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China Interbank Market Freezes As Overnight Repo Explodes To 25%

Tyler Durden's picture




 

It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation's banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China's Shanghai Composite -2.5% at seven-month lows.

  • China’s 1-day Repo Rate Climbs to Highest Since at Least 2006
  • MNI - CHINA OVERNIGHT REPO FIXING AT RECORD HIGH

China's bond market is also collapsing:

Yield on 3.1% govt bonds due January 2016 jumps 39 bps to 3.749%, biggest rise since notes were issued in January

China this week...

 

US in the run-up to Lehman...

 

Charts: Bloomberg

 

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Thu, 06/20/2013 - 05:06 | 3674415 PaperBear
PaperBear's picture

Also, bitcoin holds at $108.

Thu, 06/20/2013 - 04:16 | 3674394 Debugas
Debugas's picture

is it a liquidity or solvency problem ?

Thu, 06/20/2013 - 04:18 | 3674395 MaxThrust
MaxThrust's picture

" I said that it's not going to have any lasting effect"

Not true. It will have a very lasting affect on me. I always new my gmail was part of some sort of surveillance effort but now I know for sure. That changes everything.

Thu, 06/20/2013 - 06:18 | 3674476 css1971
css1971's picture

Hey, how's that with Google Drive. 15Gb of free storage. "Just let us run our hands all over your data in return"

Thu, 06/20/2013 - 04:32 | 3674401 PaperBear
PaperBear's picture

CREATING TRILLIONS OF DOLLARS AND TRILLIONS OF DOLLARS AND TRILLIONS OF DOLLARS AND TRILLIONS OF DOLLARS SINCE THE GFC OF 2008 AND WE ARE NOW HAVING GFC 2.0

Thu, 06/20/2013 - 04:34 | 3674402 Peter Pan
Peter Pan's picture

Black Swan Helicopters with the initials BB printed on the side seen revving up their engines.

I still have my money on Ben printing his way over the cliff.

Pay off your debts, keep a little cash and put the rest in gold/silver.

If you cannot pay off your debts, hold a little cash and buy gold, then I suggest you max out your credit card and buy gold/silver and keep a little in cash.

Thu, 06/20/2013 - 04:55 | 3674406 Supernova Born
Supernova Born's picture

Ben is clueless and superstitious.

Gold is sad-sack Ben's "whipping boy". He reflexively canes gold hoping its "pain" will maintain his lie.

It hasn't, it won't, and it merely accelerates the recognition of the BIG LIE that Ben and his ilk have lived off of for decades.

Thu, 06/20/2013 - 04:49 | 3674408 fijisailor
fijisailor's picture

PMs on sale now.  Get it while it's hot if you're awake

Thu, 06/20/2013 - 04:53 | 3674409 Yen Cross
Yen Cross's picture

      Europe is going to seize up if yields keep moving higher like these. Starting to look like the JGB market.

       Spain 10-Year    4.791    4.528    4.791    4.672    [0.262    5.81%]    8:49:40
     Italy 10-Year    4.472    4.258    4.475    4.370   [ 0.215    5.03%]    8:49:48

Thu, 06/20/2013 - 05:02 | 3674413 Supernova Born
Supernova Born's picture

Ben Quixote tilting with the windmill "gold" while economic ruin goes about its business unhindered.

Thu, 06/20/2013 - 05:16 | 3674418 Awakened Sheeple
Awakened Sheeple's picture

Yen, how high do you believe usd/jpy goes? I know you said to go long a few days ago, congrats. I thought it would top out at 98 maybe a week from now then reverse to retest 94. Jesus Christ that trade is violent.

Thu, 06/20/2013 - 05:08 | 3674416 Mr_Wonderful
Mr_Wonderful's picture

Overcapacity. Bursting credit and asset bubbles. Chronic deflation.

Looks like it´ll be Japan 2.0 for China.

