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China Says Plunge Protection Team Will Prop Up Stocks "For Years To Come" If It Has To
Perhaps it’s a case of something getting lost in translation (so to speak), but Chinese authorities have a remarkable propensity for saying absurd things in a very straightforward way as though there were nothing at all odd or amusing about them.
For example, here’s what the CSRC said on Friday about the future for China Securities Finance (aka the plunge protection team):
"For a number of years to come, the China Securities Finance Corp. will not exit (the market)."
For anyone who hasn’t followed the story, Beijing transformed CSF into a trillion-yuan state-controlled margin lender after a harrowing unwind in the half dozen or so backdoor leverage channels that helped inflate Chinese equities earlier this year caused stocks to plunge 30% in the space of just three weeks.
CSF has since become something of an international joke, as the vehicle, along with an absurd effort to halt trading in nearly three quarters of the country’s stocks, came to symbolize the epitome of market manipulation - and that’s saying something in a world where everyone is used to rigged markets.
And because Beijing wanted to get the most manipulative bang for their plunge protection buck (err… yuan) the PBoC went on to count loans made to CSF by banks towards total loan growth in July. In other words, China acted as is if forced lending to a state-run stock buying entity represented real, organic growth in demand for credit.
Now, apparently, the practice of using CSF to "stabilize" stocks and artificially prop up loan "demand" will become standard procedure. Here’s more from AFP:
China's market regulator on Friday vowed to stabilise the volatile stock market for a "number of years", saying a state-backed company tasked with buying shares will have an enduring role.
"For a number of years to come, the China Securities Finance Corp. will not exit (the market). Its function to stabilise the market will not change," the China Securities Regulatory Commission (CSRC) said in a statement on its official microblog.
The China Securities Finance Corp. (CSF) has played a crucial role in Beijing's stock market rescue, which was launched after Shanghai's benchmark crashed 30 percent in three weeks from mid-June.
The regulator's comments were the first time it has given any indication of how long it would intervene to support equities.
Authorities gave the CSF huge funding to buy shares and subsequent speculation the government was preparing to withdraw from the stock market has spooked investors.
The statement added the CSF will only enter the market during times of volatility.
”When the market drastically fluctuates and may trigger systemic risk, it will continue to play a role to stabilise the market in many ways," said the statement, which quoted CSRC spokesman Deng Ge.
So essentially, the PBoC will now do precisely what the BoJ does on nearly every single day that sentiment on the Nikkei looks to be slipping. The only difference is that the BoJ doesn't necessarily try to hide the fact that it's amassing a $100 billion portfolio of equities whereas Beijing is keen on maintaining that because CSF's balance sheet is technically separate from the PBoC's, there's "no such thing as Chinese QE." This claim may be getting harder to justify however, because as Bloomberg noted just moments ago, the balance sheet is expanding.
People’s Bank of China’s balance sheet showed that its “claims on other financial corporations” increased 200b yuan in July, signaling lending to China Securities Finance, Shanghai Securities News reports.
“Claims on other financial corporations” consist mainly of loans the central bank extended to financial cos., the report says, citing book written earlier by officials at PBOC’s statistics department.
In any event, plunge protection is here to stay in China, and that's probably not a good thing when it comes to supporting the country's bid for MSCI index inclusion, which means the CSRC is caught between making sure investors don't get the "wrong" message about the government's willingness to prop up stocks and making sure the rest of the world gets the "right" message about market liberalization.
Fortunately, this impossible balancing act is sure to lead to an endless flow of amusing contradictory rheotoric and with that in mind, we'll close with the following quote, which you'll be sure to note comes from the very same people who made the comments cited above, on the very same day.
"With market fluctuations gradually shifting to normal, from wild and abnormal, we should let the market exercise its function of self-adjustment."
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"Everybody relax, I'm here."- Jack Burton
They are taking their lessons from the wrong people.
well they are taking their queue from the "right" people....which is "if you can do this shit so can we"
Shhh.... listen.... I hear something. There's a secret subliminal message buried under the text.... I can almost make it out.....
