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Step Aside ECB: China Becomes Lender Of Last Resort To Failing Greece, In Exchange For Petrobras-Like Shell Game
Here is how you kill two birds with one stone, all the while confirming that Europe has been about a step away from a full collapse. Greece, which like Ireland, has been unable to peddle its bonds to anyone now that Bunds spreads are back to all time record levels, has just seen the last white knight of the Keynesian system come to its rescue: China. As Bloomberg reports, the European lender of last resort is no longer the ECB: "China has already bought and holds its Greek bonds,” Wen
said in joint comments with Papandreou today, which were carried
live on state-run ET-1 television. “It commits, very
positively, to buy new bonds to be issued by Greece." Yet herein lies the rub: in exchange for the Chinese last-ditch rescue financing, which by the way is so transparent that everybody, except maybe for the Norwegian wealth fund will see right through it, Greece, in what is an almost identical replica of the Petrobras shell game, will use the money to turn around and buy Chinese ships. "Wen said a $5 billion shipping fund will be set up to
tighten relations between the countries’ two maritime industries
and facilitate the sale of Chinese vessels to Greeks." Truly brilliant what Keynesians will come up with in the last days of a collapsing economic religion.
And one wonders just how far the reach for yield has pushed China - instead of buying US bonds, the country with the $2 trillion + trade surplus is investing in the sovereign equivalent of subprime. Which makes sense, when your cost of capital (i.e. artifical GDP growth) is 8%+, buying 2 Year US bonds at 0.4% just won't cut it any longer.
Greece received a 110-billion euro ($151 billion) bailout from the EU and International Monetary Fund in May to avoid default. The country, which has been locked out of international credit markets, plans to issue new bonds in 2011.
In the first visit to Greece by a Chinese premier in 24 years, Wen said he wants to signal a vote of confidence in Greece and the European Union in overcoming the international financial crisis.
“With our common efforts the total mass of imports and exports between the two countries in the next five years can double to $8 billion,” Wen said. He called on Chinese businesses to invest in Greece.
As for the JV in what could be the most oversupplied industry in the world, here is how China and Greece hope to confirm that all is well, despite a Baltic Dry Index which after its latest dead cat bounce, so vapidly extolled by those who have no idea about supply/demand mechanics in the Capesize sector which has about 5 boats of excess supply for every boat in demand, has been down for nearly two straight weeks with one or two day exceptions:
The two leaders will today visit Piraeus Port, Greece’s biggest, where Asia’s third-biggest container terminal operator has a 35-year concession to run some operations. China plans to deepen its Piraeus investment to move 3.7 million containers a year by 2015.
Cosco Pacific Ltd. won the concession to run container operations at Piraeus Port’s Pier II and build and run Pier III in 2009. Greece’s government owns 75 percent of Piraeus Port Authority SA, the company that manages the harbor.
Wen will speak in the Greek parliament on Oct. 3, Ambassador Luo Linquan said in an interview with China’s state- run news agency Xinhua.
For all intents and purposes, this is equivalent to Buffett buying a stake in Goldman, or convertible preferred in GE, just before the bottom fell off the market. The problem here is that after China, there is no other backstop left, period, unless one discovers some rather prominent printing presses on Mars, coupled with some intelligent life. Which, unfortunately for Greece... and Earth... would mean no Keynesians.
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Great minds think alike? Easy to say, especially among like-minded people, but nothing could be less true in reality, I think.
Great minds may be rare and beautiful things, but there are no functioning minds under heaven who see everything the same way.
Great minds, imo, understand that they are subject to error, i.e., don't have absolute truth nailed, everything figured out perfectly.
Great minds consequently value opposing views. Or at least tolerate them with the understanding that they need to be pushed to relentlessly question their own positions in order to further refine their thinking in pursuit of that elusive perfection they desire. This is where intellectual integrity and integrity of character find their real test.
Shouting down and ridiculing opposing views suggests something qualitatively different from great minds to me.
+ millions.
Thanks, Bob. A voice of reason among a horde of screaming group-thinkers.
Leo may have rose-coloured glasses when it comes to how long his pension funds will stay solvent and be able to actually make a payout but, IMO, he is correct in this thread.
