China, Japan Tell Europe: "No Blank Check For You"

Tyler Durden's picture

Remember all those daily rumors (prmarily courtesy of the FT) that either China, or Japan, or Europe itself would bailout Europe (yeah, don't ask). Well we can put them all to rest...for at least a few more hours. Because in the battle of inverse counter disinformation, it is important to refute the rumors you yourself have created just so next time the same rumor is spread it has some impact.... Unfortunately said impact will be less, much less, with every single iteration, until just like central bank intervention, its impact is lost in the noise. Per Businessweek: "Officials from China and Japan, the world’s second- and third-biggest economies, indicated that their support for Europe will have limits  and the region needs to solve its own debt crisis. Japanese Finance Jun Azumi said in Washington today that while his nation can buy European Financial Stability Facility bonds if needed, there is no blank check. “At the margin we can do quite a bit to help,” Chinese central bank Deputy Governor Yi Gang said in a panel discussion yesterday at the International Monetary Fund in the same city. At the same time, “the real solution of the European sovereign debt crisis has to be done by Europeans themselves." Good luck in that whole Europeans coming up with a solution: after all it was mere hours ago that France’s Baroin said that the Eurozone is "open to support from others." Translation: "Show us the money." In other news, the countdown for the latest European bailout rumors from the FT is now on.


Group of 20 finance chiefs today pledged coordinated efforts to tackle rising risks as Greece teeters on the brink of default and stocks plunge around the world. Weak growth, high unemployment, sovereign stresses and turbulence in financial markets are “renewed challenges facing the global economy,” the officials said.

Azumi said that euro-area nations had “said that this is a euro-area problem, and that the euro-area nations should be the ones to solve the problem.” “We don’t reject that view, we respect it,” he said.


Yi Gang’s remarks came amid investors’ expectations that China may help stabilize the euro region, after Italy this month followed Spain, Portugal and Greece in seeking investment from the world’s fastest-growing major economy. Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled this month developed nations should cut deficits and open markets rather than rely on China to bail out the world economy.


Also this month, other Chinese officials indicated the country is prepared to offer assistance. Zhang Xiaoqiang, vice chairman of China’s top economic planning agency, said the nation is willing to buy euro bonds from countries involved in the sovereign debt crisis “within its capacity.”


In the panel discussion yesterday, Yi said his nation’s involvement could be at the country level or with the European Union, and could also extend to cooperation with the IMF.

As to why we are sometimes baffled by why everyone automatically assumes the Chinese are ultra clever:

It is unlikely that the global economy will slide into another slump, in part because “the whole world is still at a very low level” of activity, Yi said. “We have a very moderate recovery” following the financial crisis, which indicates global growth “won’t decrease too much,” he said.


“The probability of that is still rather limited,” Yi said, referring to a double-dip recession. With the right combination of policies, countries can manage the debt crisis and “we can still have moderate growth” in the global economy, he said.

Uh.... what?

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Yen Cross's picture

 intervention  g-20 co-ordinated

sqz's picture

ZH loves pressing FT's buttons sometimes. Alphaville will be going mildly apoplectic (which is about as far as a typical Brit's upper lip can quiver) on this one! :)

Michael's picture

Dr Paul says; No Blank Check For You!

Ron Paul Highlights in 9/22/2011 Presidential Debate

Oh regional Indian's picture

WHAT in the WORLD is JAPAN doing HELPING ANYONE? Total WTF set-up.

It's own people are drowning, in every kind of literal or metaphorical way you can imagine and this shithead is talking about helping Europe? Fix your own house FIRST!

Drives me nuts. Total two world scenario, one for 99% of the populationand the other for this money mad, power hungry, pyshopathic 1%.



Troy Davis was a ritual Sacrifice on the 33rd

AnAnonymous's picture

They have to keep up the Ponzi.

A borrows from B. B borrows from C, showing A's debt as a guarantee. C borrows from A showing B's debt as a guarantee etc...

Who is damaged? At the exclusion of A, B and C, anyone who trade wealth against the money A, B and C have borrowed from each other.

Trouble at the moment is that the wealth to be injected and maintain the Ponzi up is growing scarcer and scarcer.

But Japan, as a main actor in the Ponzi, must keep participating if they do not want to be the gang member the other gangers are going to squeeze.

Present days show Europe as the ganger pushed under the train so that the others benefit from the free resources, that is all the wealth Europe will no longer be able to buy by going deeper and deeper into debt.

Oh regional Indian's picture

"Who is damaged? At the exclusion of A, B and C, anyone who trade wealth against the money A, B and C have borrowed from each other."

