed to China i.e. US Treasuries, almost a trillion of it. Dumbasses put almost all their eggs in one basket.
Thanks, Barney Fwank!
Random thoughts from the uninformed, i.e. me.
Shanghai A shares will have a margin call sell-off pressure as Chinese internal investors have to recapitalize portfolios and private savings from their losses on debt instruments.
Some of the Communist Party fiefdoms (all the way up to Provincial cadres) will go into cannibalistic death spirals similar to what happened to the nobility of the British Empire in the wanings days of WWII. The general populace will be squeezed through 'corruption taxes' past the breaking point as the cadre attempts to cling to their elevated socioeconomic lifestyles slipping from their grasps.
Some areas that were just starting to be tamed will actually get more monies from the Central Party, such as Urumqui and Eastern Tibet, as the Han nationalists attempt to secure the periphery with excessive outlays compared to midterm and long term benefits... such as the ending days of the Western Roman Empire, or even the French colonial empire in the 19th and 20th century.
The Chinese governments in areas where land wasn't used as collateral to these special investment vehicles are going to do the unfathomable, and implement some sort of property tax system on residences. Maybe also 'impact fees' for commercial developers who aren't part of the local governing cadre. RE and CRE will finally devalue to closer to realistic levels , wiping out many current private investors but in the midterm allow more future Chinese to afford homeownership. A lot of perceived stuffed pigs are going to be stuck pigs in the shake out from this regulation.
However, the Communist Cadre work very much like the US Congress, much easier for them to have mutual back scratching than try to target some other province's special investment vehicle in fear that your own special investment vehicle is next to be targeted as the kettle calls.
So, what you are really saying is time for consumer enlsavement via debt for the Chinese? Breakout the savings!
Bank One ($3 billion) is now part of the (in)famous JP Morgan Chase Bank !!
So the global financial war is starting in earnest. Odds are this will be a hot war within a couple of years. Good time to live on another planet.
In Caleeefornia there's talk of legalizing marijuana. Just in time.
Bill AB 390 winding its way through committee.
I want to smoke some pot with the Dalai Lama.
But will they then make Doritos illegal. Be careful for what you wish for.
they better! they cost US tax payers $1.5 billion (number is fictional) a year in health care costs due to diabetes.
Study Finds High-Fructose Corn Syrup Contains Mercury:http://www.washingtonpost.com/wp-dyn/content/article/2009/01/26/AR200901...
I know man, I am trying to get off the Dew. I don't want the Pound Police coming after me!
You are not the only one!
Wizards' Caron Butler Overcomes Addiction...to Mountain Dew:http://sports.yahoo.com/nba/blog/ball_dont_lie/post/More-on-Caron-Butler...
I am in the two can to 1 liter range. But yeah.
Try Green Tea. Green Tea is the shiznit! There is a brand called Yogi that makes a bunch of flavors, so there is a chance that there is at least one flavor you'd like (read the instructions). Brewing it is more complex than popping a tab, but it should take the edge off, it has caffeine. And it looks like dew too! haha
About time!
Well, you're in luck. Tickets are only $7.99. What a bargain! http://www.escapeearth2012.com/
Robot on point I think. And the question above, "who owns this shit?" is also very important.
This has the potential to move markets.Given the big notional amount involved it would appear to be one of those 'big deflationary things' that keep popping up.
Just a question. How does a central government 'nullify' a guarantee? WTF?
I think China just transferred all of the risk from their local gov'ts. to their banking system... at the same time as a property bubble is deflating. Given that China is a crony economy, many of these banks will be tied to political leaders through blood, friendship, and money.
Could this be an attempt to give the national government ultimate control of which banks get bailed out (the connected ones) and which go belly up? This could be just a consolidation-of-power move.
consolidation of power against whom exactly? The major banks are all tightly intertwined with the central government here.
Provincial power cliques, with their local crony banks and local crony industrialists. I am just speculating that the last decade of growth may have boosted far-flung, nascent power centers a bit too independent for Beijing's comfort... and kind of like a Mafia boss has to keep an eye on his capos, lest they gain too much wealth and independence with their little side deals, Beijing has decided to reaffirm that everybody works for them. Beijing will decide who lives and dies, not some local pol.