As 'carbonmutant' said above, this is a [backdoor/first] bailout of the EU -- not just Greece.
A backdoor bailout--or substantial interdependence--with the EU would change the entire global game. That's some very serious stuff. We'll see.
The global game is indeed changing ... and it would be a much more peaceful globe with the Chinese at the helm rather than the Americans! The Chinese prefer to stay within their own borders (behind a wall, if necessary) to trade rather than fight ... the Anglo-Saxon-American prefers to conquer and plunder rather than trade (or work).
The only longer-term problem is to determine whether the Chinese will be able to retain any kind of economic hegemony in the face of a concerted effort by the white oligarchs to eventually bring them down too.
Sadly and very ambivalently agreed, though it is impossible to know what the Chinese would do with our kind of power. Power corrupts, and we have fully demonstrated just how profoundly true that really is.
Read through this thread and you'll see just how vitally important the role of China may prove to be:
http://www.zerohedge.com/article/nightmare-scenario-fed-outlives-us-federal-government
Thanks for the link, but I've commented in that thread already. Mikla did a fantastic job of putting a critical step in the endgame more simply than I could have.
I trust the Chinese not to abuse their power (as if that counts for anything!), but they won't play second fiddle to anyone else either. Mutual coexistence is their preference.
China has an important member in the oligarchy but, as I hinted earlier, I have not yet worked out how the eventual interplay between the European aristocracy and the Chinese imperial heritage will play out. Neither trusts/respects/likes the other and they don't share any ancient bloodlines (that I am aware of).
I'd like to trust the Chinese--it would be nice to trust somebody!
Yet chindit beautifully makes some very relevant observations in his post below.
I think the most I can trust is that a reasonably equal balance of power would keep everybody as reliably honest as they probably can be. Unfortunately, we have that globe dominating Navy that arguably controls the world's resouce shipping lanes.
Which makes it vital, imo, for China to quickly establish serious international alliances that do not include US.
For our own good. And theirs.
Gentlemen
Who the hell are "the Chinese". You are talking about a few thousand members in good standing of the Chinese Communist Party.
You are ascribing to them benevolence that does not exist.
The "China Miracle" is factory slaves and Western consumer slaves. The Chicoms turned themselves into Fascists. Oh yeah, same thing.
Not sustainable my friend. All of China's moves are wrapped in the survival of the political fascists.
Wishful thinking is not deliberation. I'm waiting for the cobbling together of the China Middle Class. I think I will be waiting a very long time.
You need to plug your Koolaid drip back in and go back to Oprah for your world news. ZH is too complicated for you.
FYI, China's middle class is already larger than the whole population of the USA. The USA's middle class is about to become extinct.
Kayman, please see my previous post in this thread again to discern my faith in benevolence. It would definitely be an error to assume that they must be "better" than US just because we couldn't seem to get much worse.
"The Chinese" as I use it would be no different from most references to The US--the political and money elite, of course.
China Miracle? I haven't seen any miracle . . . the process has been pretty obvious (saavy negotiation and accomodation with Western financing.) I don't argue in support of low wages, but history shows us that development always starts there. They've come a hell of a long way in an amazingly short time, but it's no miracle.
Do you think that Western countries will allow Troyan horse in EU.This is why Central Intelligence Agencies exst. The Greece disies is so spread beyond financial issues that now western world will have to kill his own pacient. it is now thretening the political future of Western world by singaturing brotherhood union with CHina.
This is end game not only for the lazy Greeks but fot the Nation itself.
By the way they have long played double chair with Russians which was reprimanted by US but this is 2 much to afford.
Well, lied like the media. Back posting.
Executive Order: Blocking Property of Certain Persons Who Threaten Stabilization Efforts in Iraq
http://www.whitehouse.gov/news/releases/2007/07/20070717-3.html
What? A fucking dead flag@whitehouse.gov link. LOL
Well the story gets better.
January 9, 2008
HP-759
Treasury Designates Individuals, Entity Fueling Iraqi Insurgency
http://www.ustreas.gov/press/releases/hp759.htm
Meanwhile, Peace Pipeline sends this message out.
'Obama gives Pakistan ultimatum'
http://previous.presstv.ir/detail.aspx?id=144542
Grandpa Buffet is sitting on the back drop with bated breath.
