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Peak Desperation: China Bans Selling Of Stocks By Pension Funds

Tyler Durden's picture




 

What do you do when two policy rate cuts, $19 billion in committed support from a hastily contrived broker consortium, and a promise of central bank funding for the expansion of margin lending all fail to quell extreme volatility in a collapsing equity market?

Well, you can simply ban selling, which is apparently the next step for China.

According to Caijing, the country's national social security fund is now forbidden from selling (but is welcome to buy). Here's more, via Caijing (Google translated): 

Social Security informed the public fund social security portfolio not only buy sell stock

 

"Financial" reporter learned that the Social Security Council on Monday (July 6) Call each raised funds, social security portfolio is not allowed to sell their holdings of stock.

 

Sources said that Social Security Council has just informed all social security portfolio can only buy stocks can not sell the stock; and it is not defined as the net selling, but completely unable to sell the stock.

And a bit more from FT:

Financial magazine Caijing reported on Monday that the National Social Security Fund had told its external fund managers they could buy stocks but were not permitted to sell them.

 

Central Huijin, a unit of China’s sovereign wealth fund, also said on Sunday it was supporting the market by buying blue-chip exchange traded funds.

As mentioned above, and as discussed at length over the weekend (here and here), China is scrambling to counter an unwind in the country's various unofficial margin lending channels which have combined to pump between CNY500 billion and CNY1 trillion in borrowed funds into the country's previously red-hot equity market. 

The pension selling ban comes just days after China moved to curtail margin calls in a similary ridiculous attempt to stop the bleeding by simply making selling against the rules.

For their part, Moody's says the "lack of compulsory liquidiation" in margin accounts is probably a very dangerous idea:

Lack of compulsory liquidation rules in unmet margin call is credit negative for securities cos. because it weakens controls against losses, allows industry to increase risk.

 

Moody’s expects some cos. to aggressively incentivize clients to buy stocks on margin and allow value of collateral to fall below safe level to avoid damaging customer relationships, putting themselves in riskier position.

The takeaway: this is simply one more example (the insolvent US shale space and HY bond funds being two others) of forestalling the inevitable and in the process allowing already precarious situations to mushroom into speculative bubbles that have the potential to wreak untold havoc when the inevitable unwind finally comes. We'll close with the following quote (again from Moody's):
New rules [in China] appear to be attempt to stabilize market, [but] less discipline around liquidating positions and risk taking with securities cos. underwriting leveraged positions will sow seeds for greater market peril.
 

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Mon, 07/06/2015 - 12:04 | 6276653 JustObserving
JustObserving's picture

Best to ban all selling of stocks for a few years.

Mon, 07/06/2015 - 12:06 | 6276660 IridiumRebel
IridiumRebel's picture

Let's ban Central Planning while we are at it.....

Mon, 07/06/2015 - 12:09 | 6276677 knukles
knukles's picture

Talk about central planning, if the CB's buy all the stawlks in the world, then the politicians confiscate the CB's (just cut the bankers out of the middle) and Viola! 
Everything is Socialized in the Name of the People

                      Progressive Heaven on Earth

Mon, 07/06/2015 - 12:13 | 6276703 nuubee
nuubee's picture

Yah, ultimately both systems are f-ed. Oddly, it seems like China may be headed for the storm earlier than we are.

Mon, 07/06/2015 - 12:34 | 6276806 Waylon Bits
Waylon Bits's picture

Too many people in the alternative media cheerleading for China/Russia... reminds teh we of when the Euro was big news 15 years ago.  Just another pile of statist shit.  We need decentralization now!

Mon, 07/06/2015 - 12:44 | 6276858 Divided States ...
Divided States of America's picture

But levered up housewifes and farmer turned traders with soon to be margin calls can still sell right?

I wouldnt want to be relying on my pension funds.

Next up is EXECUTION for anybody who sells stocks in ANY accounts, if you buy stocks, you get 1 more share for every 10 you buy. AND FREE COMMISSION on BUYS only!

Mon, 07/06/2015 - 12:47 | 6276880 Soul Glow
Soul Glow's picture

What's a Chinese pension pay out per month anyway?

$500 at the most?

China ain't saving anyone, and when the world's largest hedge fund, the Fed, get's crushed under its own leverage, all falls down.

Buy silver.

Mon, 07/06/2015 - 15:26 | 6277482 Paveway IV
Paveway IV's picture

No selling? Hey - that's not a free market.

That's almost as cowardly as declaring a ban on shorting to reverse a well-deserved, say... tanking of all financial stock. The U.S. in 2008. Europe in 2011. Spain a couple of years ago. Oddly enough, the ban only seemed to curb the decline in the U.S. markets, nowhere else. 

All in all, I would say I would rather have China's approach of the pension funds restricted from selling than the corrupt U.S. market's crony-inspired short bans on financial stocks.

Mon, 07/06/2015 - 16:49 | 6277769 PT
PT's picture

"Fuck capital gains.  Should've invested for dividend yield instead!"
"Dividend yield?  What's that?"

But can you still borrow money and use the shares as collateral?
"Yes, I want to borrow a billion Yuan at zero% interest and make no repayments.  Everyone assures me that these shares are worth 2 billion Yuan, so you'll still double your money!"

