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

Tyler Durden's picture


Back in September we noted that "Wen Jiabao Says China Willing To Extend Help To Europe... For A Price" the price in question being that, among other things, the EU should recognize China's market economy status, and to split Europe with the US on the topic of Chinese currency manipulation. Naturally, being the biggest import partner for China's goods, the topic of providing vendor financing to Europe has always been a critical one. Well, as was made clear overnight a key part of the European rescue effort is to get China on the same page, and to have it allocate capital to the EFSF. As the FT reports this may have happened, although with more or less the same conditions that China delineated 6 weeks ago. Only this time China has all the leverage. According to the FT: "China is very likely to contribute to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying some key conditions, two senior advisers to the Chinese government have told the Financial Times." So what are the conditions: "Any Chinese support would depend on contributions from other countries and Beijing must be given strong guarantees on the safety of its investment, according to Li Daokui, an academic member of China’s central bank monetary policy committee, and Yu Yongding, a former member of that committee." Obviously, Europe will promise the latter. As for the former it could be a tad problematic because as observed previously Brazil has voiced against rescuing Europe in the form of non-IMF participation. But there are more conditions: "It is in China’s long-term and intrinsic interest to help Europe because they are our biggest trading partner but the chief concern of the Chinese government is how to explain this decision to our own people,” said Professor Li. “The last thing China wants is to throw away the country’s wealth and be seen as just a source of dumb money.” Alas, that is precisely how the entire world sees China. As for the final condition: "He added that Beijing might also ask European leaders to refrain from criticising China’s currency policy, a frequent source of tension with trade partners." And this is how you declare political check mate and shut up all voices that threaten to protest against mercantilist policies. And since it is only a matter of time before China will have to rescue the US, we hope Senate enjoys the time remaining in which it can debate whether or not China manipulates the CNY. That time is about to end.

From the FT:

Klaus Regling, head of the EFSF, was due to arrive in Beijing late on Thursday for discussions with senior Chinese leaders on whether and how much China might contribute. Nicolas Sarkozy, the French president, telephoned his Chinese counterpart Hu Jintao a few hours
after the summit ended to discuss the rescue plan but there was no immediate announcement on any Chinese involvement.

European leaders agreed that the EFSF would explore two plans to increase its remaining firepower from about €250bn to €1,000bn. One would be to offer investors insurance on selected government debt while the other would create a special fund in which the International Monetary Fund or countries such as China could invest.

With $3,200bn in foreign exchange reserves, roughly a quarter of which are believed to be held in euros, China could be willing to contribute between $50bn and $100bn from the reserves to the EFSF or a new fund set up under its auspices in collaboration with the IMF, according to one person familiar with the thinking of the Chinese leadership.

“If conditions are right then something a bit above $100bn is not inconceivable,” this person said.

And here is how China gets one step closer to internationalizing its currency:

One condition China might ask for is that its contribution be at least partly denominated in renminbi, which would protect its investment against currency fluctuations. China would buy euro-denominated bonds but repayments would compensate for any changes in the value of the renminbi, which has appreciated nearly 20 per cent against the euro in the past three years.

Needless to say, Europe is not too happy with the economic give for political take...

Reflecting the unease in Europe, the head of Germany’s industry association, said he feared Chinese help could “come at a political cost”. Hans-Peter Keitel told the FT: “Asking a non-eurozone nation to help the euro would the the other nation the power to decide the fate of the single currency.”

This is spot on, and at this point, Europe has absolutely no trump cards left. It is entirely at the mercy of China. Or so the market thinks.

What is ironic is that when the next European bail out has to happen, and China is indeed seen as an actual source of dumb money, political tensions will finally shift over from the developed world to "surplus positive" one:

"Any mis-steps in helping Europe could cause problems with domestic public opinion – the Chinese people will watch very carefully what their own government does,” Prof Yu said. “European leaders also must have a clear plan of what to do and they must show China they have the political will as well as the support of their own people; if we see protests and chaos all the time, then China won’t have confidence in Europe’s political ability.”

And so China enters the wacky and wonderful world in which Europe will promise the moon and the stars with the only backstop strategy that one of hope, more hope and nothing else.

We are confident this will all end the way good money chasing after bad always does. But for now, the surge continues.


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Thu, 10/27/2011 - 14:15 | 1818055 papaswamp
papaswamp's picture

The new landlord cometh....

