China's Central Bank Chief Admits "The Bubble Has Burst"

In a stunningly honest admission from a member of the elite, Zhou Xiaochuan, governor of China’s central bank, exclaimed multiple times this week to his G-20 colleagues that a bubble in his country had "burst." While this will come as no surprise to any rational-minded onlooker, the fact that, as Bloomberg reports, Japanese officials also confirmed Zhou's admissions, noting that "many people [at the G-20] expressed concerns about the Chinese market," and added that "discussions [at the G-20 meeting] hadn't been constructive" suggests all is not well in the new normal uncooperative G-0 reality in which we live.

Surprise - The Bubble Has Burst!!

But, as Bloomberg reports, the admission that it was a bubble and it has now burst is a notablke narrative change for the world's central bankers...

Zhou Xiaochuan, governor of China’s central bank, couldn’t stop repeating to a G-20 gathering that a bubble in his country had “burst.”

It came up about three times in his explanation Friday of what is going on with China’s stock market, according to a Japanese finance ministry official. When asked by a reporter if Zhou was talking about a bubble, Japanese Finance Minister Taro Aso was unequivocal: “What else bursts?”

A dissection of the slowdown of the world’s second-largest economy and talk about the equity rout which erased $5 trillion of value was a focal point at the meeting of global policy makers in Ankara. That wasn’t enough for Aso, who said that the discussions hadn’t been constructive.

...

It was China, rather than the timing of an interest-rate increase by the Federal Reserve, that dominated the discussion, according to the Japanese official, with many people commenting that China’s sluggish economic performance is a risk to the global economy and especially to emerging-market nations.

“It’s clear there are problems in the Chinese market, and at today’s G-20 meeting, many people other than myself also expressed that opinion,” Aso said after a meeting of finance chiefs and central bank governors.

Did the G-20 just admit that their all-powerful omnipotence is fading?

Meanwhile, though Jack Lew is happy to ream China as a currency manipulator, G-20 will not...

The PBOC shocked global markets by allowing the biggest yuan depreciation in two decades on Aug. 11, when it changed the exchange-rate mechanism to give markets a bigger role in setting the currency’s level. That historic move would not get a mention in the communique, according to the Japanese official, who asked not to be named, citing ministry policy.

• *G-20 COMMITTED TO AVOIDING PERSISTENT FX MISALIGNMENTS: DRAFT
• *G-20 WILL `REFRAIN FROM COMPETITIVE DEVALUATIONS': DRAFT

And - implicit in this exclamation is the fact that if it was a bubble - that has now burst - then is the PBOC admitting it is stoking a 'bubble' as opposed to supporting growth (or whatever mandate they are supposed to be living by)?

Comments

[JustObserving]

Meanwhile Old Yeller asks "What is a bubble?"

If you ignore a bubble, is it really there?

[kliguy38]

" No one coulda' seen it comin' "

[remain calm]

Keysnesians will fix it. You just have to believe in stupidity and accept slavery and everything will be OK. 

[Pool Shark]

He actually admitted the Chinese Bubble had Burst???!!!

In Public???!!!

[My condolences to him and his family,... they will all be arrested soon...]

[Money Counterfeiter]

Chinese adopted the Keynesian playbook like they adopted Mao’s Red Book.  Both lead to disaster.  Maybe they learn gold is money and everything else is debt.

People believe what they want to believe.

The Western bankers piggybacked off the Chinese for several years with$1.3 trillion in worthless T-Bill purchases (that will get vaporized if the Fed hikes rate) excessive demand for commodities, free crap and exploitation of their economic naivety. 

Hope they learn their lesson.  NEVER trust a NYC banker.  A fucking hard lesson for them to learn now.  Sad.

[Oh regional Indian]

HE is babbliing because now it's all coming out in the open...

The truth is now literally OUT there...

Because the APO-CALYPSE is under-weigh ;-)

https://aadivaahan.wordpress.com/2012/11/05/apocalypse-now/

[Skateboarder]

In my opinion, this is the second or third to last bubble - not the last, for whatever country or economy in the current system.

From the technology and control perspective - it's a global ecosystem, not localized and isolated as it used to be. The advancements of the last 100 years have paved way for the tracking and monitoring of humans in great detail, but not entirely at the turn-key level (using computer technology) yet. The IOT bubble and biotech bubble to implement the low-cost handheld DNA scanner - these are the two bubbles that will allow the controllers full access to turn-key "solutions."