Agreed, but....
On the one hand, the abuse of power by local govts is a huge threat to China's long term prosperity. However, these projects have been the main reason for the GDP growth in the last year or so. They still have their sights on overtaking Japan as 2nd largest economy and they need to keep the people employed. I suspect this is the central government trying to get more control over real estate - the bubble is very dangerous, but I doubt they will slow down the projects in total, maybe just try to build fewer luxury villas and shopping centers and focus on other things.
Hey Bruce
Ask Barry how to nullify a guarantee.
A few other notables that had that special "nullify a guarantee" magic- Adolf, Joseph- a glorious list of magicians.
Come on people what is a few trillion between friends
I am sure they will move on and explore new growth opportunities going forward........
We will see which set of bitches wins the prize
$ Bitches vs Gold Bitches take your pick and reap the reward / punishment
So this means the ES futures will only be up 1% tonight, right?
Great imagery, but as I recall, the US equity market is actually up, what, 30%+ since the shafting of Chrysler's bondholders, so how do these two events differ, other than in size, such that it will drive the US equity markets down? Apologize in advance if my focus is too narrow here, but I trade the US equity markets, so declines elsewhere, whether by geography or by asset class, don't really give me a chance to profit. Hence my question.
the US equity markets are in their own little private Idaho, trading on technicals, mania, and a most healthy dose of propaganda while "pretending" there is little to no risk on the horizon. that will change. it always does. this time is not diffferent.
WWIII to (publicly) commence in 3..........2..........1..........
Risk trade off? Better buy some gold, er, silver. The last thing I bought was gold, so........I almost forgot the two step, can't forget the two step! Cuz, you see, you have to move both yer feet 2 dance. Turn my headphones up!!!!!!!
2 Step:http://www.youtube.com/watch?v=FDzYGBEG0wg&feature=related
Haven't I said, on this site, MANY times, that Emanuel is going to do to bondholders both public and private, exactly what he did to the GM bondholders.
We're in an era of de facto (and here, de jure!) default.
Oh, I forgot, that can't happen because, according to Leo the Clown, people have "pensions." Tell that to Mao.
Yeah, well, Anonymous, you say alot of things on this site, frankly. Too much to keep track of, to put it bluntly.
So I'm into the most sophisticated form of gambling - the stock market. What is the short term play for tomorrow. DOW up or down. Considering it appears to be bad news, I'm going with up. Who here at ZH keeps saying the DOW is going to 36,000?
good luck - you'll need it :-)
Based on what I've read here.... for tomorrow, first smoke some marijuana, then eat some doritos, then go to the doctor to have your blood work done, back home, smoke more marijuana, then find a nice hillside to sit on to watch the nukes go off. In between, trade either side you want. It doesn't matter. Everything is going to zero; doesn't matter if you are long or short.
80% of mondays are up no matter what.
This time i am betting on a down monday
Glassman, AKA Master_Bates
This sounds like a sneaky way to replace the U.S. Dollar with the Yuan as the world's reserve currency. After all, at the same time that China is speaking of ending loan
guarantees by local governments, it's also speaking about revaluing the Yuan to a higher level.
The third punch could actually be the act of completely exposing the COMEX and LBMA as having no precious metals and being in default on all contracts.
you are on to 'em sure enough......
You mean China could demand delivery of all its contracts? ouch!
Start the presses.
Load up a couple of C-130's with Benjamins
and head to Beijing.
Bens's Benjamins to Beijing
C-130 Ben it is.
how much is tungsten going for today?
And does anyone actually think confiscation is off the table?
The solution to an inventory shortage is to obtain it from those who have it. And would it not help their cause if they clubbed the crap out of the spot price, spook the crap out of gold bugs only to have Uncle Sam step up to plate to let you off the merry-go-round.