Hmmmmm, let me see now:
"The company announced today that certain privileged share holders can now purchase special shares for free.  These special shares give share-holders rights to zero percent of the company's dividend pay-outs, are always worth nothing, except that they instantly pay out a one-off dividend of 100% of the current share price."
Something like that.  That'll work, won't it?  (... if your name is "Jamie" or "Lloyd" or the Chinese equivalent of ...)

  

Mon, 07/06/2015 - 16:49 | 6277768 Divided States ...
Divided States of America's picture

Hey Soul Glow I was told that it starts at around 2000-2500 CNY a month so 400 bucks USD or so....and works as high as 8k CNY though it has been increased every year.

Mon, 07/06/2015 - 12:58 | 6276946 Ward cleaver
Ward cleaver's picture

Yeah, something along the lines of Jos Banks clothier store marketing strategy. Buy 1 stock get 3 shares free. Only 1 month left on sale.

Mon, 07/06/2015 - 14:59 | 6277394 jerry_theking_lawler
jerry_theking_lawler's picture

But, but, how do you maintain the 'skim' and the people that are on the dole to the skim?

They (CBs, .gov, .fed, everybody) knows there is a problem. But to acknowledge the problem is to collapse the entire system. The only way to live is to not look at or acknowledge the problem until the bitter end.  It is basic human nature for pathological liars (aka people that are on the skim).

Mon, 07/06/2015 - 12:39 | 6276835 Divine Wind
Divine Wind's picture

 

 

 

Except that China has the industrial output and a trade imbalance in their favor to help them recover quickly.

They may dip, but will recover.

On the other hand, the U.S. has comparatively little on the horizon to aid in a recovery.

Mon, 07/06/2015 - 12:48 | 6276887 nuubee
nuubee's picture

If the U.S. deregulated to 1960's levels tomorrow, it would re-surpass China in a year. There's simply too much innovation in the U.S. for China to overcome. The main problem in the states has little to do with financialization, it's all fiscal mistakes, all state and federal regulatory mistakes. Economies do not go to centrally-planned in a single vote. They go that path over time, one new regulation (for your protection) at a time.

Mon, 07/06/2015 - 14:04 | 6277191 booboo
booboo's picture

Yea well you just wait till real war breaks out and we put all these hungry line workers and drunk UAW back to work building Skittle bombs and Lego tanks, we'll see who's laughing then!

Hell, for starters I know a negro that created 12 million new jobs in 5 years

Mon, 07/06/2015 - 14:29 | 6277293 Not Too Important
Not Too Important's picture

China's industrial output only works if there are buyers. That group is shrinking by the minute.

The Chinese are going to get out, and save even more, even if it's under their mattress. They're not afraid of their banks yet.

But everyone else is, if they're smart.

Mon, 07/06/2015 - 12:30 | 6276769 Pigface
Mon, 07/06/2015 - 12:33 | 6276797 TheLooza
TheLooza's picture

"Nobody move nobody get hurt"

Mon, 07/06/2015 - 12:44 | 6276863 datura
datura's picture

well, the problem is that China and BRICS still dont have the alternative economic system build. So what is China to do, allow it all to crash before they have their own non-Western system in place? That would not make any sense. They need to keep this system going, until they can switch to the other (gold-backed, oil-backed and based on real building of Silk Roads, railways etc.). Chinas problem also was that it was still very much dependent on export - and since the USA and EU started to slow donw, buy less and less things, Chinese economy has been slowing down as well, very logically. Unfortunately, Chinas answer to this was more debt, rate cuts etc. But I think they were somewhat pushed into this by being so dependent on the USA and the West. They need to be more independent, base their economy more on their consumer base, but this is all very easy said and very difficult to do. Even so, China still has much more healthy fundamentals than the USA: gold and gold mines, properties all around the world etc. They still have much more collateral for their debts than the USA can ever have. Perhaps if they really start crashing, they should make that gold fix, increase the price of gold - thereby of their gold reserves. But it is not easy either, they just seem to be afraid to switch to something else so abruptuly, although they DO plan to do it. Russia seems to be much more eager to collapse the Western system and just get rid of it and Putin keeps pushing China to do it, but the Chinese have been much slower in this and more careful - perhaps they should have had more courage. You can see it now, when Russia has the BRICS presidency, how they push for changes much more than other BRICS, who still seem to be afraid. Well, we'll see. I would still bet on Russia though, because they seem to be the only country, who is really preparing for the worst (the collapse of everything). I dont see any other country doing this:-)

Mon, 07/06/2015 - 13:10 | 6276977 Smiddywesson
Smiddywesson's picture

China and central planning:

 

Yes Capt'n, with human beings, you always get what you always got.  The system is just the wrapper on the same old sh!t sandwich.  It doesn't matter what they call the system, eventually it ends up with everyone owned by relatively few people.

Mon, 07/06/2015 - 12:12 | 6276700 nuubee
nuubee's picture

Bwahahah.... If you ban the selling of stock, how exactly is anyone going to feel good about BUYING it? The entire purpose of purchasing an asset is to either extract value from it (land/resources/tools), or to sell it later for an increase in relative value. If your market is driven by price changes, and not dividends, and you ban the selling of stock, they just why the hell would anyone buy stock?

