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China Prepares To Bailout Russia

Tyler Durden's picture




 

Earlier this evening China's State Administration of Foreign Exchange's (SAFE) Wang Yungui noted "the impact of the Russian Ruble depreciation was unclear yet, and, as Bloomberg reported, "SAFE is closely watching Ruble's depreciation and encouraging companies to hedge Ruble risks." His comments also echoed the ongoing FX reform agenda aimed at increasing Yuan flexibility which The South China Morning Post then hinted in a story entitled "Russia may seek China help to deal with crisis," which which noted that Russia could fall back on its 150 billion yuan ($24 billion) currency swap agreement with China if the ruble continues to plunge, that was signed in October. Furthermore, two bankers close to the PBOC reportedly said the swap-line was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze.

 

As Bloomberg reported, earlier in the evening, China's Wang Yungui noted

  • *CHINA IS CLOSELY WATCHING RUBLE'S DEPRECIATION: SAFE'S WANG
  • *CHINA ENCOURAGES COS. TO HEDGE RUBLE RISKS, SAFE'S WANG SAYS
  • *REAL IMPACT OF RUBLE DEPRECIATION UNCLEAR YET, SAFE'S WANG SAYS

Adding that China plans sweeping reforms to promote FX flexibility.

And then The South China Morning Post hints,

Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge.

 

If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia.

 

"Russia badly needs liquidity support and the swap line could be an ideal tool," said Bank of Communications chief economist Lian Ping.

 

The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the US dollar.

 

Two bankers close to the People's Bank of China said it was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze.

 

China has currency swap deals with more than 20 monetary authorities around the world. Swaps are generally used to settle trade.

 

"The yuan-rouble swap deal was not just a financial matter," said Wang Feng, chairman of Shanghai-based private equity group Yinshu Capital. "It has political implications as it is a sign of mutual trust."

 

The rouble has lost more than 50 per cent against the US dollar this year, pushing Russia to the brink of a currency crisis, though measures announced by the central bank helped it recover some ground yesterday.

 

Li Lifan, a researcher at the Shanghai Academy of Social Sciences, said the swap would not be enough for Russia even if it is used in its entirety. "The PBOC might agree to extend something like 15 billion yuan initially as a way of showing China's commitment to Russia."

*  *  *

As we discussed in October when the swap deal was signed,

...as if to assure all involved parties that there will be enough capital support on both sides, the PBOC released a surprising announcement that the central banks of China and Russia signed a 3-year, 150 billion yuan bilateral local-currency swap deal today, according to a statement posted on PBOC website. Deal can be expanded if both parties agree, statement says. Deal aims to make bilateral trade and direct investment more    convenient and promote economic development in 2 nations.

 

To be sure, some such as Bloomberg, are skeptical that the unprecedented pivot by Russia toward China as it shuns the west, will merely harm the Kremlin. Others, however, wonder: who will be left standing: Europe, with its chronic deficit of energy and reliance on Russia; or Russia, a country overflowing with natural resources, whose economy is currently underoing a dramatic and painful shift, as it scrambles to dissolve all linkages to the Petrodollar and face the Gas-O-Yuan?

*  *  *

Is 'isolated' Russia about to be bailed out by the world's largest economy China?

 

Perhaps, they already started...

 

But then again - with the BRICS currencies all turmoiling... (ZAR -22% not shown)

 

Perhaps it is not such a surprise as members take advantage of The BRICS Bank's $100 Billion reserve...

The punchline, however, is that using bilateral swaps, the BRICS are effectively disintermediating themselves from a Fed and other "developed world" central-bank dominated world and will provide their own funding.

We are pleased to announce the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements.... The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures. 

Incidentally, the role of the dollar in such a world is, well, nil.

For those who have forgotten who the BRICS are, aside from a droll acronym by a former Goldman banker, here is a reminder of the countries that make up 3 billion in population.

 

Chart: Bloomberg

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Thu, 12/18/2014 - 00:17 | 5566817 Bindar Dundat
Bindar Dundat's picture

No tickee --  no Rubee

Thu, 12/18/2014 - 00:22 | 5566841 Publicus
Publicus's picture

Not just bailing out, the mutual defense treaty is coming up next.