And then turn and sell (give) gold to the Chinese. Although gold was confiscated earlier the US govt. embarked in a gold sell program to the Chinese around 1948-1949 at the very same time it was illegal for US citizens to buy it. Nice huh?
On the surface this looks like a huge risk, but the numbers actually threatened aren't that big, if you believe any of the numbers. It seems to me like Beijing just said, along with their nearly concurrent announcement on exchange rates, that they are taking their system firmly in hand, like Ben / Timmay / Llyod etc have done in the U.S, and will do whatever they damned well need to / want to going forward. This looks to me like control consolidation, and if so, it means rough seas ahead.
This is quite a sensationalist take on China´s fiscal situation, blinded by the big numbers at stake.
But China is a country with more than one billion inhabitants.
Why did the author not quote the final passage of the Bloomberg report where things are put into perspective:
"China’s banks had 497 billion yuan of non-performing loans as of Dec. 31, accounting for 1.58 percent the nation’s total advances, according to the banking regulator."
"China’s banks had 497 billion yuan of non-performing loans as of Dec. 31, accounting for 1.58 percent the nation’s total advances, according to the banking regulator."
Keep in mind that China never had a FASB FAS 157 that was modified through political pressure to a mark to menagerie basis from mark to market; they can account any way that they please.
I believe that if you listen to the Fed, Treasury, FDIC, etc as well as to the bank sell side analysts and main stream media, American banks are doing fantabulously fantastic and becoming a full at risk owner via the purchase of their common is a risk free, guaranteed way to make lots of money. So, like China, our banks have no problems and everything is okey dokey smokey.
A few years ago the Chinese shifted many underperforming and bad loans off balance sheet and into specialist investment funds to give the appearance that they had the problem under control. As we all know, you never believe the “official” figure.
I concur with Mister Lennon Hendrix that most likely, we are seeing the build up to another war.
I've pegged this to be around the 28th of March when open hostilities will erupt.
We shall see what we shall see.
-MB
China will probably be Dumping a shitload of US bonds this week while demand is high. I would watch Gold silver and copper prices to see if the prices hold in what should be a deflationary move as the asian money flows into US markets .If they hold up I would say bait and switch.
Totally unrelated to this thread,
I am reading "A Colossal Failure of Common Sense" by Larry McDonald
"The insider Story of the collapse of Lehman"
I consider it Liar's Poker II and its one of
those can't put down books..
Between it and ZH, my wife will probably ask for a divorce some time next week...
Hopefully you didn't tell her where you stashed your PMs.
Now there's a visual. One for you, one for me.....
Hmm,I suddenly have a need for
tungsten core Maples!
I shouldn't be laughing at that.
Or the Federal Government for that matter.....
I read it several months ago....it may just be the best book out there on the whole mess and McDonald does a very nice job explaining the mortgage securities and the operational process. I've always wondered if he is part of ZH.......if not, he would be a great person to have on board, really knows the bond biz.
McDonald is a firm believer in the repeal
of Glass-Steagall creating this mess.
Does a great job explaining how too.
How many economics profs have we heard
stating that the repeal of Glass-Steagall
has had nothing to do with the current mess?
Oh the irony. I just picked up Common Sense by Thomas Paine this weekend!
FedMorganSachs will pump the market up tomorrow...that's what Monday's are for right?
Something...somewhere...somehow...will eventually squash that party. Maybe it is unexpected announcements like these on a Sunday?
If we are going to have an intermediate top in 2010 it ought to happen within the next few months. That would lead us to a bottom in april/may 2011, as per armstrong's cycle dates. However, I think he is right that there will not be a new low or a massive crash, and 2015 will see all new highs for the US markets, based not on fundamentals, but on capital flows in these ridiculous times of floating currencies.
"China’s local governments are raising funds through investment vehicles to circumvent regulations that prevent them from borrowing directly. A crackdown on local- government borrowing could trigger a “gigantic wave” of bad loans as projects are left without funding."
I wonder how many of China's provincial governments where using these investment vehicles to buy commodities?