All this ban will do is force those banned from selling into other asset classes, which can only further erode the value of the index. Peak desperation indeed.

Mon, 07/06/2015 - 12:25 | 6276725 astoriajoe
astoriajoe's picture

If you ban the selling of stocks, who can you buy from if you decided that you wanted to? this is gonna be interesting to watch.

Mon, 07/06/2015 - 12:36 | 6276818 g speed
g speed's picture

price is now irrelevant ----and value is at ZERO---lol   China gov't is not only broke economically and morally but also intellectually.

Mon, 07/06/2015 - 13:38 | 6277099 bigkahuna
bigkahuna's picture

welcome to a preview of the bonehead future of the ussa market...

Mon, 07/06/2015 - 13:46 | 6277131 agstacks
agstacks's picture

mark it 8 dude. 

Mon, 07/06/2015 - 12:46 | 6276875 Spigot
Spigot's picture

It is selling by Mutual Funds they are banning. Feel comfy?

This allows all non-institutional equities owners the option of selling first, before the herd even has a chance.

China as done VERY WELL at studying the operational methods of the western elites. I give them an A+ and a fake chinese made diploma 'Summa Cum Laude', too, with a latte on the way to robbing their citizens.

Mon, 07/06/2015 - 14:32 | 6277306 Not Too Important
Not Too Important's picture

The history of the Chinese. Not always the most creative group, but they'll refine it to infinity.

OTOH, sure skips a lot of R&D investment.

Mon, 07/06/2015 - 12:28 | 6276760 BandGap
BandGap's picture

Details, details....

I guess when you supervise the runup you expect to manage the downturn.

Tip-toeing to the exits is strongly encouraged.

Mon, 07/06/2015 - 14:25 | 6277276 post turtle saver
post turtle saver's picture

I know... you can't book gains either until you _sell it_ ... silly Chinese, trix are for kids

Mon, 07/06/2015 - 13:44 | 6277124 TheReplacement
TheReplacement's picture

Pity you figured that out.  Enjoy the nailgun.

Mon, 07/06/2015 - 17:46 | 6277908 jez
jez's picture

Good news, fund manager comrades!

The benevolent Central Committee has reduced your stock-selling quota to zero!

Life is better every day in the people's republic.

Mon, 07/06/2015 - 12:09 | 6276667 knukles
knukles's picture

Socialista Solution, Inc's suggestion:  You MUST buy stocks or be Fined.
War is Peace, etc.
What horseshit becomes us?

                  Now I know why the Incas cut people's hearts out.
                                They didn't buy stocks

Mon, 07/06/2015 - 12:27 | 6276750 JRobby
JRobby's picture

You must buy stocks that you may never sell with the money confiscated from your bank accounts. Then get on line for toilet paper and saw dust loafs.

Mon, 07/06/2015 - 12:32 | 6276786 Relentless
Relentless's picture

I think that the Incas cut out the hearts of anyone who recommended forming banks or loaning money. Thats why TPTB hunted them down and destroyed their civilization from all the way across the Atlantic.

 

Well, its one possibility...

Mon, 07/06/2015 - 14:33 | 6277309 Not Too Important
Not Too Important's picture

While stealing all their gold and destroying their countries.

Did Cortez and Pizarro establish Central Banks?

Mon, 07/06/2015 - 12:37 | 6276827 Element
Element's picture

This post needs a sound track:

https://www.youtube.com/watch?v=ys207WMzBB4

Mon, 07/06/2015 - 12:40 | 6276838 Surveyor4Pres
Surveyor4Pres's picture

But, but...that's racist!  /sarc

Mon, 07/06/2015 - 12:48 | 6276895 sun tzu
sun tzu's picture

Call it the Affordable Retirement Act. Everyone must buy $10,000 worth of stawks each year. Forty million Murcanz don't have a retirement account. The IRS will let you know which stawks you must buy. The new law will be constitutional under the commerce clause.

Mon, 07/06/2015 - 12:53 | 6276912 aardvarkk
aardvarkk's picture

I'm pretty sure it was the Aztecs that cut people's hearts out for not buying stocks.  The Incas and the Mayas saved that for REAL transgressions, like advocating free markets or speaking out against central banks.

Mon, 07/06/2015 - 13:42 | 6277109 mtl4
mtl4's picture

How about no free cash, all free funds must be fully invested in stocks and they are only sold when a purcahse for goods is made.

China should know better than to mix socialist central planning ideas with a "free" stock market, you can't suck and blow at the same time.

Mon, 07/06/2015 - 14:01 | 6277171 agstacks
agstacks's picture

The MyRA program is designed to help with this.  Instead of having to go through the hassle of setting up your etirement and managing it, Certified Government Investment Specialists (CGIS) will do all the hard work for you and even link to your bank account automatically to allocate your investments weekly!  No more difficult charts to look at, no more stock jargon or difficult choices picking stocks!  While the program was created with Treasuries in mind, recent executive orders have opened the door to fully diversified accounts including some of the finest equities such as SHAK, BABA, PCLN, and NFLX!  You do not need to do a single thing.  Your retirement account will be set up on Monday morning automatically.  Again, you do not need to do anything!   Please include an address for your complimentary Spiderman towel. 

