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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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Tue, 01/21/2014 - 23:14 | 4354291 mayhem_korner
mayhem_korner's picture

 

 

Did the Fed succeed in exporting default risk?

Tue, 01/21/2014 - 23:54 | 4354372 BandGap
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.

Wed, 01/22/2014 - 07:05 | 4354846 negative rates
negative rates's picture

Having a shadow bank in China is like having tits on a chinese woman, they only exist in your imagination.

Wed, 01/22/2014 - 00:08 | 4354407 Gankfest
Gankfest's picture

Boeing and Caterpillar... :P

Wed, 01/22/2014 - 00:55 | 4354498 prains
prains's picture

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

Tue, 01/21/2014 - 23:22 | 4354298 IridiumRebel
IridiumRebel's picture

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

Wed, 01/22/2014 - 00:12 | 4354421 ms8172
ms8172's picture

Are you saying that Gold will GOLD down?

Tue, 01/21/2014 - 23:36 | 4354325 Yen Cross
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".

Tue, 01/21/2014 - 23:50 | 4354361 Ness.
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.

 

Wed, 01/22/2014 - 06:48 | 4354833 new game
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!

Wed, 01/22/2014 - 00:02 | 4354326 kevinduhand
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

Tue, 01/21/2014 - 23:42 | 4354345 disabledvet
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

Wed, 01/22/2014 - 02:11 | 4354613 WillyGroper
WillyGroper's picture

Drink water much?

Wed, 01/22/2014 - 00:02 | 4354390 Chief Kessler
Chief Kessler's picture

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

Wed, 01/22/2014 - 00:05 | 4354397 frankTHE COIN
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.

Wed, 01/22/2014 - 00:07 | 4354406 chump666
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

Wed, 01/22/2014 - 02:09 | 4354611 TheRideNeverEnds
TheRideNeverEnds's picture

These recent developments are mind numbingly bullish!

 

           BUY BUY BUY!!

 

E-Minis TO THE MOOOONNNN!!!

Wed, 01/22/2014 - 04:40 | 4354743 praps
praps's picture

Deleted - wrong thread

Sat, 01/25/2014 - 05:51 | 4366067 shawnmike
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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