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China Just Killed All "China Bails Out Europe" Rumors For Good

Tyler Durden's picture


Just in case there are still any hopes that the FT, or any other credible media outlet, may come up with a story, like it used to do almost daily back in 2011 and early 2012, that China, whose stock market continues to plumb 3 year lows, has some capacity to inject cash (that it doesn't have) into a broke continent (which would never repay said cash even if it existed), here comes none other than China's Sovereign Wealth Fund to make sure there is never again a rumor that China will bail out Europe. From Reuters: "China would be interested in buying into a Eurobond backed by core euro zone countries and considers investment in bonds issued by heavily indebted European countries unrealistic, a senior official with China's $480 billion sovereign wealth fund said. Jin Liqun, chairman of the supervisory board of the China Investment
Corporation (CIC), said until fundamental problems of fiscal, social and
monetary policies in euro zone countries burdened by debt are solved,
there could be no investment.
" They never will be so scratch that possibility out. Now we can limit the universe of idiotic Europe is saved (it isn't - it is only a matter of time now before the ship sinks) rumors to at least one less.

And some more:

"It's not realistic to expect any Chinese investor, CIC included, to buy the bonds, which are not safe," Jin, a former vice finance minister of China, told Reuters on the sidelines of VTB Capital investment conference in Moscow on Tuesday.


"If the euro zone would issue a Eurobond backed by all of the (core) countries - it is more attractive to international investors."

It is, however, realistic to expect entities which are also "unsafe" to dodecatuple down on said "unsafe" bond purchases. Such as all Italian and Spanish banks, as well as all central banks, which have now become toxic bondohazard repositories of only resort.

That said, thank you China for your honesty.

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Tue, 10/02/2012 - 11:05 | 2848369 Shizzmoney
Shizzmoney's picture

China to ECB: Take your Communism somewhere else.

Wait, what?

Tue, 10/02/2012 - 11:08 | 2848376 zilverreiger
zilverreiger's picture

if you read the article they call for more communism

Tue, 10/02/2012 - 12:48 | 2848767 dracos_ghost
dracos_ghost's picture

Gee, I thought they were rotating their peg with bias towards the Euro away from the USD. They're full of shit. They HAVE to buy every little scrap of paper on the planet(Euro included) if they want to play this mercantilist game any longer.

Empty rhetoric from an imploding Middle Kingdom. 

Tue, 10/02/2012 - 13:29 | 2848938 francis_sawyer
francis_sawyer's picture

Call in the jayvee [Hilsenrath]...

Tue, 10/02/2012 - 16:35 | 2849629 Zeilschip
Zeilschip's picture

Don't you know, Bennie is going to bail out Europe. That's common knowledge by now right?

Tue, 10/02/2012 - 11:10 | 2848387 monkeyboy
monkeyboy's picture

$480 BILLION just doesn't seem that much anymore...

Tue, 10/02/2012 - 11:19 | 2848415 DeadFred
DeadFred's picture

When the aliens come they will be able to lend 480 B easily, and with their mind control techniques they'll be able to instill confidence into the market. If you think about it maybe they're already here (without the cash) and that's why the idiots believe the rumors every time.

Tue, 10/02/2012 - 12:00 | 2848557 JohnKozac
JohnKozac's picture

Sorry, the NAR said the Aliens are busy buying up all the 13 million Shadow Inventory of boxes. Eventually, they will work their way into the 13 million MLS (Multiple Listings Stuff).

Tue, 10/02/2012 - 11:21 | 2848414 LawsofPhysics
LawsofPhysics's picture

There's a bit more, but my thoughts exactly.  Fraud remains the status quo, everybody is lying.  Last chance to get physical assets of real value before all the real sellers left start walking away.  Does it really matter if a fake "market" goes bidless?  Guess we will find out.

Tue, 10/02/2012 - 11:34 | 2848471 Theosebes Goodfellow
Theosebes Goodfellow's picture

Why fool around with fraud when outright theft is so much easier? JPM just did it to Forex & physical PMs players at PFG. Hell, they even used a courtroom to do it. How slick is that?