Mon, 07/06/2015 - 12:14 | 6276705 Bluntly Put
Bluntly Put's picture

End all pretenses and just sell stock in governments.

 

Mon, 07/06/2015 - 12:14 | 6276707 mailrouter
mailrouter's picture

So if selling is not allowed, these funds have no incentive to buy. This might backfire quite dramatically.

Mon, 07/06/2015 - 12:17 | 6276718 Kirk2NCC1701
Kirk2NCC1701's picture

Peak FRAUD.  Everything we need to know about the REAL China, has been shown in the last few weeks. And not to mention their ghost cities. 

They are NO better or different than the Fed.  And they get to buy Commodities (PM, Cu, Energy) at crushing prices.

These scammers are to back their fiat with Gold?   Anyone who claims this, is totally gullible and retarded, or hoping we are. 

Mon, 07/06/2015 - 12:57 | 6276926 Froman
Froman's picture

Agree.  It was not that long ago that the gold they claimed they were buying and storing was not where, nor in the amounts it was supposed to be...http://www.ft.com/cms/s/0/a5361796-fd20-11e3-8ca9-00144feab7de.html

Mon, 07/06/2015 - 14:24 | 6277270 JuliaS
JuliaS's picture

I'm pretty sure that for every ton of gold purchase they have an accompanying 1000 ton tungsten order.

Mon, 07/06/2015 - 12:30 | 6276771 Jumbotron
Jumbotron's picture

The Chinese Stock Market

You can check out anytime you like......but you can never leave.

Mon, 07/06/2015 - 14:18 | 6277243 mamasan
mamasan's picture

and blame short sellers for the mispricing of assets. Conveniently forget that the short sellers are taking unlimited upside risk . 

Mon, 07/06/2015 - 16:19 | 6277671 Obamamerica
Obamamerica's picture

This is why we need a 3rd term for Obama. He will save us all

Mon, 07/06/2015 - 12:06 | 6276663 LawsofPhysics
LawsofPhysics's picture

...and they want to be in control of the world's reserve currency. LMFAO!!!

Mon, 07/06/2015 - 12:15 | 6276704 JustObserving
JustObserving's picture

As if the Fed and its minions do not manipulate every market.

Fraud, that is what drives markets today in the fair and free West.

Paul Craig Roberts Rages "Free Financial Markets Are A Hoax"

There are no free financial markets in America, or for that matter anywhere in the Western word, and few, if any, free markets of any other kind. The financial markets are rigged by the big banks, the Federal Reserve, and the Treasury in the interests of the profits of the few big banks and the dollar’s exchange value, which is the basis of US power.

http://www.zerohedge.com/news/2015-05-28/paul-craig-roberts-rages-free-f...

Mon, 07/06/2015 - 12:41 | 6276842 LawsofPhysics
LawsofPhysics's picture

I have been read Mr. Craig's work since 1980, so I guess I can file your post under "no shit Sherlock". Pull the fucking trigger already.

Mon, 07/06/2015 - 14:36 | 6277316 Not Too Important
Not Too Important's picture

I wish I had. I haven't lost much, but I could have done more for others.

Mon, 07/06/2015 - 12:35 | 6276811 TheLooza
TheLooza's picture

I've seen drunbk guys at the blackjack table use similar "leave my chips in the center until I either go broke or I break the casino."  I've never seen the casino go broke with that strategy.

Mon, 07/06/2015 - 12:07 | 6276665 KnuckleDragger-X
KnuckleDragger-X's picture

Yeah, this'll work out well. It must be nice to be masters of the universe.....

Mon, 07/06/2015 - 12:15 | 6276699 knukles
knukles's picture

It's good to be the king

https://www.youtube.com/watch?v=StJS51d1Fzg

                           And YES It Was Forecast .... Watch Closely!

                           https://www.youtube.com/watch?v=Wtr-tbnOZUg

Mon, 07/06/2015 - 12:09 | 6276670 BoPeople
BoPeople's picture

I have seen this recording before.

The banks and associated hedge funds AND government insiders sell their stocks, even go massively short and the price goes down. The government lifts the ban, and then the retirement funds sell to the banks, et. al. at the now lower price.

All of the insiders and banks win and retirees lose.

Anyone want to bet that they got their advice from bankers?

Mon, 07/06/2015 - 12:09 | 6276676 Downtoolong
Downtoolong's picture

forbidden from selling (but is welcome to buy)

Does that include buying Put options?

Can I ask that question without being arrested?

Mon, 07/06/2015 - 12:09 | 6276679 the not so migh...
the not so mighty maximiza's picture

Cluster fuck

Mon, 07/06/2015 - 12:20 | 6276730 kowalli
kowalli's picture

i agree.

PS thanks for double double post

Mon, 07/06/2015 - 12:09 | 6276681 the not so migh...
the not so mighty maximiza's picture

Cluster fuck

Mon, 07/06/2015 - 12:09 | 6276682 the not so migh...
the not so mighty maximiza's picture

Cluster fuck

Mon, 07/06/2015 - 12:09 | 6276683 the not so migh...
the not so mighty maximiza's picture

Cluster fuck

Mon, 07/06/2015 - 12:21 | 6276735 wendigo
wendigo's picture

more of a fuster cluck really. 