Choo choo!
There once was a country call America. Who tried to isolate and cut off everyone that troubled them. Their dollar got wrecked. Their power got checked. Now nobody comes to visit them.
And they haven't a clue about why.
Washington has reportedly conveyed the message that the Obama administration will no longer tolerate safe havens for terrorists in Pakistan to President Asif Ali Zardari.
Senior US officials have told Zardari during a series of secret meetings that President Barack Obama claims the cancer of terrorism exists in Pakistan, The Washington Post reported on Wednesday.
The meetings took place in Islamabad after US officials blamed the failed Time Square attempt in New York a US citizen of Pakistani descent.
Holy Christ!
Well, all I can think is that we're blessed to have the full US Government National Security apparatus protecting us from cancers--well, except for those whom everyone on the planet knows still have genuine WMD's in the billions on Wall Street.
But some of them even must be people of Pakistani descent. Perhaps we could demand that the Pakistani's take care of the Terrorists on Wall Street for us, if they're responsible for cancers and all?
Obama sure do talk tough, don't he?
I love how easily one can label *ANYTHING* created by government officials as "naive Keynsian policies". With so many armchair economists talking about economics the one guy who isn't here to defend himself as his name is dragged through the mud is Keynes himself.
What did China buy the Greek bonds with? Renminbi or did China swap the Greek bonds for US Treasuries? At least the Greek bonds have some upside...
Constitution Revolution 2012
http://www.youtube.com/watch?v=lt-jcS3ItRY
How the EU operates.
Nigel Farage on voting in the EU parliament
http://www.youtube.com/watch?v=ax-sDZisMag
Someone has ideas about beating the Mayan calendar. Lower the expectations, figurehead's look like a genius.
LOL
Gap up on Monday?
"Greece always comes back stronger"....Leo
To be frank, this is wishful thinking bordering on hyperbole. I believe a good case can be made that Greece's position in the world was a little stronger 2500 years ago, when it was easily in the Top 5 of the world's most important nation states. It has yet to even approach the same level, and hollowing out what remains of its shipping industry---along with the ancillary employment that industry affords Greek workers---does not seem to be the path to salvation. On a long enough timeline....is "always"?
By all means welcome the Chinese in. It's been working great for other countries. In Burma, the Chinese have secured mining rights to virtually all of Burma's vast natural resources, and in return the Burmese people have gotten: pollution and a landscape increasingly devoid of trees. Rivers are poisonous and/or being blocked by hydroelectric projects where 100% of the generated power is going to China and where 100% of the labor force is imported from the Middle Kingdom. Of course, some Burmese do get newly created waterfront property, at least those not washed away by the resulting lakes. Just an opinion, but if solar can pollute, the Chinese are the ones who can do it.
And like in Greece, the government gets some cash, to do with as they please. The Pap Boys will now be able to afford those nice Teutonic SL600's.
Then there's women. Chinese have this big demographic problem, the result of the One Child Policy and the preference for male heirs. Thirty million extra 12-20 year old Chinese males vs. females. Chinese have two solutions. The first is the new " To Bugger thy Comrade is Glorious" ad campaign, while the other has been kidnapping Burmese women from the border areas. I'd keep those photos of the Greek women on your hard........drive, if I were you, and stop advertising.
And please post photos when the Parthenon is all done up in gold, green and red paint. I do think those red lanterns might work better than Diogenes' lamp, though.
On a less facetious note, this shoring up of Greece has as much to do with China wishing to maintain the value of the euro as anything. Get the euro up vs. the dollar (along with taking every yen the BOJ decides to intervene with) makes it easier to "give in" to Geithner and let the yuan appreciate vs. the dollar, all the while maintaining the trade surplus with the US that accounts for 175% of China's total. China's trade deficits with Japan and Germany will be allowed to continue only so long as China has more technology to steal (and they baited Geithner by offering to let the yuan go if the US would relax export restraints on high tech gear).
They have a plan. Greece (and sadly the US) do not.
The "To Bugger thy Comrade is Glorious" policy could also work in Greece, I'm sure...
hehehe ... how ironic! Good call.
No training necessary. The book was written in Greek.