It keeps repeating over and over...... Takes....... something takes. Everyone shut up a second. Something..... takes. Something.... takes.
Oh, I got it! "WHATEVER IT TAKES!" Wait, that sounds alwfully familiar.
Glad they let us know.... just like BoE in the 70's
Shouldnt China be more worried about making sure that more cars, more buildings and more citizens are vaporized in the next little mushroom cloud accident? That will definitely help prop up their phony economy.
You are correct, as there is no PPT. This is precisely the sort of conspiracy theory that creates investigations every time. There are people who need to believe in powerful groups whom control everything for they need that image to justify being wrong.
Marty
http://www.armstrongeconomics.com/archives/35913
[Cringing Intensifies]
How About Shorting Paper GOLD A LA America ???
Amazing what they've learned from Killary's emails.
At least they''re honest about it.
If I were a public company in China...I would start issuing new shares since .gov will buy it all....thank you very much.
I say so, after all if a dangerous materials storage facility can accidentally explode and not release any dangerous materials into the air or water then whats the risk of blowing other stuff up on purpose?
Hell they have enough ghost cities and huge lots full of new cars to target. Wouldn't even need to clear out any people.
Will not exit the market, or cannot exit the market?
Cannot. They know the same thing would happen there as would happen here if the Fed stepped back.
once central banks break a portion of financial markets, they have to eventually take over the entire market...and will forever own them and they are themselves the markets.
However, economies and end demand are on their own with no help coming. Total disconnect
I disagree, there is always another cash for clunkers program, Iphones for idiots, student loan forgiveness program, Obama care (a huge bailout for big pharma, insurance, and big medicine), more illegal information, and just in general more free shit at the low end and more Corporate Keptocracy at the high end. They will extend the bailouts until every last middle class american is crushed and gone. It shouldnt be too much longer now.
Cannot. If there is going to be a world of debt ponzi pyramids, China will have the biggest and the best.
Wall Street and Brussels led the way, China is just adopting the Western process of economic serfdom for the masses.
They can hire Bernanke, he'll fix everything.
Clinton-supporting group removes demonic Carly image
http://tinyurl.com/qbnnhzr
It looks like she's got blood coming out of her eyes, or wherever...
Yet another Caitlyn
That's pretty bold talk for a one eyed fat man Rooster"
Did he say that with a Chinese accent?
https://www.youtube.com/watch?v=TzwGwsdaeQo
"It's all in the reflexes."
Well that's a lot of hot air to buy with your countries blood sweat and tears China...
Ta think you woulda learned by now...
After this revelation, ANYONE who says deflation is not here is so full of bullshit his/her eyes are brown.
But a certain kind of deflation. The deflation of those things in which the elites use to shear the sheep.
But BECAUSE of all this "propping" up, we sheep are getting sheared with INFLATION in the very things that keep us alive, like food, milk, electricity, health care, insurance, rent, housing prices, etc. etc.
If you are trying to "PROP" up your economy because of the "Wall Street Gang" ( whether they be the "Wall Street" of America, China, Europe or anywhere ) then you are showing your hand that you know that deflation is coming like an tsunami. Devaluation and outright government buying of stocks is like the water going out from the beach even when you can't see the tsunami yet. Yet it is the tell tale sign that one is imminent.
NO, in fact I am Jack Burton. And who stole my truck, the "Pork Chop Express".
"Ah, I don't get it!"
"Shut Up Mr. Burton. You were not set upon this earth to 'Get It'!"
That's all folks.
Porky Pig Rolls has spoken.
I'm living inside a fucking cartoon.
https://www.youtube.com/watch?v=gBzJGckMYO4
Does anyone think the Chinese farmers are smart enough to realize that while their stock holdings may have normalized, the actual worth of said holdings will be dropping precipitously in "real yuan" terms??? Farmers have costs that should make them very aware of the plunging (becuase that's not the plunge this team is protecting) yuan this bailout will necessitate...