 

Plus, this will blow the NWO away, the Eurasian Currency Unit.

 

As we heads toward World War 3, Total War.

Thu, 12/18/2014 - 00:26 | 5566868 VATICANT
VATICANT's picture

And these two are the ones positioned to come out of the war on top, for a very long time 

Thu, 12/18/2014 - 00:28 | 5566873 Publicus
Publicus's picture

Plenty of spare/ghost cities for the war.

Thu, 12/18/2014 - 00:28 | 5566880 economics9698
economics9698's picture

China should dump a few billion USD and buy a few billion rubles.  The only thing stopping them is the sociopath tribe parasites.  You never know the parasites might go nuclear.  The parasites would miss out on the blow and whores, better to nuke a few million.

Thu, 12/18/2014 - 00:32 | 5566888 SilverIsMoney
SilverIsMoney's picture

Ive said it before and i'm gonna keep saying it again. NO ONE is going Nuclear. Period. End of Story.

They still need peasants to lord over and even though they own this fucking planet they still need to eat, drink, and breath what it produces. Dresden style destructions? Oh you bet... Nukes irradiating the same planet they need? No way. The Russians and Americans didn't Nuke each other in the first Cold War and they certainly won't now... M.A.D. is one hell of a deterrent. These folks still need to eat like the rest of us... pretty hard to do when there's fallout all over the globe and total darkness.

Thu, 12/18/2014 - 00:37 | 5566920 Anusocracy
Anusocracy's picture

The only way nukes would not be used is if both sides suffered equal losses. Tit for tat.

As soon as one side gains an advantage, the other will be all in.

Thu, 12/18/2014 - 00:46 | 5566946 Publicus
Publicus's picture

As Ruble is now backed by oil, China buying Ruble is the same as buying oil. They will do it.

Thu, 12/18/2014 - 00:45 | 5566957 ebworthen
ebworthen's picture

Stick a fork in the West, done.

Cooked its goose it has.

Thu, 12/18/2014 - 00:50 | 5566974 economics9698
economics9698's picture

Parasites killed 6 million in the Holodormor.  They would kill a few million more.  Blow and hookers more important to these MF'ers.

Thu, 12/18/2014 - 01:16 | 5567036 eatthebanksters
eatthebanksters's picture

Everyone who called Obama smart and annointed him the 'winner' may have to pause....this story has yet to unfold...

Thu, 12/18/2014 - 01:22 | 5567051 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Obama is dumb or a tool, I don't know which (or both).

*  *  *

China bails out Russia...  Just another stepping stone for China's long-term plan to get their territories back that they lost from Russia.  CHINA is the better player.  They play Go, Russia plays Chess.

Images of Chinese territories they will get back are here:

https://www.google.com/search?q=Chinese+territory+lost+to+Russia&espv=2&...

China will get more of Siberia in due course if they choose...

Thu, 12/18/2014 - 02:06 | 5567104 COSMOS
COSMOS's picture

I think you are mistaken Dochen.  Nobody wants to live in 40 below weather.  Rather the Chinese will get the vast Australian land mass which on the coast has some of the best weather in the world.  Only a bit more than twenty million people.  Australia will become a colony of the worlds largest economy and expect to see millions of chinese there in the next few generations.  When the dollar loses reserve status expect to see the Chinese softly pushing the USA back all the way to Hawaii.  Control of Australia and NZ will also mean one step closer to Antartica and its potential rich resources.  An Australia and NZ beholden to the Chinese is not far off.

The Chinese have more than made good on lost territory with annexation of Tibet etc, without Soviet criticism or Soviet support of an insurgency movement back in the day.  The Chinese are looking South to extend their influence and settlement of population.

