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"Magic" Collateral: A Frank Look At The Sheer Credit Horror About To Be Unleashed In China

Tyler Durden's picture


While the world is terrified about what China - where corporate bond defaults are now permitted - may be about to unleash on the world, most are all too happy to remain in a state of delightful ignorance. We decided to take a peek behind the scenes.

Recall that as we have repeatedly shown in the calendar of coming Chinese bond default, on March 31, a borrower named "Magic" (no comment) is set to default on a CNY196 million Trust.

The default may or may not happen, as there is always a high likelihood it will simply be bailed out as has happened frequently in the past, but regardless of the final outcome, here is what is really going on behind the scenes. From Bank of America:

31 Mar 2014, Rmb196mn borrowed by Magic Property & arranged by CITIC Trust


Details: invested in an office building in Chongqing. The Chongqing developer ran into financial problems in mid-2013. CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.


Potential outcome: The developer and the trust company may share the repayment.


Reasons: 1) When CITIC Trust sold the product, it did not specify the underlying investment project. 2) The local government has intervened, fearing social unrest. A local buyer of a unit in the office building committed suicide as he/she could not obtain the title to the property due to the title dispute between the trust and the developer.

Please re-read that first part again:

CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.

So, "Magic" not only sold the collateral... but also mortgaged it to a few other lenders: lenders who count its as a perfectly performing asset when in reality they have zero claims to it. Did they steal that straight from the MF Global instruction manual?

Now add this:

"The local government has intervened, fearing social unrest. A local buyer of a unit in the office building committed suicide as he/she could not obtain the title to the property due to the title dispute between the trust and the developer."

... and multiply by a few thousand for all the other shadow (and not so shadow) players who have engaged in precisely this kind of gross abuse of underlying collateral, which also happens to be the main reason why China can magically create trillions in debt out of thin air with zero collateral constraints, each and every year, no questions asked.

Well, the time to ask a question or two has finally arrived.


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Tue, 03/11/2014 - 12:57 | 4534693 desirdavenir
desirdavenir's picture

rehypothecation is so much fun !

Tue, 03/11/2014 - 13:06 | 4534712 Thought Processor
Thought Processor's picture



So much real estate hokus pokus going on in China that at some point it will plunge.  It will happen just a question of when.


Most Chinese have few areas to invest their money in, and real estate it one they can.  So they buy up places and let them sit empty.  Then they use their property as assets to secure more (and often underground lending where they maybe only need to show proof of their asset holding documents) financing so that they can go buy more real estate.  And the process repeats until........


This is common all over China.


Like everything else, it works until it doesn't.  Once prices start to fall the system quickly reverts.

Tue, 03/11/2014 - 13:13 | 4534725 BaBaBouy
BaBaBouy's picture

Is The FED Any Better ???????????????????????


BUY PHYS GOLD, Bitchez...

Tue, 03/11/2014 - 13:21 | 4534778 Skateboarder
Skateboarder's picture

We called it Social Security?

Tue, 03/11/2014 - 13:24 | 4534790 zaphod
zaphod's picture

This is why despite how horrible the dollar is, everyone keeps running back to it as a safe haven. Everything else is even worse. 

Tue, 03/11/2014 - 13:30 | 4534824 Ifigenia
Ifigenia's picture

I would rather park in Gold

Tue, 03/11/2014 - 13:36 | 4534853 Manthong
Manthong's picture

Credit is money, everything else is gold.

..or something like that.

Tue, 03/11/2014 - 13:39 | 4534872 NoDebt
NoDebt's picture

Hold on, guys, don't I recall similar things happening with Spanish mortgages?  Multiple claims on the same property as collateral (or a property that never existed)?

I think we've seen this movie before just in a different theatre.

Tue, 03/11/2014 - 13:44 | 4534894 Thomas
Thomas's picture

China and a guy getting a humjob off a 90-year-old hooker are thinking exactly the same thing: "Don't...look...down."

Tue, 03/11/2014 - 14:11 | 4535003 GetZeeGold
GetZeeGold's picture




Remember the long lines to buy gold in China?


Long history of being dumped on in we just trust CNBC.

Tue, 03/11/2014 - 14:30 | 4535101 max2205
max2205's picture

LOL.  Sub prime tranches at the lkcal level...CaBoom

Tue, 03/11/2014 - 15:00 | 4535248 DoChenRollingBearing
DoChenRollingBearing's picture

While neither I nor we make loans to China, per se, we do depend on them to deliver our bearings after we send them our money!

Here ya go, China, here´s our money.  Now ship us our bearings!

Tue, 03/11/2014 - 15:07 | 4535292 FEDbuster
FEDbuster's picture

Maybe COD will make a comeback?

Tue, 03/11/2014 - 15:16 | 4535342 Herd Redirectio...
Herd Redirection Committee's picture

Hey, the place was called 'Magic Property', what do you expect?  Actual land and buildings?

