China Lays Out Conditions Under Which It Will Bail Out Europe; Does Not Want To Be Seen As "Source Of Dumb Money"

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Thu, 10/27/2011 - 14:15 | 1818055 papaswamp
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The new landlord cometh....

Thu, 10/27/2011 - 14:19 | 1818068 Ancona
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I think that China will be bailing herself out pretty soon. With the rest of the world falling down around them, who will buy those cheap exports? The U.S? Greece? Spain?

reality is a bitch, and the piper always has to be paid. When your own growth is dependent upon building ghost cities and second rate high speed rail lines, there comes a point when even your own people begin to question the value of building simply for teh sake of building.

Thu, 10/27/2011 - 14:23 | 1818092 junkyardjack
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China needs to bail out the rest of the world so it is around to bail them out in 2 years.  As long as they all don't go down at the same time the game can continue

Thu, 10/27/2011 - 14:38 | 1818126 Hard1
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"We are have you through the balls"    (Wen Jiabao, circa 2011 - Editor note: probably referring to the fact that China had all the power in the negotiation)

Thu, 10/27/2011 - 14:40 | 1818142 dlmaniac
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China must have asked for PIIGS' gold behind the door in exchange for bailout money.

Thu, 10/27/2011 - 14:58 | 1818221 bonderøven-farm ass
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Thu, 10/27/2011 - 15:44 | 1818417 trav7777
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Europe is going to say no and print.

The political costs are lower for the latter.  Tell China to fuck off and close your import markets.

China is nationally operating at nearly zero profit, which is why they have to be increasingly bellicose.

Thu, 10/27/2011 - 19:31 | 1819113 caconhma
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Do you really expect that Greece, Italy and Spain will become hard-working, honest, and productive?

Good luck. Nothing has changed. They will take money, promise everything Chinese ask for, and default.

China has learned nothing from Iraq, Libya, Pakistan, etc., As soon as China usefulness is gone (work hard for nothing), China will be treated no better than Saddam or Qaddafi. 

Thu, 10/27/2011 - 19:52 | 1819192 malikai
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LOL. Good luck with that.

Thu, 10/27/2011 - 21:26 | 1819436 Buck Johnson
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Yep, they probably said that with this gold we will give it back once our investment is paid back in full.  Everyone is getting pulled in to this impossible scenario.  There is no way that Greece can pay back any of this, eventually they will default.  As the article said, all this is doing is throughing good money after bad.

Thu, 10/27/2011 - 15:22 | 1818331 thefedisscam
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You should really educate yourself more, about how much China's export is imports from other Eastern Asian partners, such as Japan, S. Korea, Mongolia, HK, and Taiwan!

When China exports decline, China suffers LESS than those partners! Most of those partners importing their own parts to China, and use ONLY cheap labors in China. Just like Apple products!

Plus, 65%+ of ALL China's imports to the U.S. are by U.S. OWN big corporations. Asking who will suffer more?



Thu, 10/27/2011 - 15:58 | 1818474 Smiddywesson
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When China exports decline, China suffers LESS than those partners!

Perhaps over the short term, but those corporations have no loyalty to their country of origin and play a shell game with profits.  Closing off trade with China would kill it, and fancy arguments about how that would hurt multi national corporations, resulting in even more damage to the US and EU economies ignores the huge sucking sound coming out of China as those companies repatriate industries to service these economies.

You should really educate yourself more, about how much China's export is imports from other Eastern Asian partners, such as Japan, S. Korea, Mongolia, HK, and Taiwan!

Maybe you should educate us on how China can have a viable economy with no outside customers.  Your argument is globalization is irreversible.  Just watch.

Thu, 10/27/2011 - 14:39 | 1818140 derek_vineyard
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Fucking shit. Something isn't right.

Thu, 10/27/2011 - 15:02 | 1818249 espirit
espirit's picture

Agreed.  What about the source of "dumb money" from the USSA?

If China owns EuroLand, we're frocked.

Thu, 10/27/2011 - 15:08 | 1818267 Nascent_Variable
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China simply can't be the perpetual "dumb money" source.  As they said themselves, their people won't stand for it.

China is one of the most xenophobic countries the world has ever seen.  How the hell is their government going to explain to legions of rural farmers, living in essentially Third World conditions, that they need to bail out Greek pensioners?  The press can be stifled, but never completely silenced.

As soon as the PIIGS fail to honor their bailout deals, Chinese mistrust of foreigners and the government's fear of a peasant revolt will put an end to any hope of China as the go-to bailout country.

Thu, 10/27/2011 - 15:24 | 1818336 thefedisscam
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"China is one of the most xenophobic countries the world has ever seen.  "

LOL. All I can say is that you know NOTHING about China!!

Thu, 10/27/2011 - 16:04 | 1818506 Smiddywesson
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China has to be xenophobic you troll, with 292 different languages, you have to have a "barbarian" boogey man to hold all those different people together in that crap hole of an internment camp you claim is one country.  That's why you booted out Google, you can't stand the truth.