Precisely AnAn, precisely. Thus the Aaargh!


falak pema's picture


As this recent  financial crisis number crunching at ZH by different bloggers has shown the balance sheets of every TBTF bank carries huge black holes of toxicity. RM's number crunching exercise of French PAribas could be applied to the WHOLE TBTF clique world wide.

So, if the TBTF are all cheating on their balance sheets AND at the same time seeing their MARKET capitalisation disappearing in this inevitable and ongoing meltdown, what legs do they have to stand on?

The answer is simple : Government support is the only back stop. But all governments are ALREADY hocked in first world as the current EU sovereign debt, follow up to US crash of 2008, now cleary shows.

IF THE WORLD BANKING SYSTEM HAS TO TAKE A COLLECTIVE HIT TO WRITE DOWN THEIR ASSETS BY 20%-30% IMMEDIATELY, WE  will have a paper value destruction of fiat assets of book value of 15-20 trillion USD!

That is the size of the collective current hole in the global balance sheets of the integrated banking world. 

It explains why ALL politicians are literally pooping in their pants and holding hands in total impotent dismay as the house of cards crumbles. 

Wondering who goes down first, wondering what event in what country starts the inevitable asset correction of the integrated TBTF spider's web of overblown assets is just a detail now...It feels like Sarajevo 1914...(you would say 33rd parallel play in the making!).

AS RM correctly points out the market correction of Paribas assets, as for the other two frenchies, ANTICIPATES this book value asset correction that the banks won't admit to. If its true, then the markets won't rise, instead fall, until book and market match to face the new morn of depressionary dawn.

Tao 4 the Show's picture

This brings up an interesting point: Do the disappearing assets represent anyone's supposed wealth? Or are they only bank holdings? In other words, whose wealth disappears if these derivatives evaporate?

Presumably, they are mainly on the bank's books, and only about 2-3% of the at-risk amount belongs to a person. The reasonable thing would be for governments to back up the depositors and let the derivatives collapse on each other. The way out would be easy if the bankers didn't have the world by the short hairs.

falak pema's picture

derivative positions when netted out mean some money market funds, some pension funds, some HFs, take a each case. Its all part of the nebulous...But they'll all go running to their buddies in government and ask for State to take on part of the ponzi write down, as socialised debts to be paid by future generations...or to not be paid at all, if governments balk, which is now imminently in the cards...leading to depression and war. 

The banksta soup is so thick and opaque I don't believe even they know how it was concocted some years ago and what the real down sides are. Try unwinding a ball of left-over spaghetti once its really intertwined from long, cold neglect in the fridge. 

Tao 4 the Show's picture

Yep - basically agree with what you are saying, and add that the opacity is keenly important to the discussion but seldom addressed because no one outside of the banks and the govt insiders have real access.

Without knowing where and how big the potential hits are, we can't evaluate proclamations like Paulson's to congress in 2008. Officialdom can paint whatever scary picture it wants on that opaque surface. We are in the undesirable position of not really knowing.

falak pema's picture

consider this : off balance sheet accounting. Enuff said...

Michael's picture

Yes, but have you thought about this;

The Best of The Soup Nazi

falak pema's picture

hilarious and thanks its much better than banksta soup! Love George Constanza...

Oh regional Indian's picture

Falak, if you love George C, you might have a problem. Please check into TV addled Minds section of the Social Engineering Floor (Section RUFECKED) of the World Driven Mad Project on 1 Tavistock Street IMEDIATELY.

It might already be too late. ;-)


falak pema's picture

I'm talking about the character in the series not the man...I have nothing against any ethnic group as such. I don't know what you are referring to. 

Oh regional Indian's picture

Relax Mon, take a look at this. All shall be clear. And it's a good laugh too.


falak pema's picture

lol, Ori, you area true minimalist!

Oh regional Indian's picture

Too true Dr. Pema! Too True.

I'm still waiting to see the real popper, SPAIN, go off. Till then, I consider all this sidelights.

Because when Spain goes, it takes Europe AND South America with it.

Watch for Spain to come screaming into the headlines sometime soon. it definitely feels like it's time!


Snidley Whipsnae's picture


Rule #1 Of Standard Political Playbook

1) When things aren't going well locally, direct attention to a far away location... The Farther away the better.

I think I need to buy a gun's picture

well i'm fully confident in Dr Bernanke he got a 1590 on his SATS so as everyone can see i sleep well at night

EZYJET PILOT's picture

He's singing from the same hymn sheet as Geithner.