Thu, 12/18/2014 - 02:25 | 5567129 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Australia is pretty empty, true that.  And, yes, that is a problem for Australia.  (So is Indonesia)

But, Russia is next door to China (no long ocean-going voyages).  Marching distance.  "Go North Young Man."  Lots of single men in China.  In the 1960s, China was still complaining about Russia taking "their" (historical) lands.  China also uses tactics of convenience when airing historical grievences (see protests about Japan a year or two ago, no anti-Japanese riots there lately).  I am NOT convinced at all that China has given up a long-term desire to get their lands back.

I am guessing that the Soviet Union never kicked up a fuss about Chinese conquests of Tibet (etc.) because they were fellow Communists at the time.  And Russia does not want to open the changing-borders hornet nest...

*  *  *

I hear you about not wanting to live in minus 40 degree weather...

Thu, 12/18/2014 - 02:30 | 5567153 nope-1004
nope-1004's picture

So let me get this straight:

 

We bombed some folks, invaded some folks, started civil wars for some folks, sanctioned some folks, and do nefarious currency FX manipulation to affect some folks.

Then why aren't those folks cowering in the corner, curled up in the fetal position waving the white flag?

Me thinks this will get VERY ugly for USSA.  Obama sold the population out, which is nothing earth-shattering because let's face it:  half the population can't even muster enough energy to take a friggin' bath.  Lazy tards.  This will get ugly.  The US is headed for complete collapse, that is a given.  Other nations are calculating their moves while desperate western banks impose those "punishing" currency games.  Perhaps they forgot to assess the enemy.  He ain't no choomin' community gangsta.

Putin's gonna fuck us all.  My fat neighbor is going down cuz he's a useless tit.  Couldn't hold hisself a sammich, let alone defense artillery.  Ugly as I'll get out this will be.

 

Thu, 12/18/2014 - 02:30 | 5567168 DoChenRollingBearing
DoChenRollingBearing's picture

America's .gov is guilty of many things, you will get no argument from me on that.  But, out .gov is not our only threat.  My guess is there are plenty of Black Swans out there (along with threats we already know about).

We're probably going to go down.  But, it will us doing it to each other, not Putin.  IMO.

Preparation is good.  Good luck to all.  Well said.

Thu, 12/18/2014 - 03:03 | 5567225 Squid-puppets a...
Squid-puppets a-go-go's picture

oh, america is saved. didnt u hear - they can now trade with cuba

 

Thu, 12/18/2014 - 03:19 | 5567252 7.62x54r
7.62x54r's picture

I'm irritated.

China gets to trade soon to be worthless federal reserve notes for a piece of Russian industry? I wanna piece of that. Where do I send MY federal reserve notes, dammit?

Thu, 12/18/2014 - 08:55 | 5567666 Rakshas
Rakshas's picture

...... Ima confused Alice........ I keep hearing that CNY presses have been outrunning all other fiat presses combined and proxies of China.gov have been translating all those slanted 1's and 0's to real assets all over the globe ........... so if i get the gist of this ..... and assuming these ru-moars are correct they slide the electronic abacus thingy more to the right or left - however the hell that thing works - then send out their buyer squads to hard hit economies all over the world and swap these little fiat electrons for real assets.......... am I crazy or is that one of the best scams since fractional reserve theftery was invented???  Really though what a scam....... on the other hand we have our western cabal stacking one on top of zeros to infinity and beyond ...... and not buying anything real ......... uummmmm  ...... we're number ...one?!?!!??

 

Thu, 12/18/2014 - 03:30 | 5567264 European American
European American's picture

Cuba went through it's "Special Period" and came out the most sustainable country in the world. The obese became very lean. Organic gardening became the main stay for the populace. Lean times, but healthy times.

When America goes through it's Special Period, the masses will be experiencing the most horrific withdrawals (from gmo junk food and texting to psychotropics and monster drinks) and it's going to get downright nasty...medieval in the streets...Hellstorm.

Thu, 12/18/2014 - 08:20 | 5567580 fiftybagger
fiftybagger's picture

"Ugly as I'll get out this will be"

Indeed.  And directed towards that end intentionally for quite some time.  Plan accordingly, i.e. get the heck outta Dodge.

Thu, 12/18/2014 - 02:28 | 5567162 Poundsand
Poundsand's picture

It's not the living there that will draw them, it's the natural resources.  China isn't claiming the Senkaku islands because they'd like to live there and the beaches are nice, it's because of the oil beneath them.