The questions to ask, then, are "can the current system be extended to incorporate the development, mfg, production, and deployment of IOT and low-cost-DNA-scan?", and "can you, without complete chaos, get from the current system to the next system without IOT and low-cost-DNA-scan?"

You do not blow up China without affecting the state of technology worldwide.

Just bringing up some points for discussion.

[Richard Chesler]

On a positive note, there's strong support at zero.

[Pinto Currency]

US and European bubbles are bursting too.

The equity markets will give a dose of reality.

[dirtscratcher]

We should be jealous that they have leaders who, first of all, admit that there is (was) a bubble; and second, admit the obvious, that it had burst. I think that's refreshing.

[ThroxxOfVron]

"He actually admitted the Chinese Bubble had Burst???!!!

In Public???!!!"

He's an INSIDER and can speak pretty much as he likes.

The 'crackdown on short sellers and shit talkers' is nothing more than a classic political purge cloaked by propaganda..

IMHO, the equities crash may well have been engineered specifically as a vehicle for supprssion/disappearance of dissidents and upity neo-capitalists/corporatists, and/or to provide cover for monetization of the paper gains of politiboro members and other favored cronies/insiders.

[I AM SULLY]

Bingo: Dr. Krugman says "all we need are bomber pilots and bridge builders". 1/2 the population is employed building bridges, while the other 1/2 is employed blowing up the bridges - FULL EMPLOYMENT!

[Funn3r]

What's the difference between military engineering and civil engineering? 

Military engineers build weapons. Civil engineers build targets. 

[38BWD22]

And the effects of the Chinese bubble-burst have already started showing up (see Brazil and even Venezuela).

Low oil prices do not seem to have helped China so far, nor oil exporter Brazil.  Low oil is not helping Russia either.

The contagion effect will be of great interest.  What will happen if China keeps having further financial problems?  How will the ghost cities and massive infrastructure investments work out (well, or badly)?

Monday will be the start of another interesting week...

[algol_dog]

Those middle-east refuges should be filling up those ghost cities. That would be a nice start to a China recovery.

[Skateboarder]

Multiculturalism, dawg!

[WillyGroper]

those ghost cities will be filled in no time.

agenda 21 ramp.

JH II   smart meters.

neuro/bio control.  globally

[Tyrone Shoelaces]

FEMA can rent them out and turn them into the infamous camps!

[PlayMoney]

Whoa nelly. I for one didn't see THAT coming. WTF

[Tsar Pointless]

It's all coming apart at once. Just as expected. 

But nobody could have seen it coming. Not no one. 

[Carpenter1]

Follow the narrative:

"Bubble has burst"

"Central bankers failed"

"We cannot prevent the financial system from failure now."

CRASH!!!!

"We need a new, better system"

[Fish Gone Bad]

I have said this before and I will repeat it once again.  This will be the first disaster everyone saw coming (for a long time), and still refused to get out of the way.

[Tyrone Shoelaces]

The shitty part is that this is not just a financial correction or unwind, it is our society as a whole unwinding with it, everything is decaying and corrupt to the core.

[KingdomKum]

molon labe

[PlayMoney]

No, not the bubble. It can't burst. Will somebody just tell them to just print some more damn money! Fools!

[JustObserving]

The Chinese market gained $6 trillion in about the last 12 to 15 months to a value of $10 trillion and then lost $5 trillion.  Still a net plus. Chinese stocks are worth about $5 trillion today.

Chinese real estate is easily worth at least $100 trillion.  A 20% correction there will destroy the Chinese economy and currency.  That is the true danger for China today.

[max2205]

Tell that to the 4X guy when the last 20% down wiped him out

[angel_of_joy]

That's his problem. Playing games you don't understand have certain risks...

[Oquities]

i'm keen on the Keynesian Kenyan

[q99x2]

Yo Bitcoin dudes. It made it's move up $10 overnight. $237 . . .

[38BWD22]

If BTC gets back to some $300, I am back in the green.  But, I would turn some of those electrons into physical gold.

But I would keep the rest of my crypto!  A Lotto ticket...

[Tigg47]

Convert to bitgold, easy.

[38BWD22]

With great respect, any gold I buy with BTC will be physical gold.  I have bought Au and Pt from both of the below with Bitcoin, everything went fine.

http://providentmetals.com

http://veldtgold.com

[I AM SULLY]

Only those ignorant of computer science, and economics, are buying bitcoin - and mainly to speculate with.