PFG Forex and Phyzz Metals Accounts Raped



Tue, 10/02/2012 - 11:48 | 2848510 slaughterer
slaughterer's picture

Raised some money to put into PMs again.  Everybody here is right.  Gold/silver is the only solution.  

Tue, 10/02/2012 - 12:09 | 2848591 bigkahuna
bigkahuna's picture

I really would like to trust my monopoly fiat - but I can't. Too bad for all of us. We must resort to barbaric relics to trust. Too too bad...

Tue, 10/02/2012 - 13:11 | 2848870 monkeyboy
monkeyboy's picture

I just had this weird thought, is the China of 2012/13(or soon enough), soon to become the Germany of 1929 - 1933?

I'm wondering whether this current nationalistic fervour emanating from the PRC is to grow into something larger than just a local dust-up?



Wed, 10/03/2012 - 02:02 | 2850986 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

Nope, the USSA is the new Germany.  


But first we go through hyperinflation.  Then we get a fürher with totalitarian powers.

The open question for class discussion is whether the fürher will still "be elected" or whether we won't be bothering with that step anymore.  

Tue, 10/02/2012 - 11:08 | 2848379 chinatrader
chinatrader's picture

he has said that for the last 2 years, its nothing new!

CIC will not be investing in euro-bonds, though CIC is not the only investment arm in china.

Tue, 10/02/2012 - 11:08 | 2848380 Lost Wages
Lost Wages's picture

No big deal. China can buy German bonds and Germany can buy PIIGS. Problem solved! Is the Dow at 20,000 yet?

Tue, 10/02/2012 - 11:11 | 2848391 Arthor Bearing
Arthor Bearing's picture

The first time somebody explained DOW20,000 to me I almost spit coffee in his face.

Tue, 10/02/2012 - 11:20 | 2848420 Quinvarius
Quinvarius's picture

When you examine the situation, the facts, and the market structure, 20k is too low.

I am not robotard.  I am not big on the economy.  But, I know how this stuff works and the motives of the players.  You better own something real.

Tue, 10/02/2012 - 11:40 | 2848486 Arthor Bearing
Arthor Bearing's picture

Is it a matter of inflation then? When you talk about the players, I think of the people who own the debt, who benefit most from deflation. Why do people discount the possibility of monetary tightening? It would only take one decisive action from the fed board, and suddenly the banks own the whole country.

Tue, 10/02/2012 - 12:08 | 2848593 Quinvarius
Quinvarius's picture

Banks do not benefit from loan defaults or shrinking capital.  They are already all completely insolvent.  They all need massive cash infusions.  They all need to have higher reserve rations to get stable.  There is only one way to get there and that is printing.  That is why QE3 was a lock and so is QE4.  Yes.  Bigger QE is coming.

As far as stocks go, the Fed will not allow the pension system to collapse via lower stock prices. 

This isn't a debate.  It is just how it is going to happen.  The Fed is eventually going to get cornered and have to do a gigantic massive bank bailout to get ahead of the problem.  It will show up as a massive dollar revaluation.

What people need to understand is that the Fed serves only the banks.  That is the role of the Fed.  That is why it was created by the banks.  The Fed will print as much money as it takes no matter what the economy does. 


Tue, 10/02/2012 - 11:10 | 2848388 Arthor Bearing
Arthor Bearing's picture

China sees the inevitable worthlessness of the debt they are taking on and have decided to stop financing the west's suicidal serial altruism.

Tue, 10/02/2012 - 11:30 | 2848456 LawsofPhysics
LawsofPhysics's picture

Yes, they will finance their own suicidal serial altruism instead - "winning"

Tue, 10/02/2012 - 12:09 | 2848592 Urban Redneck
Urban Redneck's picture

German corporate interests have significant tangible assets in China that can be "collateralized" if need be, what similar assets do the combined PIIGS have between them, a Fiat dealership and a couple cases of top-shelf ouzo?

Tue, 10/02/2012 - 11:11 | 2848389 GolfHatesMe
GolfHatesMe's picture

Are the Ink Miners on strike?