Thu, 10/27/2011 - 14:19 | 1818068 Ancona
Ancona's picture

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
junkyardjack's picture

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
Hard1's picture

"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
dlmaniac's picture

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
bonderøven-farm ass's picture


Thu, 10/27/2011 - 15:44 | 1818417 trav7777
trav7777's picture

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
caconhma's picture

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
malikai's picture

LOL. Good luck with that.

Thu, 10/27/2011 - 21:26 | 1819436 Buck Johnson
Buck Johnson's picture

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
thefedisscam's picture

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
Smiddywesson's picture

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
derek_vineyard's picture

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
Nascent_Variable's picture

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
thefedisscam's picture

"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
Smiddywesson's picture

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
LFMayor's picture

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
yesindeedy's picture

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
yesindeedy's picture

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
papaswamp's picture

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
trav7777's picture

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
mjk0259's picture

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
yesindeedy's picture

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
CTG_Sweden's picture


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
mjk0259's picture

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...
GiantVampireSquid vs OWS UFC 2012's picture

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
jdelano's picture

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
jowenchrist's picture

The Slave Masters are at work - time to go all in -


Thu, 10/27/2011 - 14:25 | 1818101 Fibz
Fibz's picture

The banking industry is like a body having spasms after the brain is dead.

Thu, 10/27/2011 - 14:49 | 1818190 lemonobrien
lemonobrien's picture

you take shit too seriously.

Thu, 10/27/2011 - 14:31 | 1818111 Unprepared
Unprepared's picture

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
Bazinga's picture

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
HelluvaEngineer's picture

Right.  You'll pay up and shut up.

Thu, 10/27/2011 - 14:16 | 1818058 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

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
Hearst's picture

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
LawsofPhysics's picture

They will, and then the terms of WWIII will be discussed.  Not in public of course.

Thu, 10/27/2011 - 14:42 | 1818148 NotApplicable
NotApplicable's picture

As reasonable as it sounds, that would basically be a declaration of war.

Thu, 10/27/2011 - 15:20 | 1818323 Hearst
Hearst's picture

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
CTG_Sweden's picture

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
Smiddywesson's picture

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
tmosley's picture

Don't worry, just another RICroll.

Thu, 10/27/2011 - 14:17 | 1818063 gojam
gojam's picture

Screw them!

Thu, 10/27/2011 - 14:18 | 1818064 Cassandra Syndrome
Cassandra Syndrome's picture

Chop Suey Bitchez

Thu, 10/27/2011 - 14:18 | 1818066 pendragon
pendragon's picture

the world's worst investor - witness bx

Thu, 10/27/2011 - 14:18 | 1818067 Dr Zaius
Dr Zaius's picture

Dumb is as dumb does.

Thu, 10/27/2011 - 14:19 | 1818069 Irish66
Irish66's picture

My dad always said the Chinese would own us

Thu, 10/27/2011 - 14:24 | 1818093 Dr. No
Dr. No's picture

Things you own, end up owning you.

Thu, 10/27/2011 - 14:19 | 1818072 wandstrasse
wandstrasse's picture

the recent rally in EUR/USD and stocks is VERY eerie. Cannot omit a pre-tsunami feeling.

Thu, 10/27/2011 - 14:26 | 1818104 Balmyone
Balmyone's picture

China is going to need all its money when its property market takes a nose dive. 

Buy PHYSICAL gold and silver.

Thu, 10/27/2011 - 14:19 | 1818075 LawsofPhysics
LawsofPhysics's picture

So China is going to buy bonds that can take 50-100% haircuts in the future?  Yeah that's smart money.

Thu, 10/27/2011 - 14:44 | 1818163 NotApplicable
NotApplicable's picture

It's ok. They'll buy protection. Just in case... something, something.

Thu, 10/27/2011 - 15:44 | 1818413 whaletail
whaletail's picture

A small price to pay for a provocation they can further leverage. 

Thu, 10/27/2011 - 14:20 | 1818076 ZeroPoint
ZeroPoint's picture

Bankrolling the US and Europe = dumb, dumb, DUMB.


Thu, 10/27/2011 - 14:20 | 1818078 peekcrackers
peekcrackers's picture

China trying to buy its economy . Dam if they do , dam if they dont.

Thu, 10/27/2011 - 14:48 | 1818172 peekcrackers
peekcrackers's picture

The real dumb money is the sheep still walking into a Dollar stores and Wallmarts buying useless Dumb cheep  china shit and trinkets,. Dont worry china there are still  of northamarica dumbies buying your cheep crapy throw away junk!