At least they are honest about it. The US FED - not so much.
I know right? The Fed tells us to stay away from gold and that it's ok if you want to short the stocks of the companies we are actively pumping up.
Chinese student learn well from market prop master, Shaolin Yellen.
Yellen is busy telling her staff to figure out how the FED can do this too, since bad idea's are the only thing left......
Oh please, like they don't already thru their proxies
Jamie Dimon didn't get those presidential cufflinks for nothing.
lo pan has spoken. now get him a girl with green eyes
"I feel good, and I'm not scared at all. I just feel kind of . . . kind of invincible . . . Is it getting hot in here, or is it just me?"-Jack Burton
PONZIGEDDON!!!
When some wild-eyed, eight-foot-tall maniac grabs your neck, taps the back of your favorite head up against the barroom wall, and he looks you crooked in the eye and he asks you if ya paid your dues, you just stare that big sucker right back in the eye, and you remember what ol' Jack Burton always says at a time like that: "Have ya paid your dues, Jack?" "Yessir, the check is in the mail."
"In any event, plunge protection is here to stay in China"
Banksters Inc. is universal and most likely interplanetary, so they own the system.
Sit back and enjoy the souless wrecking ball show.
These motherfuckers will not stop!
Confucious say, "Man who get laid in strawberry patch sure to have ass in jam." So what's a few trillion yuan between friends?
The FED has been a communist bank for the .01% for quite some time. Why shouldn't the PBoC do the same thing.
More classic Jack Burton Quotes. Oh the irony!
"We really shook the pillars of heaven, didn't we, Wang?"
"Ol' Jack always says . . . what the hell."
"Hey, I'm a reasonable guy. But I've just experienced some very unreasonable things."
"Okay, you people sit tight, hold the fort and keep the home fires burning. And if we're not back by dawn . . . call the president."
"This is Jack Burton in the Porkchop Express and I'm talkin' to whoever's listening out there."
"Son of a bitch must pay!"
"What does that mean, huh? "China is here"? I don't even know what the hell that means!"
"This is going to take crackerjack timing, Wang."
"I'm gonna tell you about an accident, and I don't wanna hear "act of God"!"
"Are you crazy? Is that your problem?"
And the BEST;
When some wild-eyed, eight-foot-tall maniac grabs your neck, taps the back of your favorite head up against the barroom wall, and he looks you crooked in the eye and he asks you if ya paid your dues, you just stare that big sucker right back in the eye, and you remember what ol' Jack Burton always says at a time like that:
"Have ya paid your dues, Jack?" "Yessir, the check is in the mail."
QE is the black blood of the banking system.
Yeah, what idiot would want to put their money in a market propped up by a corrupt government and banking system where the banks are allow to hide from the investor their bottom line?
Oh, wait....
China: "For a number of years to come, the China Securities Finance Corp. will not exit (the market)."
USSA: bla, bla, bla, interest rates, bla, bla, Unemployment, bla, bla, potential rate hike, bla, bla, Donald Trump, bla, bla, Election, bla, bla, Demacracy, bla, bla, Ukraine, Syria, EU, Greece...........
Read between the lines. USSA in same position just trying to be tooo cleaver. Markets up forever. Interest Rates down forever. Until it all blows up of course.
Economic Viagra. Since the market cannot "exercise its function of self-adjustment" properly...
Well said
If the stock markets collapsed, I am trying to figure out how it would effect me personally...I dont own stocks. any comments on that question?
You obviously are not one of the chosen ones.
Bernanke would be very very pissed off at you. Fuck you Ben
In China, pretty much zero impact on common people. The reason why the Chinese government is backing the market the way it is however, is because they want there to be confidence in the market in the long term. They don't actually HAVE to act on all their claims, merely play the part. China wants to see a good long healthy bull run that delivers a new culture of equity finance to mid-sized companies and encourages companies to list domestically.
Now as the the US..... pension funds, retuirement accounts, corporate money sinks are all tied to stocks. That shit falls and the economy implodes.