I read somewhere in some part of China property increased 20% in a month, If true or not China is in a bubble and this move maybe just a cooling down before the market pops,
I dont know the details but as I understand China is in breach of contract law US style and more, This isnt good and should support gold and US T bonds.I am not sure about the general stock markets. Chinas will be fun to watch.
1. IMHO this may set up a nice buying opportunity.
2. The markets may have a small pullback based on this, but...
3. Why would Turbo Tim and Beard Ben allow a significant drop in US equities because of China's problems.
4. If anything this along with persistent news form China of wanting to curb speculation should effect Australian markets more than US. (And the Australian Reserve Bank just increased rates)!
5. Clearly except for saber rattling, China is still buying US treasuries; so why the excitement?
6. I read all East Asia problems/pullbacks as buying opportunities.
7. IMHO we may have a pullback on Wed and Thursday to help the sale of 10 and 30 yrs and then back to risk off trades.
Leo... is that you ?
china still buying treasuries? where do you get that ?
Feeling's gettin stronger
Dollar's gettin longer too
Dollar is flashin me
I want to take you higher
Don't ya want to get higher
Baby baby baby light my fire.
Not unexpected but sooner then I thought. Now for some serious positioning. Gentlemen, start you're engines, we could be in for a rough ride.
I imagine it will drive the dollar up this week and the GBP and EURO down?
why would CHINA decide to do this now ? please someone help!
Imagine a very large fan. Imagine China sitting very close to the fan. Imagine the US sitting next to China. Imagine BO throwing something brown and stinky at the said fan. Now China says, "We can do that as well!" Apparently neither mind when the stinky brown hits them, as long as they threw it. Also note the man with the whip behind them saying, "Throw your shit at the fan now!"
The world's leaders are as smart and mature as kinder gardeners, and for them this is about massaging ego and doing their master's bidding, not keeping clean. It is, after all, a race to the bottom. Because out of the ashes...bla bla bla.
And just when I thought they would be able to keep polishing this turd in perpetuity. More bailing wire and duct tape, stat!
GOLD BITCHES!!
I am Chumbawamba.
What if said turd is made from solid gold? Commence polishing? :)
you cant polish a turd. but you can roll it in glitter.
Very interesting that B'berg just took of the story from their front page internet "Breaking News" list.
Does any one have a Bberg terminal in front and this under the TOP news???
Or did Timmy call to hide this under the carpet?
Don't forget what Barney Franks said last week about the Freddie/Fannie paper. Now we get almost the same shit today from china. And Iceland told the europeans to go screw themselves this weekend. Geez nobody wants to make good on their guarantees anymore.
Out of the three, which one do you feel is the most significant? Just wondering.
I'll bite.
1. though the monetary amount is relatively insignificant, I'll go Iceland. The other two are politicians doing their usual. In Iceland, the entire population said "fuck you". My reading of history says this is ultimately more significant. Taking it a step furthur, Iceland's leader responded to the people, after they said "fuck you", by saying, "fuck you".
Some of that is happening in the USA and if those currently saying "fuck you" to the US gubbermint, Fed, Wall St/Banking complex, pick up steam from the Icelanders, history could take a little different course.
as a p.s. on the issue of honoring guarantees, I am forced to note that the Fed, US Congress, and US Executive Branch is honoring their guarantees to transfer as much of this nation's wealth to a small group of private financial institutions.
Iceland's turning into a fun little renegade pirate nation. Soon they'll open casinos and take up off-shoring numbered bank accounts for future ex-leaders of America, Greece, and China.
The USA could learn a lot from China and no longer prop up GMC, Chrysler, Freddie, Fannie, etc. At the same time, the USA could learn from Iceland and let THE PEOPLE VOTE on things like allowing TARP or not (and vote on health care too of course). China is making the right moves imho as the country should not be held liable for private investment and the risks involved.
It is called counterparty risk folks, and one thing to be totally avoided nowadays. This includes your money market funds, the stock market and yes your 401k. With the scribbling of a pen the US government could take your 401k and have it 'transferred' into something else. Is this a risk you are willing to take?