Thu, 06/20/2013 - 05:34 | 3674428 Mr_Wonderful
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Five U.K. banks must find another 13.4 billion pounds ($21 billion) to plug a 27.1 billion-pound capital shortfall by the end of the year, the Bank of England said....

... The central bank, whose Prudential Regulation Authority unit took over as the U.K.’s banking supervisor from the Financial Services Authority this year, outlined potential losses for banks of 52 billion pounds in March. Lenders must “hold capital resources equivalent to at least 7 per cent of their risk weighted assets,” with those losses taken into account, the BOE said....

http://www.bloomberg.com/news/2013-06-20/five-banks-must-raise-21-2-bill...

 

Thu, 06/20/2013 - 05:37 | 3674434 Wakanda
Wakanda's picture

Supply chains will probably be crashing in the next few weeks.  If you want something more sophisticated than eggs from the chickens or local vegetables, now might be a good time to order.

I expect the internet to "go down", but not quite yet, maybe in early July.

Thu, 06/20/2013 - 05:53 | 3674445 fiftybagger
fiftybagger's picture

As I watch silver cross into the teens and gold go below 1300,  I can say in all honesty and with utmost sincerity, if I could move all my money right now anywhere, and into anything, it would stay right where it is.  At the bottom of the lake.

Silver For The People

Thu, 06/20/2013 - 06:02 | 3674462 Debugas
Debugas's picture

gold should be somewhere between $1000 and $1200. It will take time till it gets there

Thu, 06/20/2013 - 07:36 | 3674583 SmallerGovNow2
SmallerGovNow2's picture

On what do you base "should be" ?

Thu, 06/20/2013 - 06:18 | 3674475 SimMaker
SimMaker's picture

LOL.... +1 from me

Thu, 06/20/2013 - 06:01 | 3674458 Julian
Julian's picture

Remember this...when it all collapses it will be instantaneous...only the survivors will realize what's happening. Normalcy bias is very hard for most of us to survive when the inevitable tail-event comes along.

Thu, 06/20/2013 - 06:18 | 3674474 Agent700
Agent700's picture

So what if the Chinese suddenly open up the Yuan? What if they suddenly announce they are making the Yuan fully convertible, it is backed by their (previously un-updated), now 4-5,000 tonnes of gold, and all this global capital finds a new home and helps them re-capitalize their banks?

They could take their writedowns NOW, ahead of everyone else, make their currency fully convertible, accept whatever market rate that takes it to and announce a brand new robust bond market of all durations denominated in Yuan......The bankers in Hong Kong and Shanghai will be jumping for joy and China has the new world's reserve currency without the USA even getting off a shot......

Of course it would crush their exporters and piss-off alot of regional heavy-hitters in the shadow market (who see their investments take a major haircut), and require some banks to be shut or a holiday for a while......But it might work.

Please all you Wall Street guys (who would be dunked on by this), tell me why this can't work?

From a Westerner who lives in Shanghai......

Thu, 06/20/2013 - 06:27 | 3674479 Debugas
Debugas's picture

it would hurt their exports hard. That is why i do not expect any country going onto gold standard at all

Thu, 06/20/2013 - 07:01 | 3674509 Mr. Hudson
Mr. Hudson's picture

The Rothschild backed Central Bankers will never allow a country to create a sound currency; including China. Every leader who has attempted this was put to death, and every country that created a sound currency has been detroyed.

Thu, 06/20/2013 - 07:05 | 3674514 Agent700
Agent700's picture

I live over here and work with Chinese folks every day. I don't see many of them that look like Jewish Rothschild's or could give a damn about them. Remember these guys were around a long time before Western bankers came up with their fiat scheme to rule the earth......