Thu, 10/27/2011 - 15:10 | 1818276 JohnG
JohnG's picture

Last weekend I went shopping for a new electric hand mixer.  I went to four different stores trying to find one that WASN'T made in China.  Never did, everything is made in China.

Settled for a whisk and a bowl I already had....probably made in China.

Thu, 10/27/2011 - 15:44 | 1818415 Troll Magnet
Troll Magnet's picture

it's a pretty good scam.  you buy cheap shit from china.  it breaks down in two months.  you have to buy it again.  personally, i try not to buy anything made in china.  but it's getting more and more difficult. 

Thu, 10/27/2011 - 15:56 | 1818450 peekcrackers
peekcrackers's picture

 duh No kidding ... I bet you would have never paid the made in U S price .

I have retail stores  that had 97 % north america made product threw 1980-to late 90s .. then it was soo much cheeper to contaner your product from over China. ( free trade )

The U S made product that is  sold in my stores is 40 times the price of the China counter product and 50 times better quality then the china product.. But the customer will allways go for the lower priced tag.

That is the problem ... every one waves a huge Buy U S flag but when it comes down to it no one want to pay for it.

China will have a realy hard landing .. north america has bought thems selves out of work looking for the never ending sale.


Thu, 10/27/2011 - 20:34 | 1819297 jowenchrist
jowenchrist's picture

More unemployed people would buy us products if they had any us money to spend - duh

Thu, 10/27/2011 - 14:20 | 1818079 Deadpool
Deadpool's picture

dumb money...funny. Are Rockerfeller Center and Spyglass golf course for sale again?

Thu, 10/27/2011 - 14:21 | 1818081 Börjesson
Börjesson's picture

"And since it is only a matter of time before China will have to rescue the US..."

I don't see how it could ever come to that. When in trouble, unlike the eurozone, the US can and will print. Eventually, this will of course destroy the dollar, but once that happens, there will be nothing China can do to help even if they should want to.

Thu, 10/27/2011 - 14:25 | 1818100 alien-IQ
alien-IQ's picture

At that point, the US will do the only thing the US knows how to do: Start a war with China based on lies.

Look how well that's worked out so far...

Thu, 10/27/2011 - 14:27 | 1818109 LawsofPhysics
LawsofPhysics's picture

The terms of the war will be agreed to somewhat ahead of time but will still get messy.  Both countries need to cull the herd.  Russians will want in on the "game" too.  Far too many people on this planet and the growth model must continue.

Thu, 10/27/2011 - 14:46 | 1818171 NotApplicable
NotApplicable's picture

Too many useless property owners. Not enough property.

Thu, 10/27/2011 - 14:47 | 1818183 iDealMeat
iDealMeat's picture

+7 billion

Thu, 10/27/2011 - 14:46 | 1818138 Incubus
Incubus's picture

Don't get fooled:  wars in countries like Afghanistan or Iraq take 10-20 years because it's profitable for the corporate interests.


If the "survival" of those corporations is threatened, we can win a war--even against China--very quickly.

Just pray that those corporations don't find a path of greater profitability on the Chinese side, or we'll lose.


To paraphrase the Network movie: the world isn't about countries: it's about companies and currency.

You and I are resources to be used.  The sugar-coating and blanketing of our actual role doesn't change it one bit. 

Thu, 10/27/2011 - 14:48 | 1818189 NotApplicable
NotApplicable's picture

A profitability which will be measured in gold ounces. Gee, I wonder which side has more?

Thu, 10/27/2011 - 15:06 | 1818257 SheepDog-One
SheepDog-One's picture

Afghanistan is where nations go to die.

Thu, 10/27/2011 - 14:43 | 1818155 Tramp Stamper
Tramp Stamper's picture

All by design folks nothing to see here......all the countries need just a little more time before they blow the whole financial system up and China just wants to make sure that when the one world currency comes out they dont get shortchanged.

Thu, 10/27/2011 - 14:22 | 1818084 alien-IQ
alien-IQ's picture

Tyler, this is how that headline will be edited for MSM consumption:

"China xxxx xxx xxxxxxxxxx xxxxx xxxxx xx Will Bail Out Europe"

And the DOW will rally another 500 points as the dollar takes a nose dive and gas and food prices explode for the 400k newly unemployed in Amerika every week.

In other words: It's like, totally bullish.