(I will keep my physical silver/gold thank you)

(and acknowlege what my profs said about "complexity", and how it is a debit and NOT a credit)

[ThroxxOfVron]

OH YEAH!!!!!

-ONLY down 80% from it's late 2014 highs...

https://www.coinbase.com/charts

[Dubaibanker]

Charts here give a better perspective than anything else:

http://inflation.us/central-bank-balance-sheet-assets-hit-record-high/

China's CB Assets to GDP has been trickling down though it remains higher than many but lower than Japan and ECB. America has had the highest increase though on paper it suprisingly looks ok. ECB and Japan, both, have gone wild! 

The SNB has the largest balance sheet as a percentage of GDP, with it currently up to 88.42% of GDP vs. 19.82% of GDP in May 2006. The BOJ’s balance sheet is equal to 70% of GDP vs. 24.27% of GDP in May 2006. The PBOC’s balance sheet is equal to 52.92% of GDP vs. 56.31% of GDP in May 2006. The Fed’s balance sheet is equal to 25.41% of GDP vs. 6.17% of GDP in May 2006. The ECB’s balance sheet is equal to 24.99% of GDP vs. 12.52% of GDP in May 2006. The BOE’s balance sheet is equal to 22.38% of GDP vs. 6.37% of GDP in May 2006.

[Allen_H]

2008 never ended bozos.

[Joe Tierney]

China's Zhou also said in his statement that 'China is making a move to a more stable growth model' that won't pose the risks of bubble boom-bust cycles.

If true, then this crisis in China's financial/economic sector is a big bump in the road rather than a catastrophe - if the ChiComms learn from this and move away from the tempting but destructive capitalist "New Economy" get-[artificial]growth-quick policies they've been embracing in the last few years, then they can benefit strategically.

But if they don't do so, then they're headed for a catastrophe similar to that which the over-developed Western economies are inevitably locked into.

So here is an opportunity for all to see whether the ChiComms are truly strategic thinkers, or just greedy morons like their Western counterparts.

Any bets?

[RawPawg]

Labor Day Monday would be an optimal day to start(if you haven't already) gathering up those last precious items...you know,stuff like can goods,ammo,etc,etc.

[Atomizer]

Go to about 36:10 here, where 3 ex-Treasury Secretaries laugh their asses off about widening income inequality. Watch entire video.

https://www.youtube.com/watch?t=2198&v=XZfXqxdGOB4

[Berspankme]

I swear if I ever see Geithner I will beat that little fucker to a pulp

[jcdenton]

If you see any of these as well, pummel them also accordingly ..

Specifically, we are now formally authorised (in writing) to identify the following officials who are variously engaged ‘as we speak’ in terminal criminal financial operations contrary to the law and against the interests of the American people – ransacking the assets of the United States in a pig-trough free-for-all on a previously unknown scale.

James Wilkinson, Chief of Staff to Henry M. Paulson, US Treasury Secretary. On Thursday 24^th August, Mr Wilkinson signed the necessary documents authorising, at long last, the transfer of the $4.5 trillion from the relevant US Treasury account with Goldman Sachs and Company, to the account of Ambassador Leo Wanta’s Virginia-based AmeriTrust Groupe, Inc. The funds were not paid over. He appears to have signed the documentation so that he personally cannot be accused of felonious conduct at the day of reckoning.

Henry M. Paulson, the US Treasury Secretary, himself. When and after he succeeded John Snow, it was believed that this reputedly honourable man had been appointed in part to hasten the conclusion of The Wanta Settlement, which triggers associated overdue ‘set-aside’ payments. It transpires, instead, that Mr Paulson may, whether through blackmail or for other reasons, have joined the ranks of the double-minded criminals – as he is alleged to have been seeking to obtain his own contract to run Medium Term Notes to Deutsche Bank using the US Treasury or its Federal Financing Bank (FFB), an institution with a separate legal entity based inside the Treasury itself.

Dr Ben Bernanke, Chairman of the Federal Reserve Board. In addition to what has previously been published about the Fed in this series, the CHIPS payment system is controlled by the Federal Reserve Bank of New York. If the New York Fed is choosing not to allow the ‘CHIP’ controlling Leo E. Wanta’s $4.5 trillion Settlement to be paid, Dr Bernanke is violating US Federal law and is not being prosecuted, contrary to the law. The Federal Reserve can continuously tap that “CHIP’ for the purpose of making money off-balance sheet. There is more than a suspicion that the Fed is illegally and fraudulently facilitating the illegal payment of criminal funds by this means and through associated transactions, in flagrant breach of the law and of the Full Faith and Credit of the United States – which is today, sad to say, null and void, as a consequence of these felonies.