IOW those making these decisions are highly invested and probably even leveraged, counting on this market to make them rich like a Trumpster. Party officials drunk with greed.
at least they admit it lol
Now all they have to do is create corporate revenues, profits, new innovation, and force them to hire/not layoff.
Ah and therein lies the problem.
Sure, as a large government one can create an index full of symbols for fantasy companies and bid their shares sky high. But what do these symbols represent? Nothing!
Just more smoke on the economic hall of mirrors. The markets mean nothing if the reality they falsely represent is rotten.
Like i said once before, these are the morons we are supposed to worry about.....I don't think so.
Sell naked puts and get rich
That has worked so well in the land of free markets
But how long can they prop it up really?
China Reserves vs M2 Worse Than 1997 Asian CrisisTo be honest, doesn't that question apply to our economy as well? In 2008, I wouldn't have believed you if you told me that "everything is awesome" in 2015.
Why the hell would you want to "prop stocks up"? Aren't you supposed to allow the market to tell you what shit is worth?
Unfuckingbelievable...Why even have a market? Just slap price tags on everything, whatever you want...what difference does it make anymore? Pick a price that you like...that's what it's worth...whatever.
There ARE no markets. Invest at your own risk.
No matter how much they try to make this look like just another policy statement, it's really an admission by the CFSC that their intervention efforts have failed.
Phew. I was worried there. Now everything is fine.
I wonder how they will distribute the stock after they buy it all.....I bet that is a great benie for the Communists to steal....again that corruption thing.....where did all the stock go???? We lost it somewhere...
This is the same problem as the Fed has gotten itself into with the treasury market, which in itself is another reason why they can't hike rates... it would crash the value of what half their portfulio is full of... crap bonds.
"China Says Plunge Protection Team Will Prop Up Stocks and suppress Gold "For Years To Come" If It Has To"
FIFY, Tyler.
So much for that golden "Store of Value", or getting a decent payout for that gold-plated "Insurance Policy" -- an insurance policy that's looking more and more like a Life Insurance policy: You buy it, and your ungrateful family gets to spend it and have a good time when you're dead.
In the meantime, some of us are hoping for the fat guy to sing (5:30-6:30)
Italian English
Dilegua, o notte! Vanish, o night!
Tramontate, stelle! Fade, you stars!
Tramontate, stelle! Fade, you stars!
All'alba vincerò! At dawn, I will win!
Vincerò! Vincerò! I will win! I will win!
‘Fat’ chance of that happening, by the looks of it.
Say, you don't think Princess Turandot has anything to do with the Renminbi devaluations, do you?
She's very spoiled and gets her way a lot!
YAY STATUS QUO CONTINUES confidence reigns supreme to dear communist party.
Remember ZHers if you insult Mao, ObMao will do Mao's bidding unto you.
Fed if needs to will continue PPT in Chicago office for years to come ---- future headlines
Forward guidance for the stock market. Maybe Janet soon has a new trick up her sleeve, too.
Sooo, this is like the Chicom version of the Plunge Protection Team then?
I guess there's a "Little Trouble in Big China" huh?
well that means the china gubbermint underwrites and then buys all the stock market fraud. at least we don't do that here in the usa which makes us better than them and less fascist too. /s
Damn it Bones, you're a doctor. You know that pain and guilt can't be taken away with the wave of a magic wand. They're the things we carry with us, the things that make us who we are. If we lose them, we lose ourselves. [to Sybok] I don't want my pain taken away. I need my pain! [/James T. Kirk]
Yep. FED software connected to an infinite supply of fiat.
You're in good hands. Trust them. There are no markets. Instead you have some kind of a ruling class saying Trust us we can make it work no matter what. That is scary because there is nothing except trust in bankers that the whole thing won't go poof.
It's over Rover. Each man for themself.
How man non-ZHers know this? How many of our friends? How many could even comprehend it?
It may be each man for himself, but I think we will be lonely men.
My Ex-Wife told her shrink all my doom porn....He laughed it off and told her I was crazy.