Thu, 10/27/2011 - 14:44 | 1818165 homersimpson
homersimpson's picture

Funny you bring that up. The algos read the headlines that way, too..

Thu, 10/27/2011 - 14:23 | 1818089 Gubbmint Cheese
Gubbmint Cheese's picture

Euros feast on a Chinese bailout.. and 45 minutes later they will be hungry for another round.

Oh the irony..



Thu, 10/27/2011 - 14:42 | 1818154 knukles
knukles's picture

Oh that's just wrong....   :)

Thu, 10/27/2011 - 14:23 | 1818090 Dr. Engali
Dr. Engali's picture

They don't have a choice. They will bail out Europe and they will bail out the U.S. The game will role on.

Thu, 10/27/2011 - 14:24 | 1818094 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

For those who haven't seen it:




TV Ad: United States owes China

Thu, 10/27/2011 - 15:50 | 1818444 Troll Magnet
Troll Magnet's picture

yeah, we owe you a stack of paper. 

Thu, 10/27/2011 - 14:24 | 1818095 jowenchrist
jowenchrist's picture

I'm jonesing bad for a dose of Bonzai -

Thu, 10/27/2011 - 14:24 | 1818097 Dick Darlington
Dick Darlington's picture

Japan will be furious if China tries to "steal" it's place as THE source of DUMB money. Japan is to Europonzi what German "investors" were to subprime.

Thu, 10/27/2011 - 14:35 | 1818123 malikai
malikai's picture

Japan is busy right now.

Thu, 10/27/2011 - 14:26 | 1818103 drivenZ
drivenZ's picture

"As for the latter, it could be more problematic because as observed previously Brazil has voiced against rescuing Europe in the form of non-IMF participation."


no doubt Brazil will shut up real quick on any opposition once China(their lifeblood) is involved.  

Thu, 10/27/2011 - 14:54 | 1818206 NotApplicable
NotApplicable's picture

For all we know, the criminals in China may well want a global authority such as the IMF to expand in order to save the world, with the expansion, of course, placing them into a controlling role on par with the US.

I see the criminals in Brazil as the avenue to give this meme legs.

Thu, 10/27/2011 - 14:27 | 1818105 jcaz
jcaz's picture

Beautifully played, China-

Who needs thermonuclear war?

Debt is much more powerful.


Thu, 10/27/2011 - 14:27 | 1818107 eurusdog
eurusdog's picture

Sino-euro. Should be as stable as all the other Sinos in the last year!

Thu, 10/27/2011 - 14:27 | 1818108 Madcow
Madcow's picture

to those who bought CDS contracts - HA HA HA HA !!!

you got tricked fair and square. now go f yourselves. 


Thu, 10/27/2011 - 14:39 | 1818133 knukles
knukles's picture

Fucking Love It! 
It's just plain downright fucking Fraudulent!  And all wrapped in the guise of fairness, process, legal contractual obligations...

Fucking sell your soul to the devil may as well done.

Thu, 10/27/2011 - 14:31 | 1818110 Sudden Debt
Sudden Debt's picture

which has appreciated nearly 20 per cent against the euro in the past three years.

nice... why go into detail when a 10yr bond goes over 6% when devaluation against your lender is over 6% a year alone.

Just by taking that money, would bankrupt Europe. Death sentence by firing squad without a bullets.


But it could be a lot worse. They could have said:

"the loan must be repaid in silver or gold at the value at date when the loan was given".


Thu, 10/27/2011 - 14:46 | 1818174 slewie the pi-rat
slewie the pi-rat's picture

nice point, sodden_d!

kinda like those great home loans---in sw.francs!

Thu, 10/27/2011 - 14:31 | 1818113 JR
JR's picture

So, China, a communist nation dragged up by its boot straps by the globalists and international bankers using American money, patents and manufacturing prowess, now is going to return the favor to the free enterprisers by bailing out Europe?

Perhaps now the free world will get some much needed technical assistance and patent sharing, even help to turn around our welfare states into free market economies.

Give me a break. China’s money is no better than a Federal Reserve Note.

Thu, 10/27/2011 - 14:32 | 1818115 wang (not verified)
wang's picture

Who would have thought that an over weight  bumfck SNAP card user somewhere in flyover country would be indirectly participating in the Chinafornication of Europe

Thu, 10/27/2011 - 14:33 | 1818117 kito
kito's picture

of course china will bail out europe. anything to keep the export markets rolling. they are a CREDITOR and an EXPORTER. they have almost NO DEBT. they are still in the early stages of growth. there is nothing stupid about what they do. they are biding their time till they can get their domestic consumption rate up. their 5 year plan will urbanize hundreds of millions who will need furniture, appliances, etc. until then, they need to keep europe and the united states propped up. its called common sense.