Tue, 03/11/2014 - 16:01 | 4535517 macholatte
macholatte's picture


what's with all the Doom & Gloom?

There is a solution to all this: China & Japan go to war. 

Simple, clean & easy.  Solves lots of problems..... population control, over building, currency re-boot and the opportunity to watch the American sheeple go deeper into debt as they bail-out the warring countries.

God created man. Samuel Colt made them equal.

Man created governments. Robert Oppenheimer made them equal.

Tue, 03/11/2014 - 16:12 | 4535566 Muppet Pimp
Muppet Pimp's picture

OT: Speaking of Magic Real Estate:

For Sale: Authentic 8 bed/8 bath Illuminati/Masonic Castle on 71 acres in Rockwall, TX. Great shape. 950K (214) 237-4500

Tue, 03/11/2014 - 16:19 | 4535597 Sirius Wonderblast
Sirius Wonderblast's picture

As someone who loves a good castle, that makes me weep. No good taking refuge there when it turns nasty...

Tue, 03/11/2014 - 20:31 | 4536477 Crisismode
Crisismode's picture



Lordy, will this never end?

What a total load of bullshit here.


What has ZH come to?


Tue, 03/11/2014 - 20:49 | 4536555 FEDbuster
FEDbuster's picture

Why am I now hungry for some small hamburgers on soft buns with grilled onions?

Tue, 03/11/2014 - 21:30 | 4536699 mjcOH1
mjcOH1's picture

"Recall that as we have repeatedly shown in the calendar of coming Chinese bond default, on March 31, a borrower named "Magic" (no comment) is set to default on a CNY196 million Trust."


Is Magic defaulting on debt to the Happy Lucky Golden Dragon? latest data, there are 93million people in-country with the surname 'Wang'.   Report to your local People's Kidney Donation center.

We appreciate your sacrifice for the People.

Surname the People's kidney.   We will be in touch.

Tue, 03/11/2014 - 22:21 | 4536900 The Vineyard
The Vineyard's picture

China's not going anywhere.  Bitches.

Tue, 03/11/2014 - 16:23 | 4535610 MsCreant
MsCreant's picture

That is one FUGLY house, holy fuck hell. Kunstler would like that for his eyesore of the month feature he does. McCastle. Ewwwwwww!

Tue, 03/11/2014 - 16:31 | 4535633 chunga
chunga's picture

Rinda Green is arive!

Tue, 03/11/2014 - 21:52 | 4536788 Yes_Questions
Yes_Questions's picture



Hahahahahaha Points!

Wed, 03/12/2014 - 00:27 | 4537352 old naughty
old naughty's picture

would you like them houses?



Tue, 03/11/2014 - 16:57 | 4535723 giggler321
giggler321's picture

You've totally missed the good points, high ceilings, exposed beams - just what one wants when da'hanging judge presides over the bankers.

Tue, 03/11/2014 - 17:20 | 4535793 Sirius Wonderblast
Sirius Wonderblast's picture


It's a fair point you make, but will those paper thin walls support the weight?

Tue, 03/11/2014 - 17:30 | 4535819 MsCreant
MsCreant's picture

I stand corrected. Who cares how it looks if the whole place is being used as a gallows. And you can hose out the blood and other bodily fluids so easily with those floors.

Aw hell, now ya gone and done it. [Sniff, sniff]  Baby, it's beautiful. For me?

Tue, 03/11/2014 - 17:16 | 4535777 Ourrulersknowbest
Ourrulersknowbest's picture

Classy that AMERIKAN heritage becoming....

Tue, 03/11/2014 - 17:59 | 4535898 The Wisp
The Wisp's picture

is that an Apartment Complex ?

Tue, 03/11/2014 - 19:15 | 4536150 willwork4food
willwork4food's picture

Pretty cool on the inside though, but imagine the heating bill.

Tue, 03/11/2014 - 19:27 | 4536203 Jafo
Jafo's picture




Walter White and Jesse Pinkman could see a lot of potential in that place.

Tue, 03/11/2014 - 21:10 | 4536635 fleur de lis
fleur de lis's picture

It could be refitted for an indoor flea market, with lots of room for a food court. At least then it would be a place of honest work instead of a hideout for weirdo Freemasons.

Tue, 03/11/2014 - 21:31 | 4536704 willwork4food
willwork4food's picture

First time I've ever seen a bug like this at ZH. All 10 comments (or so) above belong in the castle post!!

Tue, 03/11/2014 - 18:07 | 4535914 Hobbleknee
Hobbleknee's picture

They could also blame Fukushima radiation on the nukes.

Tue, 03/11/2014 - 15:04 | 4535275 FEDbuster
FEDbuster's picture

If anyone is interested, I have this bridge in Brooklyn....