Yes, this bring us to physical gold holdings as it has no counterparty risk, easily transported and sold into whatever localized currency at the time/country of sale. Right now is not the time to play the game of risk, especially with things like retirement funds and 401k.
Gee imagine that. A Communist country acting more like a freemarket economy than the supposed bastion of free market activity the good ol US of A.
Communist! Coward! Chinese synthesizer!
Ah, no counterparty risk, three of the most
beautiful words in the English language today!
Got Gold?
After a full year of "news that was so bad as to kill the ridiculous rally" I give up. Come on Mutual Fund Monday lets see a 200 point rally!
Me too.
So many false promises of doom. Not California, not GGP, not CIT, not Dubai, not Greece, not continuing unemployment can halt this melt up.
It seems they've discovered the financial version of the perpetual motion machine and I'm convinced that we'll see the DOW at 11K before it cracks ten again. *sigh*
These special financing vehicles are nothing at all to worry about folks.
You see, I have read that many of our U.S. banks have used these same types of special vehicles and all is just ducky with the assets contained within those.
IS this in response to Barney saying FNM and FRE were not guaranteed by the US? Watch the mad rush to Treasuries and the Dollar.
Oh some more bad news, should be good for another 1000 points on the Dow
Whaddaya mean, bad news?
Not according to this guy:
http://seekingalpha.com/user/473496/comment/927249
The better view may be that this move by the Chinese authorities is similar to the recent move by the US Fed when it increased its discount rate for credit extended to investment and commercial banks. If so, both these moves are welcome signs that both China and the US consider that the fragile current recovery is resilient enough to justify removal or winding down of some of the unorthodox special measures taken in the wake of the September/October of 2008 meltdown to prevent a collapse of bank credit for normal consumer and commercial transactions.
The usa bankstas have nothing to fear. The fedres will buy all failed investments or the usa treasury will off balance sheet them.
On "Local Government Financing Platforms" (LGFPs)
http://blogs.wsj.com/chinarealtime/2010/03/08/comments-on-local-governme...
LGFP tycoons have been having a ball shopping for designer goods in Hong Kong and playing the tables in Macau.
Correct me if im wrong but wouldn't this be the same as the U.S. gov telling the people holding debt in say California munis that they are on their own... that the U.S. taxpayer will not backstop local or state governments? Or that the U.S. taxpayer wouldn't backstop holders of Fannie or Freddie debt? You know something that a country that believes in free market capitalism would do? Unfortunately officials in our country have gone down the other road... They are backstopping everything... they are going down the road to serfdom.
They are backstopping everthing? Cool. I'm off to the mall. Where's my credit card?
Remember this note from Art Cashin on Friday.
Is China Harboring Scores Of “Californias”?
There are concerns growing about municipal and provincial debt in China. Professor Victor Shih has recently warned that –
http://www.zerohedge.com/article/morning-musings-art-cashin-1
Sorry folks, the futures are about flat right now. Obviously there will be no crash tomorrow. It's going to take a lot worse news than this to derail this puppy.
Stop feeding the pig, take your money out of the banks, 401K's and IRA's now before it is too late. We're all monkeys.
http://www.youtube.com/watch?v=y12hkHdN3Ds
All that money, just sitting there waiting for them to take it or at least freeze it so you can't get at it,.....
just far toooooo tempting to the Gambling Geithner and Ben and his Heli
This is an interesting bookmark to check now and then:
http://www.bloomberg.com/apps/quote?ticker=CNLNNEW%3AIND
Note the sudden flare-up to initiate the year. This recent ramp-up represents one-fifth of what the Chinese stated they would lend for it's stimulus package of 2010. 20%, already done. Will they truly meter the remaining 80% of the stated limit smoothly over the rest of this year? Hmmm.
Yuan appreciation? Perhaps as part of the feign towards inflation, just before the next deflationary blow bang.
I foresee much, much dumping of Most Glorious People's Revolutionary Products upon global marketplace. Anyone care to apply for a position as a WTO arbitration specialist? Anyone? Well, you just think about it, and get back to me later.
Leadership. Morals. What's my cut?
Beating Asian markets to a pulp....