Now run along and make those sneakers, your 16 hour shift is about to start.

Thu, 10/27/2011 - 15:25 | 1818338 LFMayor
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They don't explain shit to their farmers man.  They TELL them.  Once.  And then it gets done.

Mon, 10/31/2011 - 05:29 | 1827832 yesindeedy
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1. Farmers are self sufficient, the equivalent of homesteaders.

2. Most of the press outlets are government run, so there's no need to stifle press.

3. Another day, another China expert. Why don't you go on a talk show circuit?

Mon, 10/31/2011 - 05:33 | 1827836 yesindeedy
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Anybody who's opened a history book should be able to see that China's mistrust of foreigners is well founded.

>Portuguese land in China, leave almost empty handed, but steal some local children to sell as slaves

>British land in China, start selling opium


Thu, 10/27/2011 - 14:40 | 1818143 papaswamp
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China may be already bailing itself out. That is the problem with closed books, we have no idea. They can print as much as they want and claim anything they wish. 

Unfortunately, in Europe's despiration, they will accept anything....even sell their soul (or most likely property). 

Thu, 10/27/2011 - 15:47 | 1818430 trav7777
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doubtful...Germany holds cards, China really doesn't.  Maybe over the PIIGS but they aren't going to extract any concessions from the krauts.  Germany will VETO anything which materially hurts THEIR mercantilist and protectionist economy.  Bank on that.

Thu, 10/27/2011 - 16:03 | 1818493 reload
reload's picture

Immagine Chink owned tolls on French and German roads, bet they would like a nice port or two as well, Hamburg would be a great trophy aquisition.

How about some French Nuke tech? no they have that already dont they.

Point is thereis lots of stuff in Europe that they would take equity in given half a chance. Printing will be easier than taking the shaft in the polls by selling out to Chineese interests. In the end they will print.

Thu, 10/27/2011 - 16:59 | 1818691 mjk0259
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They could demand Airbus start manufacturing and R&D in China. Plentiful visas and college admissions for scions of ruling class. Weapons tech. Middle East intelligence. Still some industrial tech they havn't stolen the latest version of. Meanwhile, Euros keep mouth shut about China human rights and China generated pollution affecting whole planet. Assistance in continuing Taiwan isolation, other UN votes. More China rep on IMF, World Bank. Increased China imports.


Mon, 10/31/2011 - 05:37 | 1827833 yesindeedy
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Pretty sure a good chunk of that pollution was simply outsourced from western countries. If not China, then Europe or some other country. Also, Europeans preaching human rights? The same Europe that spawned Stalin and Hitler? The same Europe, home of NATO that's playing world police and bombing Libya? Those "independent" rebels were sure quick to establish a new central bank.

Thu, 10/27/2011 - 15:15 | 1818262 CTG_Sweden
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China should probably increase wages near the coast even more and accelerate the process in which Chinese export companies move inland. Perhaps these companies should also move to countries like Vietnam, Cambodia and Laos? 

China is a country which in theory can produce almost everything they need except raw material domestically. Why not cut imports as regards things they can produce domestically rather than bother about exports of cheap junk? If China did that I think their economy could grow by 20 % per year rather than by 10 % per year. 20 % is not impossible. The South Korean economy grew in that rate for a few years.

Furthermore, the Chinese leadership would be less vulnerable to major uprisings if people actually could see that they made more money and improved their living standard. My impression is that the Chinese leaders are somewhat stupid when they are so anxious about being able to export cheap junk which requires riot prone cheap slave labour. People generally prefer democracy and freedom to dictatorship. In the long run, I suppose that a non-elected government needs more growth and more prosperity than democratic countries in order not to be toppled. But non-elected rulers seldom seem to realize the need for prosperity until it is too late. Perhaps that is due to the fact that the leaders don´t feel the pressure to improve people´s living standard since they can not lose any elections?


Thu, 10/27/2011 - 17:02 | 1818705 mjk0259
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They are now the largest car market. 30 years ago, lucky to get a bike so the standard of living is increasing pretty fast. Couple Chinese tell me house prices are almost the same as US in many areas. Actual income must be a lot higher than reported for a large part of the population because I don't see how that is possible considering they are supposed to have per capita income $3,000/year and have to put down huge down payment.

Thu, 10/27/2011 - 15:58 | 1818471 GiantVampireSqu...
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Reality is a bitch, Chinese bailouts are bottom up bailouts for the most part.  Building ghost cities is straight out of Keynes book.  Bailing out bankers is straight out of the red shields book.  Burn the books, fuck the system, it's all bullshit.  

Thu, 10/27/2011 - 14:19 | 1818071 jdelano
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I can't remember the last time I ever had such a leaden feeling of disgust in my stomach.  Anybody giddily celebrating this obscene equity orgy cleary does not comprehend the magnitude of what is unfolding in front of our eyes today, and how grim the future has just become.  I'm going to throw up now.  