Tue, 03/11/2014 - 20:56 | 4536585 simplejustice
simplejustice's picture

Hey/ I own that stinking bridge!!!!!!!!

Tue, 03/11/2014 - 22:14 | 4536863 disabledvet
disabledvet's picture

says right here I've got title to it mister. and it's insured!

Tue, 03/11/2014 - 15:16 | 4535346 ebear
ebear's picture

"Remember the long lines to buy gold in China?"

The lines to buy gold plated tungsten are even longer!

Tue, 03/11/2014 - 14:41 | 4535032 TruthInSunshine
TruthInSunshine's picture

"CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders."

This lone, concisely written sentence, if the allegations contained therein are true (and they are likely to be so by a percentage of 99.99% or greater), should be interpreted by everyone with an IQ of 88 or greater that the toxic assets in China that have been "loaded up" in the last decade or so TOWER OVER the toxic assets (both in nominal AND REAL terms) that had built up and led to the 2008 crash that was demarcated by Lehman's collapse.

Take this sentence, and imagine it on scale that is multiplied by millions confines, regarding residential, industrial, commercial & office properties/buildings, plus other forms of collateral, INCLUDING CHATTEL PAPER, in China, which just so happens to be the home of 1.3'billion people with the fastest official GDP growth rate AND RECIPIENT OF THE GREATEST AMOUNT OF FOREIGN DIRECT INVESTMENT OF ANY NATION during the last two decades, as well as the nation that has printed the most fiat currency and non-regulated loans during the last 5 years.

Anyone who has yet to heed this FACT and yet fails to prepare for the inevitability of what is about to wash over the global economy deserves to drown in the great flood.

The aggregate amount of Chinese toxic assets are now EPIC and there is no way to deal with or contain their fallout in any manner that doesn't wreck the global economy given that China has soaked up tens of trillions upon trillions in multinational companies' capex over the last 19 years, to be the 50 year producer of the goods that their companies' business models depend on.

Tue, 03/11/2014 - 14:42 | 4535158 McMolotov
McMolotov's picture

One man's trash is another man's freedom fighter!

Tue, 03/11/2014 - 15:05 | 4535272 walküre
walküre's picture

This can't be contained and it cannot work its way through the system. Hence the ever greater confusion from the mouthpieces at the central banks. They all speak like cheaters caught between a rock and a hard place that they and only they can truly appreciate in all its severity and confinement.

The central bankers are stuck and coming to the end of their ropes. A full on collapse or a complete reset are coming closer with each passing day. Wars and rumors of wars, financial desolation, high unemployment, exessive lifestyles in the upper echelons and so on are all harbingers of a great paradigm shift.

Cash is King but not just any kind of cash. Needs to be either Dollars or Euros. Virtual cash in bank accounts is neither guaranteed nor protected, thus not qualified as collateral. Cash in hand will be collateral to buy whatever is not nailed down.

Unless of course, the central banks pull the nuclear option and physically print Dollars and Euros and distribute the money to citizens (account holders) around the world.

Either way, there will be tears. 2014 is the year it all comes crashing down. Life as you all knew it and all took for granted, has an expiry date. That date is sometime this year. I'm not shitting you.

Tue, 03/11/2014 - 15:37 | 4535414 Overfed
Overfed's picture

I remember saying as much about a year ago. I don't have any kind of cogent analysis, but I have the feeling that mid-2014 is when it gets really interesting.

Tue, 03/11/2014 - 22:17 | 4536878 disabledvet
disabledvet's picture

reports of billion dollar debit cards on Reuters.

Tue, 03/11/2014 - 16:05 | 4535545 RafterManFMJ
RafterManFMJ's picture're my favorite turd.

Tue, 03/11/2014 - 16:24 | 4535615 Sirius Wonderblast
Sirius Wonderblast's picture

Euros? Spare me!

Tue, 03/11/2014 - 16:46 | 4535682 walküre
walküre's picture

Shillings and pence as well. Happy?

Tue, 03/11/2014 - 17:21 | 4535795 Sirius Wonderblast
Sirius Wonderblast's picture

Better, much much better.

Tue, 03/11/2014 - 16:22 | 4535605 Sirius Wonderblast
Sirius Wonderblast's picture

Anyone who ever placed the slightest faith in Chinese data needed their bumps felt.

Tue, 03/11/2014 - 18:05 | 4535909 MarsInScorpio
MarsInScorpio's picture



I always enjoy the power and clarity of your posts.


You're good.


Wed, 03/12/2014 - 06:32 | 4537738 new game
new game's picture

i was thinking the same and agaust of the subdued reaction! seems like the world wide ptb don't see a problem.

hmmm, is this the fault in the ocean that will produce the wave that is coming our way? typical response of the human psycy?

all good in the neighborhood....