Thu, 10/27/2011 - 17:25 | 1818757 Rick64
Rick64's picture

Of course, just as Germany and France were trying to prop up the EU. Its self preservation.  Greece while trying to impose austerity measures continues to buy weapons from Germany and France in return for those loans. These are the sort of stipulations China will seek. Impose austerity while supporting the corporations which in return support the banks or vice versa.

Cohn-Bendit accused France and Germany of making their contributions to an IMF-led rescue package for the debt-ridden Greek economy contingent on Athens honoring massive arms deals signed by Papandreou's predecessor.

(Reuters) - In a bizarre twist to the Greek debt crisis, France and Germany are pressing Greece to buy their gunboats and warplanes, even as they urge it to cut public spending and curb its deficit.

 They need to audit this debt like Ecuador did to find all the fraudulent deals that went on, also Goldman profiting off consulting Greece while betting on the bond market. If this isn't insider trading then what is?

Odius debt - n international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state.

Thu, 10/27/2011 - 14:34 | 1818118 reader2010
reader2010's picture

Put up all brothels in Europe as collateral for next 1000 years.  Marc Faber will shout buy buy buy.

Thu, 10/27/2011 - 14:39 | 1818141 gwar5
gwar5's picture

"Pay as you enter"

Thu, 10/27/2011 - 14:42 | 1818151 Biosci
Biosci's picture

every time?

Thu, 10/27/2011 - 14:35 | 1818122 knukles
knukles's picture

Chingrish conrishuns:

1.) Collateraize the debt with Gold (Hey, you said you're not gonna default, so why worry about it, eh?  A classic Knukie negociating strategy.  They say, but we can't.  Knukie say neither can we.  Vioila! Collateral appear.)
2.) You declare us a free trade entity.
3.) Group of whatever we want menbership in, we get mwembership in.  (We'll even go along with just one vote like everybody else.  See, we're civil blokes.)
4.) You formally announce that there is no malfeasance with our currency policy.  (With the entendre that if there's a problem with ours, by definition, there's a problem with Hamerica's as we're just pegged to them, yadda, yadda, yadda.)
5.) We get some free ports of call rights for our New Blue Water Navy in the Atlantic and the Med.
6.) Ya'll agree with our Navy's passage (free) through the Suez Canal.
7.) Our internal human rights policies are A-O-fucking-K by Europe and such positrion will be formally assumed by the European Parliament and presented as such to the UN

(Sidebar sherpa conversation, boils down to:  Listen you little cocksucker, the deal is eveything, no negociations.  You need my money more than I need your bullshit toxic paper, capiche?  Now you go home and tell that sawed off little peckerhead frog to get it done.  The offer's only good for 1 week.  One fucking week. And don't even think about calling me back with any fucking questions, comments, ifs, ands or buts.  It's your ass on the line, not mine.  It's no fucking difference to me.)

Now that's called Power  

Thu, 10/27/2011 - 14:41 | 1818147 Biosci
Biosci's picture


Thu, 10/27/2011 - 15:06 | 1818258 sabra1
sabra1's picture

8.) all of germany's technology.

Thu, 10/27/2011 - 15:53 | 1818452 trav7777
trav7777's picture

And Europe says "go fuck yourself."  The EU collapses, Germany arms up and motherfuckin invades China and burns their little slope ghost towns to the ground.

People keep acting like china has cards to play...they don't.  They are just WILLING TO PRINT.  And they have, wantonly.

There isn't any VALUE there.  The overcapacity has reduced almost all of what's IN China to negative ROI "assets."

Thu, 10/27/2011 - 16:26 | 1818583 Smiddywesson
Smiddywesson's picture

I agree with Trav.  China is definintely not in the driver's seat like everyone seems to believe.  The global collapse that looms threatens to take everyone down, so they are cooperating.  As Trav points out, that cooperation has its limits, and if those limits are exceeded, it's End Game.  Think of this as a pact between organized crime families.  The Fed and the ECB don't like China, and China doesn't like them, but it's just business, so they are all in this together, trying to hold it all together and buy as much gold as possible. 