Mon, 07/06/2015 - 12:42 | 6276851 Tinky
Tinky's picture

Ah, I see the inflationary pressures reflected in your decreasing upvotes.

Excellent demonstration!

Mon, 07/06/2015 - 12:10 | 6276686 williambanzai7
williambanzai7's picture

Fuck fake equity markets...

Mon, 07/06/2015 - 12:10 | 6276687 silverserfer
silverserfer's picture

this is how sheep feel in the slaughterhouse right before they get blugeoneed. Just keep moving forward everything will be fine. 

Mon, 07/06/2015 - 12:12 | 6276690 mojojojo
mojojojo's picture

Ancient Chinese wisdom. If you're gonna blow a bubble, might as well make it a big one!

Greece is kind of interesting. It's like an entree. But I'm really holding out for the main course, a larger economy to fail. I'm excited about the U.S. 4.5 trillion on the FED balance sheet, FED rate at 0-0.25%, the end of a bull bond market, over valued stock market, the end of USD hegemony. To be honest, I can't fucking wait. China's central bank is fighting the market too. Fuck there is some money to be made if you have the connect. So many idiots in the world.

If I throw someone a book on corruption, politics, money, banking, etc, and they don't read it and promptly go back to their comfortable little television induced bubble reality of illusion, 'should' I really care when they inevitably get thrown in the plastic crusher?

How about I write and scream and protest and plead and nobody gives a fuck? If people prefer ignorance, apathy, despondence, indifference, normalcy bias and cognitive dissonance, mental lethargy, logical fallacies, then they can have it.

Mon, 07/06/2015 - 12:11 | 6276692 Glass Seagull
Glass Seagull's picture

 

 

 

Brilliant idea!  Wait...what?

Mon, 07/06/2015 - 12:12 | 6276702 luckylogger
luckylogger's picture

HA- And they want a free-floating currency.....

HAHAHHAHAHHA

They just set back their timeline for a fully intigrated currency and global domination by a century or so....

The USD peg is here to stay for our lifetimes anyway!

Mon, 07/06/2015 - 12:16 | 6276712 philosophers bone
philosophers bone's picture

This makes perfect sense.  No one can afford to satisfy any obligations to anyone, so lock everything up, fix the value by devine central bank fiat, either through law or through manipulated markets.

The interesting question for me is do the Bankers jump or get pushed off first?

Mon, 07/06/2015 - 12:17 | 6276713 Chad_the_short_...
Chad_the_short_seller's picture

after seeing shit like this I am glad our market is where it is. There are plenty of shorts out there even at all time highs. Just look at the shale stocks, look at gold miners, look at tech shit like SNDK, STX, WDC, TWTR..... SOOOO MANY shorts out there.

Mon, 07/06/2015 - 12:17 | 6276714 pragmatic hobo
pragmatic hobo's picture

did the mother fuckers in central planning really think the daily vertical ramp in stocks was sustainable?

Mon, 07/06/2015 - 12:17 | 6276717 q99x2
q99x2's picture

You can tell by the way the last quote was written that the authorial intent is to recall it sometime in the future; it shows the author is completely confident with what they have written.

Mon, 07/06/2015 - 12:18 | 6276719 Rentenmark
Rentenmark's picture

Chinese markets crashing 20% does not matter.  Banning selling and encouraging buying with massive leverage certainly seems prudent, especially with a Greek default as a backdrop.  Debt and leverage everywhere, I'm shocked the DOW isn't at an ATH!

Mon, 07/06/2015 - 12:18 | 6276722 mojojojo
mojojojo's picture

Central banks are definitely the way to go I think. The FED, PBOC, and the BOJ are my favorites.

Mon, 07/06/2015 - 12:18 | 6276724 macambaman
macambaman's picture

LOL, what a joke this has become. "it is not defined as the net selling, but completely unable to sell the stock."

Mon, 07/06/2015 - 12:28 | 6276756 philosophers bone
philosophers bone's picture

No one is allowed to say the word "sell".  It's now called "Reverse Buying".

Mon, 07/06/2015 - 12:20 | 6276731 cassotto
cassotto's picture

and here we cannot fight the FED/ECB and the stock market is closed in Greece

Mon, 07/06/2015 - 12:20 | 6276733 i_call_you_my_base
i_call_you_my_base's picture

What are your assets worth when you can't sell them?

Mon, 07/06/2015 - 12:23 | 6276741 kowalli
kowalli's picture

same as always. why should price change?

Mon, 07/06/2015 - 18:51 | 6278081 The Ingenious G...
The Ingenious Gentleman's picture

They may be worth collateral for bank loans if God so instructs banks to accept them.

But that'll be at 17% interest rates, of course.  

Mon, 07/06/2015 - 12:22 | 6276738 Surveyor4Pres
Surveyor4Pres's picture

So does that mean that VOLUME goes to ZERO?

Mon, 07/06/2015 - 12:23 | 6276739 traderjoeblow
traderjoeblow's picture

Funny, no talks about banning the purchase of stocks when stocks are shooting up like a bat out of hell in an uncontrollable way...  Where is all the concern about stabalizing their market then?