Tue, 10/02/2012 - 11:18 | 2848411 Cognitive Dissonance
Cognitive Dissonance's picture

Silly you.

That's why we have the Giant Squid on call.

Tue, 10/02/2012 - 11:19 | 2848399 Cognitive Dissonance
Cognitive Dissonance's picture

Well.....I guess that just leaves the Space Aliens to bail out the world.

Cue the invasion in 3...........2.........1...........

<Juncker - Is that a strange protuberance under your spacesuit or are you just happy to see me?>

Tue, 10/02/2012 - 11:23 | 2848403 Quinvarius
Quinvarius's picture

No one expects China to buy them.  They expect the Fed and the ECB to end up with them, one way or the other.  China needs to beef up their infrastructure.  They have much more pressing needs.  Did you know that based on your license plate numbers, you can only drive on certain days in China?  What does that tell you?

Tue, 10/02/2012 - 11:16 | 2848406 Temporalist
Temporalist's picture

It's a well know fact that pandas eat a diet of bamboo shoots but a little know fact that they hate skittles shit from unicorns.

Tue, 10/02/2012 - 11:18 | 2848412 LongSoupLine
LongSoupLine's picture

"Ha!! China saying no won't fucking stop us from saying otherwise" - EU Talking Heads



Tue, 10/02/2012 - 12:20 | 2848645 walküre
walküre's picture

EU are not sell outs to China. No money, no trade. Simple. Go peddle your trinkets to the rest of the world. Europe can manufacture just as cheap in the Non-EU Eastern periphery. The Chinese idea of trade is very one sided anyway. It benefits them or its not happening. They come and buy European and North American corporate assets across every sector but if the Europeans or North Americans try do the same, it ain't happening.

Fuck China. What are they good for exactly?

Tue, 10/02/2012 - 12:36 | 2848711 Crisismode
Crisismode's picture

General Tso's Chicken, with a side of subgum chow mein.



Tue, 10/02/2012 - 13:20 | 2848905 Carl Spackler
Carl Spackler's picture

...followed by a vicious reaction from all the monosodium glutamate (MSG) the Chinese restaurant dumped in the wok

Tue, 10/02/2012 - 16:33 | 2849622 Zeilschip
Zeilschip's picture


Tue, 10/02/2012 - 11:20 | 2848419 vote_libertaria...
vote_libertarian_party's picture

but..but...the Euroheads SAID everything was fixed.  What part of that doesn't China understand?



Tue, 10/02/2012 - 11:26 | 2848441 caimen garou
caimen garou's picture

EU instigators and rumor starters, sounds like a business entity to me.

Tue, 10/02/2012 - 11:26 | 2848443 jmeyer
jmeyer's picture

The US Fed is the bailout bondsman of last resort. Happened in '07-8

Tue, 10/02/2012 - 11:31 | 2848464 LawsofPhysics
LawsofPhysics's picture

The Fed is a private bank.  The Fed will do whatever is best for it's shareholders and owners.

Tue, 10/02/2012 - 12:01 | 2848559 Biosci
Biosci's picture

Under what circumstances would it be best for the Fed not to bail out the USG?  The terms of the ongoing bailout are pretty good for the PDs.

Tue, 10/02/2012 - 11:30 | 2848461 eckart
eckart's picture

classic mis-direction: EUR to sail higher

Tue, 10/02/2012 - 11:31 | 2848463 darteaus
darteaus's picture

China has *cash*?  Really?

I thought they had US Treasuries...

Tue, 10/02/2012 - 11:41 | 2848492 insanelysane
insanelysane's picture

and will they roll them over at maturity???

Tue, 10/02/2012 - 11:35 | 2848474 Meesohaawnee
Meesohaawnee's picture

now we need to kill the silly euro close algo ramp. oh foget it. . .never gonna happen.

