China's Liquidity Injection Did Not Calm All Its Credit Markets

Tyler Durden's picture

While last night's almost unprecedented reverse repo liquidty injection into the Chinese banking system stopped the bleeding of short-dated money-market rates briefly, the likelihood remains that a shadow-banking system default will occur: As CASS's Zhang noted:

  • *CHINA TRUSTS AND SHADOW BANKING TO SEE DEFAULTS IN 2014: ZHANG
  • *CHINA SHADOW-BANKING DEFAULTS WOULD BE GOOD THING: CASS'S ZHANG

Perhaps that explains why China's CDS spread remains at its highest since the summer credit crunch, barely budging on last night's cash drop. At double the default risk of Japan, China appears far from out of the contagion fire.

 

China's risk makes the US debt ceiling debacle look miniscule and while liquidity does not reign supreme in these markets, the last few months have seen considerably more activity in Asian sovereign CDS...

 

China's Academy of Social Sciences Zhang Ming had a few other things to say...

  • *CHINA EXPORTS MAY NOT BE AS GOOD AS MARKET EXPECTS: ZHANG
  • *CHINA MONETARY POLICY TO REMAIN RELATIVELY TIGHT IN 2014: ZHANG
  • *YUAN APPRECIATION COMING TO AN END, CASS'S ZHANG MING SAYS
  • *YUAN MAY WEAKEN AFTER REACHING 6 PER DOLLAR: RESEARCHER ZHANG

and typically is seen as yet another mouthpiece for the administration... so that won't please Schumer and his crowd...

 

Chart: Bloomberg

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mayhem_korner's picture

 

 

Did the Fed succeed in exporting default risk?

BandGap's picture

No. keep this simple as shit. Those that understand what is going on are going to take the money and run.

Clear as the shit on their noses.

Gankfest's picture

Boeing and Caterpillar... :P

prains's picture

strange...I've found a liquidity injection to be quite calming, maybe it's in the presentation....

IridiumRebel's picture

I bought a shitload of GDXJ today. Hence, gold is fukt. My condolences....

ms8172's picture

Are you saying that Gold will GOLD down?

Yen Cross's picture

     China is having a tough go. It's inflation related though. I'm not taking sides.\

   The yuan is at (6) year highs vs usd. That's pathetic, and just shows the wasteland Bernankenstein has dealt the " U.S. economy".

Ness.'s picture

The Bernanke bubbles are starting to boil the frogs abroad.  We've exported inflation and imported Choom-by-ya. 

 

'Hey, smoke up Yenny!' ;) - John Bender 1985.

 

new game's picture

10 percent faux growth revealed-ha, built on yuan/dollar cheap labor growth ponzi scheme that is unwinding with further increments of liquidity to keep er going. ha. nice job ben-financial war at its finest with china falling right into the trap. but alas, does china have some gold up their sleave?

central planners and their loose of control with guess what, more controls to control the controls that getting out of control.  peg that shit mon!

kevinduhand's picture

Worst case scenario: PBOC lets shadow banking defaults, housing bubble collapses, PBOC devalues Yuan by 90%, riots spread across China,
Xi JinPing gets assasinated, Bo Xi Lai reclaims throne and turns China back into Communist, dumps USD debt and Japs take over island then boom WW3

 

Likely scenario: PBOC prints moar to prolong the ponzi scheme as inflation rises 10% in China and since 98% of ordinary Chinese don't care about Politix, life goes on as usual like nothing happened

disabledvet's picture

folks need to stop looking at "numbers" (the "yuan/dollar exchange rate") and start looking at the data (natural gas production numbers.) we've known for at least three centuries that North America is sitting on a "planetary equivalent" of natural gas. by hammering "Big Coal" you're shutting in production thus unleashing "Jupiter" (the gas giant) which is a lot easier to get to than coal of any kind.

the "technology" has already been proven.

http://en.wikipedia.org/wiki/Lolland_Hydrogen_Community

http://www.nrel.gov/hydrogen/proj_wind_hydrogen.html

http://www.iphe.net/docs/Renew_H2_SaharaWind.pdf

by trying to "control" interest rates (destroy the very idea of savings by forcing interest rates to zero) you're unleashing a "production binge" so, sure..."keep those exports of cheap energy from coming to the USA"...problem being "cheap (free?) energy already exists in the USA." (and Canada.)

http://en.wikipedia.org/wiki/ClearEdge_Power

Chief Kessler's picture

I'd like to inject some liquidity into my hot Chinese neighbor

frankTHE COIN's picture

Quite a few turbulent events are all coming to a head at once.
This morning on cnbc the anchors, in unison, were calming the audience by stating that Chinas Banking System is not ingrained enough into the World Banking System to be a threat Systemically.
It's as though they were not aware, that Far, Far smaller countries were the Turning Point to dominoes falling in the past.

chump666's picture

China can flush out it's shadow banking - and say f*ck America's con-job and the world, but it will need to provide a buffer for it's people.  Something to keep the people happy...that'll be cheap energy and nationalism.  

http://youtu.be/G7xP5EFThh0

TheRideNeverEnds's picture

These recent developments are mind numbingly bullish!

 

           BUY BUY BUY!!

 

E-Minis TO THE MOOOONNNN!!!

praps's picture

Deleted - wrong thread

shawnmike's picture

Meanwhile the controlled sell-off in US equities is just that, completely controlled, and ready for the late day ramp. All while they go mad for bonds. Whatever, don't think anyone's jumping from windows on Wall Street just yet

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