Mon, 07/06/2015 - 12:23 | 6276740 TheAntiProgressive
TheAntiProgressive's picture

Thank God for "free" markets.

Mon, 07/06/2015 - 12:25 | 6276743 lasvegaspersona
lasvegaspersona's picture

If you cannot sell; you will not buy....unless the boss tells you to.

Mon, 07/06/2015 - 12:27 | 6276751 wendigo
wendigo's picture

Why would they do this? A correction is a healthy thing, required. Are they afraid that if the stock market crashes the economy dies? There are worse things than merely the end of everything. 

Mon, 07/06/2015 - 12:28 | 6276757 erikaappleihzyjtyeg
erikaappleihzyjtyeg's picture

All your selling are belong to us.

Mon, 07/06/2015 - 12:40 | 6276758 pashley1411
pashley1411's picture

dup

 

Mon, 07/06/2015 - 12:28 | 6276759 pashley1411
pashley1411's picture

This seems consonant with central banks everywhere in the 21st century; steal from tomorrow to pay for today.  

I'm waiting for holders of pension funds to be condemned as anti-social capitalist roaders.

Mon, 07/06/2015 - 12:31 | 6276775 Loucleve
Loucleve's picture

I would not be in the least bit surprised that the words "DO NOT SELL" have been whispered into the ears of the players at Fidelity, T Rowe, AmFunds, Vanguard and all of the major mutual fund complexes.

At the minimum, if you sell, buy something else.  Sell and go to cash strictly forbidden.

Its for the children.

Mon, 07/06/2015 - 12:37 | 6276776 Surveyor4Pres
Surveyor4Pres's picture

I'm going to take the opposite view, and say it seems vowel with central banks...

"And...No Swaps.  It's outgoing, only, today."

Mon, 07/06/2015 - 12:29 | 6276765 willien1derland
willien1derland's picture

Excellent!!!! I guess its time to unleg all LONG EQUITY HEDGES on Shenzhen....How does one say unintended consequences in Chinese? 

Mon, 07/06/2015 - 22:38 | 6278776 Real Estate Geek
Real Estate Geek's picture

Sum Ting Wong?

Mon, 07/06/2015 - 12:33 | 6276796 Element
Element's picture

FREE MARKET ECONOMICS

China style.

Mon, 07/06/2015 - 12:35 | 6276810 Joebloinvestor
Joebloinvestor's picture

Take a hint people.

Pet food, dry wall, stock market.

Mon, 07/06/2015 - 12:36 | 6276814 Surveyor4Pres
Surveyor4Pres's picture

Wow!

You would think that with the Chinese Stock Market (State Capitalist bastards that they are),

and with what's going on in Greece and the Euro,

and the US debt 'stuck' at $18 Trillion dollars,

and JPM cornering the commodity derivative markets,

and Citigroup cornering the metals derivative markets,

there's maybe something wrong with the World economy?  But....nah....

Mon, 07/06/2015 - 12:36 | 6276815 robertocarlos
robertocarlos's picture

If the stock goes up then you've made money. Why would you want/need to sell the stock? If you need cash monies you can go to the bank and using your stock as collateral you can get a big fat juicy loan.

Mon, 07/06/2015 - 12:36 | 6276817 bart12
bart12's picture

This is like bringing money into a casino but you can never leave!

Mon, 07/06/2015 - 12:37 | 6276826 ThisIsBob
ThisIsBob's picture

Everybody remember how to trade gaps? :)

Mon, 07/06/2015 - 12:39 | 6276836 moneybots
moneybots's picture

"Well, you can simply ban selling, which is apparently the next step for China"

 

I would think that would "ban" buying, as people won't want to buy what they can't sell.

As with Newton's laws, for each action, there is an equal and opposite reaction.

Mon, 07/06/2015 - 15:34 | 6277512 ebear
ebear's picture

"I would think that would "ban" buying, as people won't want to buy what they can't sell."

They're all in man. Nobody left to buy.

Mon, 07/06/2015 - 12:41 | 6276844 Surveyor4Pres
Surveyor4Pres's picture

Destruction of the World Economy in

3...2...1

...JADE HELM!

Mon, 07/06/2015 - 12:42 | 6276852 katchum
katchum's picture

If it goes up, why isn't it allowed to come back down? Nothing is lost...

Mon, 07/06/2015 - 12:43 | 6276861 Handful of Dust
Handful of Dust's picture

I don't want to rub it in but "I told ya so."

 

Just like the Fed, China's cb is no way going to let RE or stawks drop that much.

 

It's very 21st century economic thinking.

Mon, 07/06/2015 - 12:45 | 6276868 Soul Glow
Soul Glow's picture

Remember how well banning selling worked for Europe?

Mon, 07/06/2015 - 12:47 | 6276881 Surveyor4Pres
Surveyor4Pres's picture

I've always wondered about the "fairness" of the equity markets, when during a massive selloff, everything is shut down,

"to protect the markets".

Sure, markets could rise 25% in one day, but God forbid if they took a nose dive.

That is just unacceptable.