Tue, 03/11/2014 - 14:19 | 4535057 WillyGroper
WillyGroper's picture

That is sooooo bad.


Tue, 03/11/2014 - 14:06 | 4534991 debtor of last ...
debtor of last resort's picture

That's correct ND. An appartment complex as collateral for several loans. Only about 30% of the building was rented, the rest was empty. Read that somewhere.

Tue, 03/11/2014 - 14:11 | 4535002 ThroxxOfVron
ThroxxOfVron's picture

Wake the hell up: the exact same thing has been going on in the United States for years.

What the fuck did you People think destroying all the signed mortgage notes/deeds, hiring bogus notaries, creating bogus assignments, and making entries in an open and editable online speadsheet called MERS was all about?

Tue, 03/11/2014 - 15:08 | 4535294 stocktivity
stocktivity's picture

Quit yelling!

Tue, 03/11/2014 - 15:20 | 4535362 ebear
ebear's picture

He's not yelling, he just has a loud voice;)

Tue, 03/11/2014 - 15:36 | 4535402 Tall Tom
Tall Tom's picture











DOWNARROW THIS YOU CRAZY FUCKS. (And I am happy to be associated with crazy fucks as yourselves. No finer people in the World!!!)

Tue, 03/11/2014 - 17:16 | 4535779 agent default
agent default's picture

Yes, it's  Fight Club.  So quit acting like a world of tanks noob.

Tue, 03/11/2014 - 18:01 | 4535901 Socratic Dog
Socratic Dog's picture

Tell us what you really think, Tom.

Tue, 03/11/2014 - 20:17 | 4536418 stocktivity
stocktivity's picture


Tue, 03/11/2014 - 15:38 | 4535415 TheFourthStooge-ing
TheFourthStooge-ing's picture

+1 Green (Linda)

Tue, 03/11/2014 - 16:31 | 4535632 MsCreant
MsCreant's picture

We know this. What might be news is that China really is even more crooked than we are. But that's just cause they are bigger. We are still more innovative fuckers. 

I'd rather be here, with it less polluted and fewer people, than there. 

I've got the cleanest dirty shirt in the laundry basket, look at me, nanny, nanny, boo, boo (she said as she danced a dirty shirt dance on the deck of the Titanic).

Tue, 03/11/2014 - 17:20 | 4535792 HyBrasilian
HyBrasilian's picture

I thought you were Canadian...

Tue, 03/11/2014 - 17:34 | 4535832 MsCreant
MsCreant's picture

I thought you just said that to make me laugh...kinda like the whole grey hair thing, you workin' to get under my skin and all.

Still a professor, not grey, not Canadian. I am probably old in your book, but not that old.

Wed, 03/12/2014 - 06:35 | 4537743 new game
new game's picture

you are thinking clear! and that is all that counts in my book...

Tue, 03/11/2014 - 20:24 | 4536446 aka_ces
aka_ces's picture

best quip of this form -- Keiser's, that the US is the leper with the most fingers.

Tue, 03/11/2014 - 21:03 | 4536608 simplejustice
simplejustice's picture

M. F. Global?

Tue, 03/11/2014 - 22:20 | 4536893 disabledvet
disabledvet's picture

Boeing 7....7.....7.

Tue, 03/11/2014 - 13:34 | 4534842 Dollarmedes
Dollarmedes's picture

The Chinese as a culture have little respect for the rule of law. They are fundamentally corrupt, and are always looking for the next scam...behavior incentivized by various governments throughout their long history.

Tue, 03/11/2014 - 13:57 | 4534949 Dollarmedes
Dollarmedes's picture

I will add that I understand the common Chinese man's view: they are tiny cogs in a large machine. If they get lost in the shuffle or trampled on, nobody will miss them and their replacement will arrive in moments. In that light, there is an incentive to "get yours" and get out, since you owe no allegiance to anyone but yourself (and maybe your family).

That said, it's still not a great way to run a country.

Tue, 03/11/2014 - 14:34 | 4535126 john39
john39's picture

what country isn't run that way today?  The chinese just copied Great Britain and the U.S.

Tue, 03/11/2014 - 15:32 | 4535368 HyBrasilian
HyBrasilian's picture

The REAL problem here is the 'CONCEPT' that there really need to be any 'COUNTRIES' [& by consequence ~ any 'RUNNING']...


Same holds true for RELIGION [perhaps to an even greater degree]...

But hell ~ a minority of shitheads have, over the past 300 years, managed to convince the entire human populace that THAT is necessary...

Moreover ~ THEY have set THEMSELVES up as overlords of all this 'RUNNING' [by way of theft, coercion, murder, racketeering, & propaganda]...

VD will be along soon to JUNK this comment [because it is UTTERLY untrue]... He might even manage to get me KICKED OFF of ZH for saying so... & then BRAG about it later...  [because as we all know ~ ZH is ONLY interested in the TRUTH]...