AUD's picture

Gold is still falling in Euros, where is this crisis? The 15 yr Bund is trading at 156, where's the crisis?

Nobody is afraid for the Euro.

cychan4's picture

why the word "blank" is even needed?

chump666's picture

Oh man, China, crashing in real time and they still got that commie misinformation overhang.


Peter K's picture

They got to FOCUS on the wording. That's the ticket:)

Temporalist's picture

Translation: "Show us the money."


More like China says "Give us your gold, then we'll talk."

AnAnonymous's picture

What money? Europe, Japan, the US are insolvent. Only China might not be borrowing to keep up the Ponzi. Which is also quite irrelevant as they hold reserves in USD and Euro so nothing conserved here.

The reaction is not surprising: the insolvent countries have built a network of tangled debts to give semblance of solvency. They borrow from each other, using the debts as collateral, allowing them to consume more and more.

Trouble is that resources are not extracted fast enough for the Ponzi to keep going on. One or more big consumers have to be eliminated to free resources for the others.

Snidley Whipsnae's picture

"Trouble is that resources are not extracted fast enough for the Ponzi to keep going on. "

Excellent...I will rephrase it slightly, AnAnonymous....

The fantasy of fiat/ponzi is crashing onto the very real shores of commodities.


BigDuke6's picture

Will freegold then  beckon?

Snidley Whipsnae's picture

"Will freegold then beckon?"

Too many variables, to many decisions have to be made by too many pols/central bankers.

It is enough for each of us to know that gold/PMs do not go to zero. Fiats always go to zero.

oobrien's picture

Boy, the boys at zerohedge are really working overtime.

They must expect the crash is close at hand.

Id fight Gandhi's picture

The last part is a head scratcher. Something lost in translation?

AnAnonymous's picture

Save trusting things to happen the same, where is the head scratcher?

The world went through a financial crisis. Moderate growth still was.

As another financial crisis is brewing, the same result is expected: moderate growth.

Growth will fall a bit but not enough to call it a double dip.


You can question the principle behind it (stuff is going to happen the same) but other than that, where is the head scratcher?

zebra's picture

No, Martians will bail all of us out as long as we give them 90% of our water resource.

Sad Sufi's picture

No cash for you.


jomama's picture

aaaand PM's still getting faceraped.

achmachat's picture

a large part of my PMs have the Queen's face on them.

Have you noticed that you can get 50 ounces of Ag for each ounce of Au right now? Don't count in fiat, but in things that are real like the ratio!

You want my honest advice? If you have Au, change parts of it into Ag while that ratio is still so ridiculously high.

jomama's picture

oh trust me, i stack both.  does sting a bit considering i just loaded up on 200 oz. last week, however (yes, i am small potatoes).

Libertarians for Prosperity's picture



If I were you, I'd wait until the "Cartel" knocks silver down to about $38.  According to Turd Ferguson, there is "very strong support" there.


CapitalistRock's picture

Done. 3 hours later and silver is 32.60 as I type this.

It's getting real juicey here.

CitizenPete's picture

It's already been down though 38 and bouncing around waiting for a flock of black european swans to crash into a big black FED blimp that is hovering off the shores of Hong Kong ... 

Reptil's picture

That last part IS very clever; it's meant for european (EU) politicians. China (and Japan) want to buy stuff in Europe. They obviously do not have a high regard for the people in charge. Do you tell these european fuckwads that they will be selling, and losing collateral, in vain? Do you tell them that they'll just win a little time but that their efforts (of selling gold, and land and everything but the kitchen sink) will only have a temporary effect? No of course not, then they wouldn't sell to the asians at all.

What you do, is, you lie. You tell them this is really going to turn everything around. No matter if they believe you. If they (european politicians) regard you (ironically) as dumb, even better! So you lie and you tell a story about a little boy who planted some beans in his garden... one day he woke up and...

phyuckyiu's picture

Someone had their Starbucks ice cream tonight. Jim Willie's been calling global QE for months now, it's finally more blatant now in an effort to steer algos.

Tic tock's picture

It's a simple monetary issue - I really cannot understand what the personal attachment might be - the reserve currency has shifted to Gold, it's a fact- exactly how slow to grasp this does the city have to be  - I mean, call a spade a spade!

Tic tock's picture

It's a simple monetary issue - I really cannot understand what the personal attachment might be - the reserve currency has shifted to Gold, it's a fact- exactly how slow to grasp this does the city have to be  - I mean, call a spade a spade!

Steroid's picture

They should have learned it by now.

You start a rumor by denying it.