The Shrink is just trolling for new business....don't worry about it.
This is the real deal.
http://www.marketwatch.com/story/heres-the-advantage-high-frequency-trad...
Someone made a cogent point on twitter about time delays on trades. I've seen pix of microwave and laser setups and know what happens in length of wire runs. Computers are fast but travel distance varies based on routing. A short distance also can be delayed as are certain live broadcast are.
Nanex for President!
I would safely assume he wouldn't want it (neither would I), but his image after this fucking horror-show should be crafted on Mt. Washington.
And some people still think the Chinese will back their currency with gold?
not exactly, they are adding to their gold reserves in order to get maximum drawing rights on the IMF new gold backed SDR, they have been secretive about it but most analysts believe they have more gold than they have officially claimed in their reserve. the crash may have changed that, they have been selling their UST bonds into the market, and so far the Belgium buyer is keeping up, the drop in gold prices probably means the Chinese are buying more, thats how and why they repress the price of gold. be ready for an annoucement with a shock to the upside on Chinas gold ownership, which would cool the dollar off some, which is just what Yellen wants. everybody works together as opaquely as possible, so unless you get emails from the fed you have to hunt and peck over the data.
How can the Chinese be officially selling their UST into the market & the Belgium buyer keep up if the Belgium buyer is unofficially the Chinese as well??
how do you know if you're getting the factual emails from the Fed or the rumorish ones?
can you really call it a team? Team Bejing i suppose, the team is bigger than the fans or the investors. maybe Olympic Monetizing will become a sport.
Well, welcome to the party pal (as Bruce would say) we did it in the bond market, Japan is the largest holder of their stock market index etf's. We'll do the same after a 20% drop. Take this to the extreme and imagine all markets owned by every respective goverment. Real estate . . check, Bond market . . .soon check. Stock market . . .soon check. Then what?
we already did it after a 50% drop in March 2009. that was before QE when we only had TARP.
there's a question whether we can use the same get out of jail free card twice.
Was that plunge protection or Plunger protection??
Plunge as in dive in = ??
Plunger as in getting shit out = ??
Quick edit: seems the Chinese characters don't come up here...
They may mean to keep it in a range, especially above key MAs. Should be tradeable; e.g. FXI or even YINN.
BUT if they drop the yuan by another 20% over the next 5 years - what is your expected return? Think that one over.
Are there only lunatic posters on Zerohedge ?
Look in a mirror and ask the same question.
Bernake and the Fed has taught the communists how to maintain control in a digital currency world. The Stock market is a way for the "elite" to communicate their "value proposition" of their leadership to the people.
Why "vote" against a group that is going to "take care" of you. The conclusion is "Voting is actually unecessary". Brilliant work Ben Bernanke and Goldman Sachs !
If you believe ANYTHING out of China you're a lunatic.
Idiots think they already rule the universe. I forsee many pitchforks descending on the CCP in the near future.
Welcome to Japan.
Dear friends,
Really. What is the point of being in denial about the capabilities and motives of the Chinese?
Everyone here who thinks they are clueless are themselves clueless and suffering from stage four denial (the worst).
In 1971, before Nixon decided to play the Chinese off against Russians the Chinese were nowhere.
Less than 50 years later they reign supreme as the largest exporter in the world. Soon to be the largest economy in the world.
They are the only nation on earth with their own Space Station, unregulated by any partners and agreements.
On December 14, 2013 they made a soft landing on the moon.
If you get some solace from saying this by all means keep on saying it: The Chinese don't know what they're doing. The Chinese don't know what they're doing. The Chinese don't know what they're doing. The Chinese don't know what they're doing.The Chinese don't know what they're doing.
Feel better?
However many dollars worth of yuan Wall Street bought to play the Shanghai Market, are now worth 4.65% less.
Lloyd Bankfein's short hairs are a little shorter today.
ps if anybody knows what % interest Wall Street is paying on the margin loans they took out to cook the Shanghai Market and that are still tied up in stock suspensions, please drop me a line. thx