Thu, 10/27/2011 - 14:22 | 1818086 jowenchrist
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The Slave Masters are at work - time to go all in -


Thu, 10/27/2011 - 14:25 | 1818101 Fibz
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The banking industry is like a body having spasms after the brain is dead.

Thu, 10/27/2011 - 14:49 | 1818190 lemonobrien
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you take shit too seriously.

Thu, 10/27/2011 - 14:31 | 1818111 Unprepared
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As a sign of good faith, shipment of a new Freedom Statue is on its way to Shanghai.

Mr. Jiabao also received a free lifetime golden membership to Berloscuni's Bunga Bunga club.

Thu, 10/27/2011 - 14:39 | 1818139 matrix2012
matrix2012's picture

ha ha ha.. the junks are simply worthless... find other stupids for the sell-out!

Thu, 10/27/2011 - 14:54 | 1818209 Bazinga
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The new landlord giveth and the new landlord is smart enough to be in a position to take it away...

Thu, 10/27/2011 - 14:15 | 1818057 HelluvaEngineer
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Right.  You'll pay up and shut up.

Thu, 10/27/2011 - 14:16 | 1818058 FunkyMonkeyBoy
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China is dumb to have anything to do with this s**t. They hold the strongest hand at the poker table and are yet look like they're going to fold, while Europe and the U.S. hold a pair of deuces and king high, respectively.

Thu, 10/27/2011 - 14:24 | 1818096 Hearst
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China would be wise to demand physical Gold as collateral or swap FX reserves for bullion.  That would be their strongest move possible and demonstrate to the EU that they are serious about not being the source of 'dumb money.'  Indeed the EU would be the dumb ones to exchange bullion for paper.

Thu, 10/27/2011 - 14:40 | 1818144 LawsofPhysics
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They will, and then the terms of WWIII will be discussed.  Not in public of course.

Thu, 10/27/2011 - 14:42 | 1818148 NotApplicable
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As reasonable as it sounds, that would basically be a declaration of war.

Thu, 10/27/2011 - 15:20 | 1818323 Hearst
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That declaration would originate from the EU not China.  China is the one bailing out the EU.  The EU as condition to recieve China's funds must dance to the tune they play.  The EU (and US) have the economic weak hand.  The US amassed all its Gold from the world not from being holding a weak hand but a strong one.  China will do the same.

Thu, 10/27/2011 - 16:01 | 1818492 CTG_Sweden
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Another solution is that the EU prescribes that all imports of oil must be paid in euro rather than USD. Then the EU can print all the money they need. Of course, that would take less printing in the US, and the US would probably not like that.

If the west want to topple the Chinese ruling party, I think that it would be easier to see to that underpaid slave labour riot. The Chinese leaders seem to be folly enough to think that it is so important to be able to export cheap junk to the west. Therefore, it is important to see to that wages don´t rise to fast. But why not use all the money they got in order to build factories that can produce more goods for their consumers and produce these goods efficiently enough so that workers can get wages that won´t make them riot? Remember how Henry Ford in 1913/14 more than doubled his workers pay by increasing their pay-cheque to 5 dollars a day. In 1914, a Ford model T sold for $500. 100 days of work = a new Model T. And that was almost 100 years ago. Perhaps some of the investments could be accomplished by buying equipment in Europe and the US? That would create some growth in the west too. To me, that seems as a better solution than lending money to European politicians, countries and banks that they can´t control but are controlled by others than themselves. If they buy factory equipment and tooling instead of lending Europe money, they can be sure that they get something in return.

Thu, 10/27/2011 - 16:10 | 1818533 Smiddywesson
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China would be wise to demand physical Gold as collateral or swap FX reserves for bullion.

They are coordinating their margin hikes, so you can bet all parties know the future value of that bullion.  How likely is it anyone is going to let go of their gold?  Not going to happen.

Thu, 10/27/2011 - 14:25 | 1818099 reTARD
reTARD's picture

Agreed. Unless of course if China were to traded their 3 trillion dollar FX holdings for the physical transfer of gold... I somehow doubt that would happen.

Thu, 10/27/2011 - 14:37 | 1818127 malikai
malikai's picture

Until we see the details of a deal we can't make that assesment. If I had the strongest hand at the table, I'd like you to think I was about to fold, too.

Thu, 10/27/2011 - 15:07 | 1818264 tmosley
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Don't worry, just another RICroll.

Thu, 10/27/2011 - 14:17 | 1818063 gojam
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Screw them!

Thu, 10/27/2011 - 14:18 | 1818064 Cassandra Syndrome
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Chop Suey Bitchez

Thu, 10/27/2011 - 14:18 | 1818066 pendragon
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the world's worst investor - witness bx

Thu, 10/27/2011 - 14:18 | 1818067 Dr Zaius
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Dumb is as dumb does.

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