Thu, 12/18/2014 - 03:31 | 5567272 old naughty
old naughty's picture

How can one be sure, with all the fake data nowadays?

Besides, aliens living underground may have lots to say about fracking/drilling/mining, no?

One cannot stay on the surface and not dig down into the core, perhaps?

Thu, 12/18/2014 - 02:28 | 5567163 economics9698
economics9698's picture

China will colonize Africa when the USA is gone.  Huge continent, easy to dominate, natural resources.

Thu, 12/18/2014 - 03:30 | 5567271 Titus
Titus's picture

China is looking to colonize EVERYWHERE. Their elites are already colonizing the US and Australia, look at all the real estate purchases. The Russians believe they still have an active plan to recapture Siberia by 2050.

In truth, the Chinese are the real threat to the Zio banking cartel.

Thu, 12/18/2014 - 03:32 | 5567273 European American
European American's picture

CHina will colonize America. May already have.

Thu, 12/18/2014 - 07:12 | 5567476 ParkAveFlasher
ParkAveFlasher's picture

You've never been to Queens, have you?

Thu, 12/18/2014 - 12:35 | 5568603 stewie
stewie's picture

No they'll just buy it.

Thu, 12/18/2014 - 05:10 | 5567360 IPURDOM75
IPURDOM75's picture

They've already started!!

Thu, 12/18/2014 - 02:33 | 5567172 old naughty
old naughty's picture

While the bail out is hardly a big surprise, one would ask if they hadn't thought of it when they signed the treaty and held SOC meeting, etc.?

Territory disputes...War memorials...

Military drills...New ships order...

Nuclear test /EMP and readiness...

All for show / smoke and mirror?

Do we know what the PTB is planning (with the invisible hand)? Real-ly?  (Executing, may be, with the visible hand).

All the dots are there, how many (of us) connect enough to tell?

Reset, then NWO...

then what?

 

Thu, 12/18/2014 - 09:18 | 5567725 RaceToTheBottom
RaceToTheBottom's picture

China wants russian and siberian resources, not land mass for serfs.

Thu, 12/18/2014 - 06:34 | 5567429 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

China doesn't fucking care about Siberia, I would even say she care more about Japan now...

If you are so wet about China expansionism, I would rather bet on Japan: once it collapse due to her debt and aging population, they will be invaded by Chinese, at this time the US would be completely broke and will don't give a fuck about defense treaty...

It could be even made by a secret treaty, a thing like this:

USA: we own you 4 trillon debt, OK man, we can't reimburse it...

China: That's a huge problem.

USA: Yes, but you can always take my whore: Japan, invade it, we will remove troops just before that.

China: Oh great idea Uncle Sam ! Then we will start next week with the Senkaku island.

USA: Roger !

Thu, 12/18/2014 - 08:40 | 5567626 silvermail
silvermail's picture

You want to know what they say about it Russians?
They say: We have no choice, and in any case we lose our Siberia? Well, in this case, Siberia will belong to our Chinese friends. Yes, Siberia may belong to China. But our Siberia will never belong to our enemies from Washington!

Thu, 12/18/2014 - 03:50 | 5567299 invention13
invention13's picture

Agreed. There are so many ways this could play out. Russia and China patch up their differences - manpower and manufacturing, meet natural resources ... Or Russia could just decide to default on debt ...

Thu, 12/18/2014 - 06:36 | 5567434 Paveway IV
Paveway IV's picture

More insanity. I kind of get why Jewish-banker-friendly Bloomberg is all over this fake story, but there's just nothing here. Is Israel in trouble financially or something?

Russia doesn't have a liquidity crisis. You can't have one unless you are in debt up to your eyeballs, and Russia is not. No amount of foreign ANYTHING matters to a country that is solvent, relatively self-sufficient and hasn't loaned out it's citizen's wealth six generations out. I'm no Russophile and don't have a man-crush on Putin. I'm just a stupid cold-war veteran that respects and appreciates the Russians for what they are and how they've been screwed lately. Fuck Crimea - I'm thankful that Putin didn't nuke Washington for machinating the current Jewish oligarch / neo-Nazi coup in Ukriaine.