Tue, 03/11/2014 - 15:37 | 4535412 Dollarmedes
Dollarmedes's picture

This is absurd because it denies that there are significant differences between populations. Tell me, how's that working out between the Germans and the Greeks?

Tue, 03/11/2014 - 15:54 | 4535502 HyBrasilian
HyBrasilian's picture

You tell me [Poindexter with the dollar sign on your shield]... I'm clearly not as SMART as you...

Tue, 03/11/2014 - 16:10 | 4535570 Dollarmedes
Dollarmedes's picture

The two populations have very different lifestyles and work ethics (i.e. cultures). This is the essence of why the EU/Euro isn't working.

Tue, 03/11/2014 - 22:08 | 4536839 Leraconteur
Leraconteur's picture

If I could upvote you 100+ I would.

This is the issue with the EU and Globalist Trade Mercantilism.

Free Open Trade is good, all fine and dandy - to a point. A nation needs to use common sense and not gut its economy and population on the altar/alter of some ideology.

The choices are not Smoot-Hawley or NAFTA. There are middle grounds that can be reached.

Everyone is not the same.

Tue, 03/11/2014 - 18:14 | 4535936 MarsInScorpio
MarsInScorpio's picture



Suffering from a bit of a persecution complex today . . . ?


Tue, 03/11/2014 - 14:50 | 4535208 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"That said, it's still not a great way to run a country."~


I would have to guess that the local Chinese government would take whatever passes for the county/province tax assessor out and after a short trial, have the poor dumb bastard shot.

That is of course assuming that it is required to register liens on real property there with a government agency, though the idea, in general, of every so often taking low and middle level bureaucrats out, giving them a show trial and shooting them promptly afterwards is quite the elixir to social unrest. The beauty the Chinese have added to this quaint and charming practice is in charging the family for the consumables, namely brass, smokeless powder and lead.

Tue, 03/11/2014 - 23:17 | 4537111 Things that go bump
Things that go bump's picture

That's not new. The Nazi government sent Stauffenberg's widow a bill for the rope used to hang him. 

Tue, 03/11/2014 - 18:24 | 4535967 Dr. Bonzo
Dr. Bonzo's picture

We'll find out soon enough cause they're all moving over here.

Tue, 03/11/2014 - 13:58 | 4534957 JohnnyBriefcase
JohnnyBriefcase's picture

By "the Chinese" I'm assuming you meant "humans".

Tue, 03/11/2014 - 14:38 | 4535143 somecallmetimmah
somecallmetimmah's picture

It's largely a communist thing, but 'yes', it applies equally to the Chinese.  I lived in Moscow in the early 90s; they'd permanently "borrow" anything that wasn't nailed down.

Tue, 03/11/2014 - 14:41 | 4535145 Omen IV
Omen IV's picture

The AMERICANS as a culture have little respect for the rule of law. They are fundamentally corrupt, and are always looking for the next scam...behavior incentivized by various  REPUBLICANS AND DEMOCRATS WHEN THEY HAVE CONTROLLED THE government throughout their long history.

please read some US business history or just open a newspaper in the last 5 years concerning CDO's

Tue, 03/11/2014 - 15:32 | 4535388 Dollarmedes
Dollarmedes's picture

This applies equally well to every government and those at the pinnacle of power, since power corrupts. I wasn't talking about them.

They say "the fish rots from the head," but the real question is "how far down does the rot go?" There are a good number of even large US companies that play by the rules, and the further from power you go the better the behavior, generally speaking.


I think it goes farther down in China than the US, and that it is incentivized by their government. At the individual level, I'm sure the Chinese are fairly nice people...but that's as far from power as you can get.

Tue, 03/11/2014 - 15:37 | 4535409 Bastiat
Bastiat's picture

Except for the suckers, the soon to be extinct middle class.

Tue, 03/11/2014 - 15:26 | 4535376 ebear
ebear's picture


The Chinese I know: 1) are honest 2) work hard 3) save dilligently 4) put their kids through school  5) care for their old folks.

Other than that, I totally agree.

Tue, 03/11/2014 - 15:34 | 4535400 Dollarmedes
Dollarmedes's picture

Are the Chinese you know living in China, or elsewhere? That makes a big difference.

Tue, 03/11/2014 - 17:19 | 4535787 agent default
agent default's picture

All people from cultures with a long past and history have little respect for the law.  They have figured out that the greatest scam ever invented is government, and couldn't care less about their "laws".

Wed, 03/12/2014 - 06:43 | 4537750 new game
new game's picture

bravo, truth speaks volumes! so be it. and that my friend is why noone should get their shorts in a bundle.

the pendalum swings back and forth, like tic toc...