Chindit:
Actually, the male/female imbalance ratio has created a huge strategic advantage for China. Assuming that 50% of the Chinese male 12-20 age cohort is of military age,
Voila! ....fifteen million fully expendable PLA soldiers !
fifteen million fully expendable PLA soldiers,
and no way to transport them....
Ever since I remember our governements always said " we belong to west" meaning USA, NATO, etc. We had a bloody civil war for that. Now it seems that we went beyond, crossed the pasific and landed on China. Earth is a round.
+1 They have no idea what they have begun. What is on the outside is not necessarily on the inside. Culture is as different as night and day. Watch what you have unleashed globalists... there is no going back now!
This seems super fucking bad for us. What did I miss?
Also, what happened to this comrade?:
http://x3etfhell.blogspot.com
Additionally yet, what happened to Chumba, or Gordo Gekko, or CheekyBastard, or ProjectMayhem?
I'm becoming increasingly suspicious, but LOVE American Idol and Dancing with the Stars.
Matrix is a system
http://www.youtube.com/watch?v=MXQozTxQSiE
One is staggered by the stupidity of people.
Well, the Chinese are smart capitalists. They're on our side, sort of, until the gyros curtain falls.
In November 1864, six days before his assassination, Abraham Lincoln wrote in a letter to Colonel William Elkins:
I wouldn't worry. Peeps are aware of the deceit.
Fiscal year ends in fiscal failure
http://thehill.com/blogs/congress-blog/economy-a-budget/121819-fiscal-year-ends-in-fiscal-failure-rep-paul-ryan
This is as similarly provocative as the recent Chinese purchases of Japanese Government Bonds that just kicked off the currency wars in earnest...and Leo, I am sure you would agree that one of Greece's problems is corruption at every level...but not this deal?
btw, thanks for making it abundantly clear how long European union lasts in a tight spot. I cannot tell you how much damage you do your cause by writing that way.
I am almost beyond caring; after all the news of this last week from Ireland, US Mortgages & Miracle Allonges, FDIC unlimited guarantees, Meredith Whitney calling it again, SEC v Wadell & Reed and now this.
I will just continue buying gold as I can afford it up to $2,000, which I hope is at least the next few years but I expect it won't be.
Updated GOLD monthly chart:
http://stockmarket618.wordpress.com
A strong Euro is not politically or economically tenable for all of the Eurozone countries, therefore the Euro will soon no longer be.
This is very simple; every country on earth cannot be a net exporter at the same time.
John
TRUE. Nor can every country destroy their own currency (relatively) at the same time.
I would not praise China foreing curreny of the amount 2.5 trilion $.
Since this number diveded by population comes to only 1500$ per Chiness. With the current inflation and $ depreciation every day is less and less.
Not to mention increasing prices of food to feed this population. With 1500$ per Chiness citizen they can provide food for only 2 months. And here we have Greek rescue help, with unknow number of debt, each day they find new one. Plus purchasing other EU, US,JPY securities below the cost of debt = destruction
when your cost of capital (i.e. artifical GDP growth) is 8%+, buying 2 Year US bonds at 0.4% just won't cut it any longer.
Sensational stuff ZH. I wrote about and reported about the Chinese interests in EU in december and it was promptly ignored. I once again reiterated it this weekend and you guys finally waited for it to make it to every regional newspaper before picking it.
And report it you did. With bias and color that probably fits any of government controlled media outlets. In fact someone who writes just like you guys do is the nut called Ambrose Evans from Telegraph. That fellow was jumping all over shouting the end of the world every single month from Jan 2008 to Dec 2009. I think he is half brother Nourial Roubini. Now welcome to the stage, ZH who goes great length to fit in their convoluted theories. A few questions for you guys and your ardent fan: akak
Who told you that the Chinese GDP growth was artificial? Do you have proof? Cause the it is much more easier to believe the GDP growth of China to be upward of 10% given its Telecom growth, electricity growth, broadband growth, retail growth and HSBC PMI and 100s other indicators. All you are relying is a few idiots like chanos who cant add 2+2. In fact the guy was short from 2200 on shanghai and if he has not removed his big shorts he is staring down the barrel here.