Co-conspirators and accessories to the fact of this and multiple related ongoing fraudulent financial, tax-evading, money laundering transactions condoned by the ‘Justice’ Department and the Internal Revenue Service include:

George H. W. Bush Sr., former President of the United States, allegedly a.k.a. Georg H. Scherff, Jr., alleged head of Deutsche Verteidigungs Dienst, Dachau.

George W. Bush Jr., President of the United States.

Richard Cheney, Vice President of the United States. He is strongly rumoured to have been shorting the US dollar, betting against the US currency – which is both treason and a felony – using inside information

Donald Rumsfeld, US Secretary of Defense.

The Omega Group of ‘Neocons’ (Vice President Cheney, US Secretary of Defense Rumsfeld, and others).

Dr. Linton T. Wells II, Principal Deputy Assistant Secretary of Defense.

Unnamed officials at the US Department of Defense.

Maynard C. Anderson, former Assistant Under Secretary of Defense.

William B. Bader. PhD, Chairman of the Board, Eurasia Foundation, Georgia (former USSR), and former Associate Director, US Information Agency.

W. Neil Thompson and Mrs Janet Thot-Thompson, Multi-Sector Crisis Management Consortium (MSCNC), consisting of intelligence operatives.

John Negroponte, Director of National Intelligence.

General Michael Hayden, Director of Central Intelligence.

Starre Foundation, viz. Hank Greenberg and William B. Bader et al.

Using a Federal Reserve ‘tap’ based on Ambassador Leo Wanta’s earmarked and tagged $4.5 trillion, these and other high-level scamsters and criminals have been running, inter alia, more than $25 trillion of US funds into India and Israel, allegedly using the payment services of the Bank of England, which are likewise allegedly being made available corruptly, for the corrupt disposal of the proceeds.

http://wantarevelations.com/2014/01/wanta-plan-macro-financial-economic-...

[Atomizer]

Public works programs fail each and everytime.

[Cycle]

Rubin, Summers and Greenspan should be called to explain the validity of the economic model which began in earnest under the Clinton administration.  The model was a strong US dollar, which killed and maimed American manufaturing, and those exported dollars were exchanged by the Chinese central bank for US Treasuries, allowing the US to run extremely high current account deficits while maintaining low interest rates and low inflation. That was the crux of "The New Economy." It sounded like a very bad idea at the time, but its consequences could be put off until now. The Chinese central bank has to offset capital flows out of the country supporting the yuan by selling USTs.  Of course, it also happens that they can continue to sell USTs at a very good price as global capital looks for a safe haven - in the very same USTs until that trade gets crowded.    

[Clowns on Acid]

Yeh... should ask those criminals about the repeal of Glass Steagal as well. The repeal was the beginning of centralizton of risk and 30X leverage.

How much $$ did Rubin make after the repeal ? $$100s of millions.

[Shirley Swanepoel]

I had a stick of CareFree gum, but it didn't work. I felt pretty good while I was blowing that bubble, but as soon as the gum lost its flavor, I was back to pondering my mortality.

Mitch Hedberg

[gwar5]

If Chiina is admitting their bubble popped does it mean they'll release the jailed journalists?

[eduard khil]

Arrest this man!

[Latitude25]

As opposed to the US where everything is rosy and solvent.  No bubbles there huh?

[williambanzai7]

Please do not worry...

[starman]

Burst ya think after 8k point drop? Glad you fng noticed!

[crackerjack_finance]

Now what happens to China markets after the parade?

Another take on the ZX comments:

http://crackerjackfinance.com/

[Tyrone Shoelaces]

We should repost the Monty Python 'Thin Mint' video on Chinese sites  LOL

[Youri Carma]

Who saw that comin’? ;) http://img.photobucket.com/albums/v393/youricarma/Miscellaneous/Mao_That...

[jcdenton]

Xiaochuan huh? I did a short movie about him nearly 5 years ago ..

https://youtu.be/3VLv-vyrKos

I guess what I said to myself about a year ago, I'm behind schedule and need to get to work ..

[Peter Pan]

Fixation on asset values by governments and individuals ALWAYS end in tears and almost always leave a precarious pile of rubble behind that exacerbate the bursting bubble pain.