Tue, 03/11/2014 - 19:53 | 4536316 Vendetta
Vendetta's picture

"everyone keeps running back to it as a safe haven. Everything else is even worse"

Its called "the plan" at the Fed reserve

Tue, 03/11/2014 - 16:08 | 4535562 caShOnlY
caShOnlY's picture

We called it Social Security?

Those who get/got checks callis Social Security.  Very soon it will be called what it is/was:  Ponzi Scheme.

Tue, 03/11/2014 - 19:27 | 4536204 boooyaaaah
boooyaaaah's picture

Gold is a hoarded metal

Copper is a hoarded metal

Tue, 03/11/2014 - 19:27 | 4536205 boooyaaaah
boooyaaaah's picture

Gold is a hoarded metal

Copper is a hoarded metal

Tue, 03/11/2014 - 20:03 | 4536345 Renewable Life
Renewable Life's picture

China knows it sits on trillions in hard asset trade balances and god only knows how much gold and silver in their possession? But it's western banks who hold all the funny money debt, so China is going to send a little
political message to the west, about power and money and the golden rule!!

Wait until they start unloading trillions in Tbills, coupled with about a trillion in loses to EU and US banks, from corporate BK's, then will see who's setting down fucking red lines, "not to cross"????

Wed, 03/12/2014 - 06:46 | 4537757 new game
new game's picture

sooner the better, i'm ready. all this preparation for nothing, ha; tired of this slow demise shit...

Tue, 03/11/2014 - 15:56 | 4535509 Groundhog Day
Groundhog Day's picture

Abbakadabra  Bitchez

Tue, 03/11/2014 - 19:51 | 4536308 Buck Johnson
Buck Johnson's picture

When this system crashes it will take the world economy with it, just you wait.

Tue, 03/11/2014 - 13:14 | 4534733 SamAdams
SamAdams's picture

I took on five additional mortgages on my $200k home at the beginning of the year.  The loan value of each mortgage is $100k.  I couldn't pay six mortgages, so I decided to declare bankruptcy.  Of course I have no other assets and the $500k has disappeared, so the six banks will have to fight over the $200k collateral.  Maybe the FED will pony up $700k and bail them all out?

That is rehypothecation.  Unfortunately, it doesn't work that way for the little guy unless he has a little magic up his sleeve....

Tue, 03/11/2014 - 13:30 | 4534814 zaphod
zaphod's picture

Lots of "little guys" did just that prior to the 2008 blow up. Remember all those stories on ZH of people who bought a house for $200K with zero down, then kept refinancing larger and larger mortages to cash out (despite having never paid in) and in the end had >$800K mortages that they couldn't afford to keep "their house". Where if they had not continously cashed out they would have largely paid off the house. 

Tons of dishonest people living beyond their means got away with the same here. The key is dishonest people, there are dishonest people everywhere.

Tue, 03/11/2014 - 13:46 | 4534902 Unknown User
Unknown User's picture

Banks don't loose money, they simply take the neighbors house.

Tue, 03/11/2014 - 14:16 | 4535034 Kirk2NCC1701
Kirk2NCC1701's picture

LOL.  I thought that "Banks don't lose Money, sometimes they just lose Interest."  ;-)

Tue, 03/11/2014 - 14:07 | 4534995 BlackMagician
BlackMagician's picture

~Tons of dishonest people living beyond their means got away with the same here. The key is dishonest people, there are dishonest people everywhere.~


Trying to play a rigged game with dishonest opponent is a fools game...

Tue, 03/11/2014 - 15:10 | 4535301 walküre
walküre's picture

Nevermind banks and governments cheating. It is YOU  that needs to walk the straight and narrow as YOU and YOU alone can make the difference!!! /sarc

Tue, 03/11/2014 - 13:42 | 4534884 rotagen
rotagen's picture

Last I checked China is not owned by the Rotschilds They're just using their Illusion.

Tue, 03/11/2014 - 13:43 | 4534892 fx
fx's picture

the Chinese are excellent in copying everything. And then making it  in bulk volume.

Tue, 03/11/2014 - 16:35 | 4535646 DoChenRollingBearing
DoChenRollingBearing's picture

Very true.  I predict they will dominate rolling bearing manufacturing within 10 years.  Average quality is going up, and NOBODY else is willing to lower their prices, even some, in response.  Not even Korea, *sigh*.

Tue, 03/11/2014 - 19:12 | 4536139 Berspankme
Berspankme's picture

Corzine pops a boner

Tue, 03/11/2014 - 12:57 | 4534694 LawsofPhysics
LawsofPhysics's picture

Please, the Chinese are a unified people (admittedly by some force) with a single party socialist government.  There will be no disagreement about anything, let alone "collateral".  They will set "prices" and GDP and everything exactly where they need it to be and no one will argue one way or the other.

Tue, 03/11/2014 - 13:01 | 4534704 SubjectivObject
SubjectivObject's picture


That seemed close.