"The problem here is that after China, there is no other backstop left, period,"
So why would you be looking for more backstops? And what about ECB? In fact China is a convenient factor brought in to a place where ECB should have been buying the toxic assets. You dont see China buying California bonds, do you? So EU has pulled a master stroke here by selling Greece to China. As far as the arrangement goes, I cannot see any red here. It is a perfect trade for China who is desperate to shake US off its hook. Obviously the end of fiat system seekers cannot live another day to see such news which somehow make them wait endlessly for the collapse of the system. Sadists. akak?
fresbee
1.You want proof that a Fascist government doesn't lie about its statistics ? What's the punch line to that joke ?
2. You think Greece is a substitute for Walmart. Again, I need to know the punch line.
Just more export ponzi BS
So far reading the comments, I've learned three things:
1/ Most posters here [presumably American] know very little about Europe esp Greece;
2/ they know even less about China; and
3/ belief in one's stereotypes does not constitute knowledge
The way to make money is to buy when blood is running in the streets
~ attributed to John D. Rockefeller or Baron Rothschild
China will get access to Greek shipping infrastructure at a bargain price.
A steal of a deal when compared to the cost/benefit of Iraq or Afghanistan.
Colonel Sun
So far reading YOUR comment, I've learned 3 things:
1. You believe in the stereotype that "Americans" are all ignorant about Europe and Greece. I, for one, believe that ignoramus's are ignorant.
2. Some American's know a lot about China. Without Nixon, Clinton, Bush and Obama China would still be entirely an agrarian backwater. Without American investment China would still be on the outside looking in. But when entering this Faustian bargain (promoted by corporate America), I don't think either country considered how dangerous this symbiotic relationship would become.
3. Most of ZH'rs seem capable for thinking outside the box, so I call bullshit on your generalization of what constitutes knowledge.
While I acknowledge the waste of blood and treasure in Iraq and Afghanistan, pray tell what was the cost of the Cultural Revolution ? Ah... get out that little Red book and read me some passages again.
Kayman
So far reading I've learned three things:
1. Yes, in fact most Americans are willfully ignorant about Europe and Greece. Pundits and some ZH posters here included.
2. Some Americans are very knowledgeable about China. However, they're not posting here. China is where it is today thanks to Deng Xiao Ping and, well, the Chinese, not former and current US POTUS.
However, it is to Nixon's credit that he realized that it was silly to continue to pretend that over 1 billion people do not exist.
http://www.china-profile.com/data/figures/fig_fdi_3.gif
3. Most ZH'ers seem to expect imminent global collapse any day now.
I think that they have a longer wait ahead of them than most realize:
http://www.amazon.com/Great-Reckoning-Protecting-Yourself-Depression/dp/0671885286/ref=sr_1_1?s=books&ie=UTF8&qid=1286134539&sr=1-1
4. China learned from the deadly mistakes of the Cultural Revolution. Compare Mao's Beijing of the 1960's to Beijing today.
The US appears to have learned exactly zero from it's defeat in Vietnam.
Okay. Four things.
China still charges for the execution bullets, no?
As I said 5 months ago when the Euro was in all but reality called to vanish from the surface of earth (including Tyler) I said China will come to the rescue because it is in their interest since Europe is a bigger market than US for the Chinese. But as usual Americans are to busy with themselves to see the obvious...and here we are.
So Old and Senile.
China will "save" Europe by providing Vendor Financing while European consumers buy useless crap from European Walmart. That sure did a lot of good for the U.S.
I think our political animals, including most of the Europeans, are seeing the structual imbalance/currency problems that come from unstable FX balances and will send China home packing. Only the very weak and larcenous will try to outsmart/outscrew China.
China has already lost 2 years of cobbling together the Miracle of the Chinese Middle Class. To generate sufficient average wages to support that goal will require the help of the divine.
Of course, they could encourage a USD black market with all their excess reserves (after all the renminbi is really just a mini-me US dollar).
Dream on Kayman....to the Island you never will come
China will act in it's own interests and do what the US has been doing for decades:
loan a foreign country money and then demand that the foreigners use that money to purchase their [US or China, as the case may be] goods and services.
You are right...and that with very few words. Agree
Chart: ES
Down Channel.
http://99ercharts.blogspot.com/2010/10/es_03.html