Thu, 06/20/2013 - 07:13 | 3674528 Mr. Hudson
Mr. Hudson's picture

You don't understand. The Communists under Stalin (Chairman Mao was a puppet under Stalin) were funded by the Bank of London (Rothschild) and by Wall Street. Soviet Russia and Red China have been under the Rothschild umbrella for decades. The whole world is on a fiat system, and the Yuan is worthless; being "pegged" to the worthless FRN. The Chinese would never back their Yuan with their gold. That would be throwing good money after bad. I don't think at this point China wants "world reserve currency" status. The Chinese leaders want to keep their country from collapsing and from people starving.

Thu, 06/20/2013 - 06:29 | 3674482 Antifederalist
Antifederalist's picture

My, my....

Ben what have you wrought?

Junkie throwing a fit.

Need more cowbell

Thu, 06/20/2013 - 06:31 | 3674484 RunningMan
RunningMan's picture

The engine has seized, and pouring more oil in won't help. Yikes. First the financing will lock up, then supply chains will be disrupted, then the ugliness really emerges. Looks like we have three months.

Thu, 06/20/2013 - 06:38 | 3674491 Mr_Wonderful
Mr_Wonderful's picture

Gonna be a lot of margin calls today.

Thu, 06/20/2013 - 06:46 | 3674492 q99x2
q99x2's picture

Throw the barbaric relic back in the graves

Let the dead men sleep.

Gold -83 bucks and I'm a goin fishin.

Thu, 06/20/2013 - 06:57 | 3674506 Mr. Hudson
Mr. Hudson's picture

Why is gold collapsing at this moment if China is collapsing?

http://goldprice.org/spot-gold.html

Thu, 06/20/2013 - 07:10 | 3674518 Mr_Wonderful
Mr_Wonderful's picture

It´s anticipating rising U.S. interest rates and thus a rising dollar.

This is negative for commodities and stocks and of course bonds.

Thu, 06/20/2013 - 07:18 | 3674538 Arius
Arius's picture

@Hudson

because of supply and demand.... is there such a thing? peut-etre???

i dont think rise on US interest rates is ever going to happen ... forget about king "le douleur" ... that one is dead long ago ...

Thu, 06/20/2013 - 07:30 | 3674573 Mr_Wonderful
Mr_Wonderful's picture

Well, the 10-year note is at a two year low and falling (and yield conversely at a two year high and rising).

It´s in progress. Rates are going up. Therefore the Bernank is scrambling now. He´ll be forced to start hiking rates probably in Q1 2014. The death of the dollar and hyperinflation and all that stuff will remain elusive as before.

 

Thu, 06/20/2013 - 13:09 | 3675678 Money 4 Nothing
Money 4 Nothing's picture

WHAT HAPPENED SEPTEMBER 7-11TH IN 2008? GO LOOK UP THE GOLD HISTORIC CHART AND STOP LOOKING AT PAPER PRICES.

PM's always take paper price hits in the beginning of a CriSIs... It's price on paper folks, use the dip to purchace.

Its a tactic to drive up equity markets. All head fake.. Physical sales price hasn't changed.

Thu, 06/20/2013 - 08:27 | 3674734 Mamzer Ben Zonah
Mamzer Ben Zonah's picture

Love that QR code -- my sentiments exactly!

Thu, 06/20/2013 - 10:52 | 3675220 Luckhasit
Luckhasit's picture

Why am i reminded of Napelons defeat at Waterloo?  But, there's no Rothschild in this equation.

Thu, 06/20/2013 - 12:24 | 3675564 papaclop
papaclop's picture

Better buy metals while they are artificially cheapened. 1300 gold is a very sweet deal, but you'll have to pay almost $1400 for real metal. Just don't buy any "paper gold" because that's a scam. Pile now, smile later.

Thu, 06/20/2013 - 12:33 | 3675589 Winston Smith 2009
Winston Smith 2009's picture

Wow, I think they'll be having major problems sometime this year at the latest even if not right now!

Video inteview - China's 'Actually Gotten Worse': Jim Chanos - 12 May 2013

http://www.planbeconomics.com/2013/05/chinas-actually-gotten-worse-jim-c...

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