Tue, 10/02/2012 - 12:03 | 2848565 YHC-FTSE
YHC-FTSE's picture

This was at a VTB capital conference. VTB ffs!  What happens at a VTB meet stays at a VTB meet. I've been there, and believe me, they are the biggest collection of fuckups on the planet outside the US. If you thought US banks are stuffed to the gills with morons who can't do simple arithmetic serving billionaire mobsters with their fingers in every pie (and political whore), you ain't seen nothing yet until you visit the VTB. The first thing a VTB capital fuckup is likely to tell you is that they get their intel/info from the FSB, then they will start spilling the beans on how fucking stupid their clients are - even to potential clients. That bank is staffed by idiots - just look up all the cretins at their London office. 

Back to the story. If anyone ever believed the "China bails out EU" story since it was touted in 2007, (And many times since then) that person needs to take a reality pill. There is nobody who can bail out the EU, unless they themselves decide to go the EU bonds route which will be infinitely worse than what they are facing today. The EU merely faces devolution today, but the EU bond route will make all the worst hyperinflationary fears of Germany come true. Probably.

Tue, 10/02/2012 - 13:29 | 2848934 fredquimby
fredquimby's picture

gold will bail out the EU

Tue, 10/02/2012 - 12:10 | 2848605 bigkahuna
bigkahuna's picture

If this does not send gold and silver through the roof, then the PMs are an even better buy than they were before.

Tue, 10/02/2012 - 12:15 | 2848628 walküre
walküre's picture

No problem, folks. The Greeks got their own backs.

There was a Greek fellow here yesterday who posted that some movement by Greeks was trying to raise money to pay down the national debt. They apparently found a Greek American billionaire who offered to sell 600 billion worth of US treasury paper to help the cause. Verified by allegedly a Canadian banker. No worries there AT ALL. It is all covered!

Tue, 10/02/2012 - 12:32 | 2848643 steve from virginia
steve from virginia's picture


China has a gigantic problem:


 - It already holds hundreds of billion$ in euro bonds (taken in exchange for euros gained by selling billions of pounds of poisoned dog food to Europeans). The Greek bonds were retrieved by the ECB (no haircut for the Chinese, of course, a professional courtesy) however ... the other EU countries' euro-bonds are worthless, too.


 - The ECB doesn't have the 'headroom' to accept additional hundreds of billions in worthless euro-bonds. China must sell on the open market!


 - When the Chinese sell they gain euros in return. (Second prize is more euros in return!)


 - With euros in hand the Chinese must find someone to accept them ... Europeans! What do the Europeans have to offer in exchange for euros? (Hint: you can feed yr dog with it ...)


The Chinese can swap euros to the Iranians for petroleum but for how long? The euro itself looks to be a dead duck and the Chinese are stuck with almost a trillion of them! Nobody on God's green Earth -- including Iranians --  wants to be stuck with euros. (Catalans, excepted.)


 - If the Chinese panic and dump their euros the dynamic is self-fulfilling: the euro will fall worthless. At the same time, the Chinese need better quality money so they need to jettison their euros as fast as possible. Damfyado, damfyadon't.


 - The Chinese have run aground on the First Law of Economics which states the cost of managing any surplus (euros) expands with the surplus until the cost becomes greater than the worth of the surplus itself. China's euro surplus has become so large it has 'negative worth'.


Don't be surprised if Greece exits the euro or Spain breaks up for the Chinese to dump and run. Just sayin' ...

Tue, 10/02/2012 - 12:33 | 2848700 walküre
walküre's picture

China has way worse problems than their 1 trillion Euro problem. How do you run a manufacturing economy when all your customers are contracting into Depression territory. They can stuff the ghost cities with cheap furniture, appliances and trinkets but even that is a dead end street.


Tue, 10/02/2012 - 16:31 | 2849616 Zeilschip
Zeilschip's picture

Stop posting stuff as if you are in-the-know. The hundreds of billions of Eurozone bonds you claim China owns, if true, 90% of it is non PIIGS.

Tue, 10/02/2012 - 12:24 | 2848664 TroyPDX
TroyPDX's picture

Not to worry... I have a credible source that informs me Japan is going to bail out Europe, right after Europe bails out Japan.

Do NOT follow this link or you will be banned from the site!