Russia's non-dependence on Western bankers was designed. If you don't incessently print money or spend money like a drunk teenage girl at the mall with her parents platinum card, then you generally don't have a systemic liquidity crisis. There are imbalances created by the Western sanctions and artificially depressed exchange rates, but nothing approaching a 'liquidity crisis' and nothing China needs to remedy by their currency swap arrangements.

Do the West's Jewish bankers have some scheme to turn 150 million Russians into their indentured servants?

That's a really bad idea - the Russians ARE the embodyment of Anonymous: They never forgive. They never forget. Expect them.

Thu, 12/18/2014 - 01:02 | 5566955 ZerOhead
ZerOhead's picture

Whoever launches the massive first strike wins.

My guess is that either we nuke them directly first or we find a willing psychopathic partner to launch a limited 'false flag' nuclear attack on us so we can blame the Russians. Then we proceed to immediately vaporize Russia.

The crazies are driving the bus playing a TEOTWAWKI game of chicken.

The bet is that the Russians capitulate and then it's on to the Chinese.

Thu, 12/18/2014 - 01:16 | 5567041 FeralSerf
FeralSerf's picture

The owners of the herds do NOT allow their livestock to destroy them. If there's any slaughtering to be done, it will be to livestock and some of the staff.

The Rothschilds will not allow their estate to be destroyed.

Thu, 12/18/2014 - 03:35 | 5567278 old naughty
old naughty's picture

One would dare ask what lord over Rothschilds and the like?

Thu, 12/18/2014 - 00:49 | 5566958 economics9698
economics9698's picture

China needs to stick a fork in the bs game.

Thu, 12/18/2014 - 01:03 | 5567005 freewolf7
freewolf7's picture

Check and mate.

Thu, 12/18/2014 - 01:12 | 5567029 ZerOhead
ZerOhead's picture

Or 'Shake and Bake'...

Thu, 12/18/2014 - 06:46 | 5567442 Farqued Up
Farqued Up's picture

The weaker will attack first, especially if the U.S. is the first down the chit chute. Governments are running over with retard psychopaths. Uh oh, I feel like punching up Dr Strangelove again on my DVR.

Black humor, my ass, that is Edgar Cayce and Nostredumbass type stuff except this is sure thing shit. Stanley Kubrick, you fucking genius!

What occurs naturally in caves besides bat shit? The cave dwellers will survive with the cockroaches. Any nutrition in roaches?

Thu, 12/18/2014 - 19:40 | 5570627 tarsubil
tarsubil's picture

Only one country has used nukes on another in war right? And they were winning hands down.

Thu, 12/18/2014 - 00:40 | 5566929 suteibu
suteibu's picture

"They still need peasants to lord over..."

Well, at least until robots become reliable.  And that will work until Skynet becomes self-aware.

Thu, 12/18/2014 - 01:10 | 5567022 CrazyCooter
CrazyCooter's picture

There are arguably billions of useless eaters on the planet right fucking now. At least in the eyes of the elite. Culling that herd is definately high on their list, they just don't want it to be their herd.

Regards,

Cooter

Thu, 12/18/2014 - 02:43 | 5567183 zhandax
zhandax's picture

There are 535 in congress and that doesn't include the staff.

Thu, 12/18/2014 - 00:40 | 5566935 Skateboarder
Skateboarder's picture

Fukushima slow-motion biosphere poisoning. Do not underestimate.

Thu, 12/18/2014 - 01:05 | 5567011 noben
noben's picture

Think Nanobots, wizard.

Thu, 12/18/2014 - 01:28 | 5567061 Skateboarder
Skateboarder's picture

Can nanobot make thing grow?

Thu, 12/18/2014 - 01:27 | 5567052 TeamDepends
TeamDepends's picture

Yeah! Did you see the thing that washed ashore in Cali? Looks an awful lot like the Montauk Monster!?!?! (shit getting realer)

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