Mon, 07/06/2015 - 12:47 | 6276884 Bull Bear Nice Pair
Bull Bear Nice Pair's picture

"Peak Desperation" is over-sensational at this point. The value of Chinese stock market is still at $7.1 trillion, over 120% higher than its value of $5.7 trillion in Jan. 2015. Chinese one year benchmark rate is still at 4.85% (compare that to the 0.25% for the U.S.). Chinese still have $21 trillion bank depostis and 0 derivatives, compare that to $11-12 trillion U.S. bank deposits and $30 trillion derivatives.  

Mon, 07/06/2015 - 13:02 | 6276951 Tinky
Tinky's picture

Ah, well, since you put it that way, I guess that banning selling isn't really a problem.

Mon, 07/06/2015 - 12:50 | 6276900 Dr. Gonzo
Dr. Gonzo's picture

So if you can't sell them they are worth zero then?

Mon, 07/06/2015 - 12:54 | 6276920 Spungo
Spungo's picture

A few months ago, I joked about central banks "welding the doors shut then setting the building on fire." This is now an accurate description of what China is doing. Pension fund holding a bunch of garbage? We've welded the doors shut. Good luck retiring, bitches!

Mon, 07/06/2015 - 12:56 | 6276932 nakki
nakki's picture

Paging all the clowns that think China and its Yuan will be the next reserve currency. They've only just begun to print to protect their Potemkin economy, and now this. Unbelievable! So you can get in but you can't get out. Central planning at its finest.

Mon, 07/06/2015 - 13:34 | 6277086 Free_Spirit
Free_Spirit's picture

Which means its just as good as the dollar

Mon, 07/06/2015 - 13:36 | 6277092 chosen
chosen's picture

I thought the Euro was the next reserve currency.

Mon, 07/06/2015 - 14:51 | 6277363 J Jason Djfmam
J Jason Djfmam's picture

I heard the next reserve currency is going to be 15 year old MREs.

Mon, 07/06/2015 - 12:57 | 6276936 1033eruth
1033eruth's picture

China values the importance of a Ponzi scheme and pulls out all the stops.  China likes how we've kept ours afloat so, monkey see, monkey do.

Mon, 07/06/2015 - 13:10 | 6276990 gwar5
gwar5's picture

No way! They did not do that! This is not good.They're going to give the FED ideas.

China's crash is bigger than Greece and keeps getting biggerer. China also imports a helluva lot, too. It's a good thing they have a lot of gold and can reboot, the FED, not so much.

 

Mon, 07/06/2015 - 13:21 | 6277031 highwaytoserfdom
highwaytoserfdom's picture

no worries Lloyd's Yahweh's grindstone mission of debt slavery aligned with FAS 142 goodwill and Intangibles is all hedged into the market...       Lloyd must be consulting Chinese.....   Gyro  and now Chinese food  qualify for the good old American J.Wellington Wimpy

https://www.youtube.com/watch?v=sKJw6MIl1yQ

Oh yea the goodwill IP is tax free in  double Irish with a Dutch sandwich         gee I am hungry but the cooks

crooks are all on payrole http://www.reuters.com/investigates/special-report/scotus/      Thank you Greece..

Mon, 07/06/2015 - 13:21 | 6277035 reader2010
reader2010's picture

They can still command shutdown of the entire stock market in China,  as Deng Xiaoping said many years ago. 

Mon, 07/06/2015 - 13:24 | 6277053 TheRideNeverEnds
TheRideNeverEnds's picture

Sweet plan.

1- buy stocks

2- buy moar stocks

3- ?????

4- profit.

It's fool-proof!

Mon, 07/06/2015 - 13:33 | 6277083 Archive_file
Archive_file's picture

Wait, no more cheap umbrellas?

Mon, 07/06/2015 - 13:37 | 6277097 chosen
chosen's picture

No price discovery in China, in fact, no price at all.

Mon, 07/06/2015 - 13:51 | 6277145 YHC-FTSE
YHC-FTSE's picture

Funniest headline I've seen in a long time. You buy it. You keep it. Ha! How will the speculators, er, speculate then? What a fucking weird world.

Mon, 07/06/2015 - 13:58 | 6277163 tarabel
tarabel's picture

 

 

I think most intelligent observers are unsurprised at the trouble in China.

What is surprising is the speed and intensity of the government reaction, as well as the complete abandonment of long-term thinking in the face of an urgent short-term crisis.

A couple of thoughts on this:

1) With sovereign funds frozen in place, they are bound to see the net value of their investments decline and/or crash. This is not going to be happy news for recipients of Chinese social security checks.

2) Retail investors are looking to escape. Some of them at whatever cost right now. Others at the first sign of a dead cat. In either case, it seems likely that they are going to get out with a greater percentage of their investments than will the national players. This trend will not be halted by any temporary pause in the collapse, since the players are now interested only in exiting the game at the most favorable moment they can arrange.

3) People keep talking about the mighty amount of money on deposit in Chinese banks. My guess is that a large percentage of these deposits has already been pledged as collateral for margin accounts and is not just in danger of annihilation, but even of additional margin calls above the actual amount on deposit. 5-1 leverage can do that easily and swiftly.

4) All government actions are built around riding out a short term crisis. They cannot forbid margin calls forever without destroying the stock market and the banking system entirely. They cannot leave state funds in crashing bubble stocks forever without wiping out their own joint Commie nest egg. What happens when they have to abandon these short-term "riding the storm out" measures-- as they inevitably will be required to do?