Tue, 03/11/2014 - 13:09 | 4534722 Thought Processor
Thought Processor's picture



And as crazy as that sounds, it will likely be the solution that Beijing will go with.  My guess is that the RE market takes a horrifying jump off the ledge first.  Then Beijing will be tasked with trying to restore order.


We'll see.   Maybe they already have RE price controls set up and ready to go.   Who really knows with the China Gov. lack of transparency and their ability to make changes at will with almost anything.

Tue, 03/11/2014 - 13:18 | 4534765 LawsofPhysics
LawsofPhysics's picture

They will also sell assets to help give the appearence of a "responsible bailout".

assets like treasuries...

Tue, 03/11/2014 - 13:31 | 4534827 Dr. Engali
Dr. Engali's picture

I'm sure Belgium will pick up the slack, if not Belgium then maybe Madagascar.

Tue, 03/11/2014 - 13:38 | 4534868 pods
pods's picture

The Striped Lemur is one of the two animals than can properly digest a treasury.

The other are Unicorns that shit skittles.


Tue, 03/11/2014 - 14:08 | 4534999 new game
new game's picture

like a magician with 7 seven balls in play! hey let him try 8, or 9...

will they just keep changing the rules? they could set by law all underlying loans have no bearing

on claims of collateral. but then how can the loans be paid without moar phoney money. dismiss the loans?

i think we will never really know about the whereabouts of several thousand enterprizing china men and women.

vanished, poof, suicides anonamous, in the night stuff...

still, the outcome of this> total distrust and credit freeze. next news, "credits markets frozen". meltdown,

china banks ordered to provide liquidity...


Tue, 03/11/2014 - 14:20 | 4535060 LawsofPhysics
LawsofPhysics's picture

That's the real crux of the biscuit isn't it?  No faith, no fucking credit...

Tue, 03/11/2014 - 14:24 | 4535080 Winston Churchill
Winston Churchill's picture

They could justb Cntrl+P.

Almost like they are looking for cover to dump their UST's, instead of

saying outright that its to support Russia.

Tue, 03/11/2014 - 14:32 | 4535105 LawsofPhysics
LawsofPhysics's picture

My thoughts exactly.  The Russians, India, China, and Iran have been ready to do their own thing since 2010.  Honestly, I thought "operation twist" would be the last QE because of this.

I still can't place Brazil in all this, unless it's simply that (like all hispanics south of the boarder) they will sell anything and everything (including their own mother) for any fiat.  God help the south american jungles as there is still plenty of real assets to plunder there.

Tue, 03/11/2014 - 14:54 | 4535224 Almost Solvent
Almost Solvent's picture

Hispanic is a narrower term and refers mostly to persons of Spanish speaking origin or ancestry, while Latino is more frequently used to refer more generally to anyone of Latin American origin or ancestry, including Brazilians. (Per Wiki)

Tue, 03/11/2014 - 14:13 | 4535024 tenpanhandle
tenpanhandle's picture

Are you saying that skittles are the basic building block of treasury bonds.

Tue, 03/11/2014 - 13:17 | 4534757 yrbmegr
yrbmegr's picture

Good.  We can all stop worrying now.  Time for lunch.

Tue, 03/11/2014 - 14:14 | 4535029 Mike in GA
Mike in GA's picture

That's the great thing about central planning - if all are told what to think then there is no individual culpability for propagating false information.  When the truth collides with the centrally planned and constructed alt. reality, no one can bitch.  Brilliant! 

No wonder our native leftists are so enamored of the delights of socialism - they've always been real big on no  personal responsibility.

Tue, 03/11/2014 - 14:28 | 4535096 August
August's picture

And God bless Tom Friedman and the New York Times!

Tue, 03/11/2014 - 14:55 | 4535229 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"And God bless Tom Friedman and the New York Times! </sarc>"~



Tue, 03/11/2014 - 12:58 | 4534697 monad
monad's picture

Look people, if you're going to commit suicide because some crook destroyed your life, at least try to take them out first.

Tue, 03/11/2014 - 13:03 | 4534707 Dr. Richard Head
Dr. Richard Head's picture

I agree.  Selfish dead bastard..

Tue, 03/11/2014 - 13:20 | 4534769 i_call_you_my_base
i_call_you_my_base's picture

Maybe he was suicided before he could try.

Tue, 03/11/2014 - 13:48 | 4534910 drdolittle
drdolittle's picture

Agreed.That would provide some incentive for honesty in transactions. Anyone suicidal take out a bankster with you and leave a hero!

Tue, 03/11/2014 - 15:44 | 4535446 Tall Tom
Tall Tom's picture

That is just too tempting. But when I decide to take the Sunset Limited I think that I shall go alone.


Besides there are still far too many whom deserve the Banksters.