I think an acceleration of capital flight from China is certainly in the cards.

This is bound to be greatly encouraged by the likelihood of show trials for those who dared to place rational bets against the madness of the herd. Anyone who is winning today has to be making urgent plans to escape with whatever they can spirit out of the country-- including themselves and their family.

The possibility of an absolute financial holiday, both banks and stocks, cannot be discounted either.

The likelihood of a Falklands "solution" has gone up a few percentage points as well. A rapidly arriving foreign crisis could both distract from domestic troubles as well as serve as a rationale for "temporary" domestic clampdowns that would be better supported as a patriotic measure.

Mon, 07/06/2015 - 15:56 | 6277602 ebear
ebear's picture

"I think an acceleration of capital flight from China is certainly in the cards.

This is bound to be greatly encouraged by the likelihood of show trials for those who dared to place rational bets against the madness of the herd. Anyone who is winning today has to be making urgent plans to escape with whatever they can spirit out of the country-- including themselves and their family."

I would guess those plans were made a long time ago - as evidence I point to the RE market here in Vancouver and elsewhere.

This has been an open question in my circle for several years now:

Does a collapse of the Chinese market lead to panic selling of their offshore assets? It's well know that players pay cash in the Vancouver market, but there's no way to tell if that money was borrowed at home and is part of the collateral for their vastly over-leveraged market. Now, with selling not an option, do they liquidate foreign assets to shore up the domestic balance sheet?

I guess we'll know soon enough.

Mon, 07/06/2015 - 13:58 | 6277165 XRAYD
XRAYD's picture

"...  underwriting leveraged positions will sow seeds for greater market peril."

 

That is when THEY roll out the tanks in China.  The FED has NO tanks!

Mon, 07/06/2015 - 14:05 | 6277193 agstacks
agstacks's picture

"If the market did not rally today, it would have badly hurt the governments credibility."  said Zhang Xi, an analyst with Hitong Securities in Shanghai 

Peak Absurdity 

Mon, 07/06/2015 - 14:09 | 6277205 Pumpkin
Pumpkin's picture

Well that's bound to drive stock prices up.

Mon, 07/06/2015 - 14:30 | 6277296 jacship
jacship's picture

They are not your father's socialism

Capital flight ? 

pullin the chips

Ixing got JD on speedial

JD not answering-

were sorry-the party will not answer questions from the Bric's bank, your on your own

but if you change your mind about running your own bank

we'll talk

bye fur now     J-god-D

 

Mon, 07/06/2015 - 14:50 | 6277357 howieg
howieg's picture

Now that they have figured all our mistakes and are banning short selling (which never works) I think they should become the reserve curr. I mean they are making every mistake we do and they are doing it so much faster. 

Mon, 07/06/2015 - 14:58 | 6277391 headhunt
headhunt's picture

Commies - they are so funny.

Tue, 07/07/2015 - 01:50 | 6279157 onmail
onmail's picture

And what about bankster puppet masters of capitalist USA

Mon, 07/06/2015 - 15:05 | 6277413 Chuck Knoblauch
Chuck Knoblauch's picture

Obozo is drooling again.

He wishes.

Mon, 07/06/2015 - 15:36 | 6277519 GoldenDonuts
GoldenDonuts's picture

Peak stupidity!

 

Wow how do these people make it to the top?  How do you get there if you are this stupid.  I guess you do what others are unwilling to do.

Mon, 07/06/2015 - 15:46 | 6277555 Condition 1SQ
Condition 1SQ's picture

It's not just the Chinese oligarchy, it's the culture itself.  Extremely xenophobic, utterly clueless, stubborn and savage.  It's a recipe for bizarre and self-destructive behavior.

Mon, 07/06/2015 - 15:50 | 6277572 PleasedToMeatYou
PleasedToMeatYou's picture

More Comedy:

I wonder if that guy can even pique his nose. 

Mon, 07/06/2015 - 16:13 | 6277641 Magooo
Magooo's picture

This is one of those moments when you see that the answer to the problem was so simple that you wonder why someone didnt think of it sooner

Mon, 07/06/2015 - 16:36 | 6277721 fowlerja
fowlerja's picture

Hey folks...let's give the guy the benefit of doubt and let things play out ..we are talking about yin and yang taking place in the Chinese markets...

Mon, 07/06/2015 - 16:37 | 6277724 Bunga Bunga
Bunga Bunga's picture

There go the pensions. Coming to your 401k soon.

Mon, 07/06/2015 - 22:12 | 6278719 hedgiex
hedgiex's picture

A global World where deformed markets with collapsing price discoveries are the norms. Why is it a surprise that these unfold in China ?

Why is it a surprise that Central Planning attempting to direct markets can never work.

Like in every place, trading is with the Central Banks who are the largest counterparties in respective markets.

Roads to poverty lie with listening to these wealth managers with their spins on values, etc. If you cannot trade, then yank out your monies before bail-ins, gates, etc are erected. Retards continue to ignore so let them continue to be preys.

 

Tue, 07/07/2015 - 01:45 | 6279150 onmail
onmail's picture

It is a crime to use pension funds for the stock markets.

Copying evil west means copying all the evils & perils which west is going through leading to a crash & collapse.

 

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