Tue, 03/11/2014 - 14:06 | 4534992 Let them eat iPads
Let them eat iPads's picture

Nobody's taken out Corzine yet. This is surprising.

Tue, 03/11/2014 - 15:42 | 4535438 Bastiat
Bastiat's picture

It is.

Tue, 03/11/2014 - 17:02 | 4535734 Winston Churchill
Winston Churchill's picture

Tiger waits in long grass.

Old Chinese saying basically saying revenge is best served cold.

Tue, 03/11/2014 - 18:30 | 4535982 monad
monad's picture

Stupid people slash tires.

Smart people unscrew valve stems.

Tue, 03/11/2014 - 19:29 | 4536215 caustixoid
caustixoid's picture

Stupid people slash tires.

yeah, this sometimes doesn't go well

Tue, 03/11/2014 - 20:02 | 4536338 Vendetta
Vendetta's picture

He's probably hanging out on the same island as Ken Lay drinking those umbrella drinks and laughing their asses off.

Tue, 03/11/2014 - 12:59 | 4534700 whisperin
whisperin's picture

Oh yeah baby. Just how much of this shit is spread around the globe and who holds too much?

Tue, 03/11/2014 - 13:09 | 4534719 HyBrasilian
HyBrasilian's picture

Not to worry... No tribeholders will be affected...

Tue, 03/11/2014 - 13:06 | 4534713 PHantomofthemarkets
PHantomofthemarkets's picture


Tue, 03/11/2014 - 13:08 | 4534715 dead hobo
dead hobo's picture

If China goes for the bail out, it will need to raise cash. It has 2 choices. 1 = print. 2 = sell assets. 

Now, assume a world where China becomes the outlier and sells assets to raise bailout cash. It can sell national assets, such as the Forbidden City or it can begin to disgorge itself of US debt securities. My guess is that the latter is preferable to the former. Now, how will this affect long term interest rates? Especially if Russia joins in the fun just to be an asshole. Will this cause a 5% 30 year rate? If so, what will the resale rate of prime European debt rise to? Interesting times ahead.

Tue, 03/11/2014 - 13:17 | 4534756 LawsofPhysics
LawsofPhysics's picture


Tue, 03/11/2014 - 13:37 | 4534843 dead hobo
dead hobo's picture

Busted. There was also a trick question in there. The correct answer for 'European debt' is subprime, of which there is an unlimited amount. 

Sleep well.

Tue, 03/11/2014 - 15:03 | 4535262 Almost Solvent
Almost Solvent's picture

The answer to the real trick question is:


The FED will buy ANYTHING in ANY AMOUNT needed to keep ZIRP alive.


(Maybe not directly, but no way would they let rates rise like that no matter how many trillions worth of IOUs China & Russia want to dump)

Tue, 03/11/2014 - 13:45 | 4534901 KidHorn
KidHorn's picture

They'll never sell their US debt since it will go against everything the PCB has been trying to do for the past decade. They'll just print more than usual.

Tue, 03/11/2014 - 14:22 | 4535073 Charles Nelson ...
Charles Nelson Reilly's picture

just throwing this out there, but wouldn't they sell some of their gold?  and if so, what happens to the price?  China seems to be the driver of the price right now.

Tue, 03/11/2014 - 14:58 | 4535241 the_magician
the_magician's picture

Defenestration of China 2015. First thing to happen. Or, as you say.

Tue, 03/11/2014 - 13:09 | 4534720 Fix It Again Timmy
Fix It Again Timmy's picture

Wait a damn minute!  Your debt is my asset, whadda ya mean you're defaulting on your debt? BASTARDS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tue, 03/11/2014 - 16:13 | 4535579 SunnyDD
SunnyDD's picture

Hehe, you got it Dude.

China WON!


Tue, 03/11/2014 - 20:14 | 4536409 Jafo
Jafo's picture

Could it be the other way round?  China has gone all in and the Fed decides to taper.  This will pull the rug out from under all of the doubtful Chinese debt which will collapse the Chinese economy and with it the Chinese government.  The clever part is they have done it without firing a single shot.

Tue, 03/11/2014 - 13:10 | 4534721 economessed
economessed's picture

The Chinese may be able to resolve their pollution problems after all -- by the time the financial contagion runs its course, the only people who will be able to generate any greenhouse gasses will be the rural farmers sitting at the south end of a north-bound cow.

Tue, 03/11/2014 - 13:10 | 4534728 RSDallas
RSDallas's picture

And I wouldn't be surprised if Goldman underwrote the scheme.

Tue, 03/11/2014 - 13:11 | 4534729 Luckhasit
Luckhasit's picture

Know what the difference is? They have a shit ton of gold.  Sometimes I think the Chinese government is willingly trying to one-up the West.  Damn near everyone has their printer on full blast, at least the Chinese has a barbaric relic called gold. 

How much does the US have?

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