Thu, 10/27/2011 - 14:35 | 1818124 TheLooza
TheLooza's picture


Thu, 10/27/2011 - 14:39 | 1818128 NuYawkFrankie
NuYawkFrankie's picture

Americans have no problem looking dumb - why should it be any different for the Chinks?

Thu, 10/27/2011 - 14:38 | 1818129 Mr_Wonderful
Mr_Wonderful's picture

"""strong guarantees on the safety of its investment"""

Not surprising given that in the overindebted western system paying debt is becoming increasingly optiional.

Thu, 10/27/2011 - 14:49 | 1818130 gwar5
gwar5's picture

It's been said the Chinese will accept either a low EURO or a low USD, but not both.  Of the three the Fed has the most leverage, the EU the least. Guess which one is going to lose the 3-way currency race to the bottom? I never understood before why smart people were doggedly going long the EURO when it looked like it was going to be smashed or extinct.

Bizarre Love Triangle, explained by Jim Rickards.  My Blog




Thu, 10/27/2011 - 14:54 | 1818208 william shatner
william shatner's picture

cough.... 1EUR=1,42$....cough

Thu, 10/27/2011 - 15:14 | 1818292 gwar5
gwar5's picture

I know! They live! But they're still going to have to print and so are we, but Ben can print more and gets the room to do it.



Thu, 10/27/2011 - 14:39 | 1818136 1835jackson
1835jackson's picture

So now  theEU law enforcement will have a zero tolerence policy against protestors to keep their money masters happy...great.

Thu, 10/27/2011 - 14:42 | 1818152 Cult of Criminality
Cult of Criminality's picture

Two people that make me laugh when down with the flu

 Tyler and Nigel


 I thank them for that

 Cheers guys

Thu, 10/27/2011 - 14:56 | 1818219 gwar5
gwar5's picture

I second that hankie salute. Thanks for the link. Love the Faraginator.

Thu, 10/27/2011 - 14:57 | 1818227 gwar5
gwar5's picture

I second that hankie salute. Thanks for the link. Love the Faraginator.

Thu, 10/27/2011 - 14:43 | 1818159 lolmao500
lolmao500's picture

Good luck with that considering how much US dollars you bought over the years. Not to mention your stake in AIG.

Thu, 10/27/2011 - 14:44 | 1818160 Dave Thomas
Dave Thomas's picture






Thu, 10/27/2011 - 14:53 | 1818202 jowenchrist
jowenchrist's picture

yep - Robo's the man no doubt.

Thu, 10/27/2011 - 15:02 | 1818245 wang (not verified)
wang's picture

I was wondering it it's okay to watch as Robo's detractors line up later today  to kiss his sorry ass

Thu, 10/27/2011 - 14:44 | 1818161 steve from virginia
steve from virginia's picture


China doesn't want any Eurocomplaints against its currency rate: how do ya think China got all that money in the first place? How did Europe become so poor?

China is eager to lend Europe's money back to it. This was the same Europe that once owned China but has been reduced to beggary.

Meanwhile, China wants any EFSF contributions in yuan: to be spent only on poison dog food and children's toys made of lead and plutonium.



Thu, 10/27/2011 - 14:44 | 1818164 broke433
broke433's picture

Short gold at 1900 and silver at 45

Thu, 10/27/2011 - 16:37 | 1818628 Smiddywesson
Smiddywesson's picture

Yes, the $1900 level is going to be on titanic battle.  This is definitely not over yet.

Thu, 10/27/2011 - 14:45 | 1818168 CTG_Sweden
CTG_Sweden's picture


Like I said yesterday:

I could understand if the Norwegians would give up their oil wealth and hand it over to the EU in return for nothing. My impression is that Norwegian politicians in the past have been subject to sexual extortion a very large scale similar to what happened to the top spy Arne Treholt.


But the Chinese? I would expect them to ask for something in return, such as all big media in Italy, control of the Internet infrastructure in Italy and some Italians banks in return for a bailout. If they have no control over the debtor´s politics there is no guarantee at all that they will get their money back.


Thu, 10/27/2011 - 14:45 | 1818169 unionbroker
unionbroker's picture

er why is DB up 20% today don't they have an appointment at the barber shop this afternoon?

Thu, 10/27/2011 - 14:46 | 1818176 carbonmutant
carbonmutant's picture

"LOL! The whole point of EU was said to give Europe the size/gravitas to "stand up to China", not get bought by it!

Thu, 10/27/2011 - 15:15 | 1818180 toady
toady's picture

OK, the can was officially kicked succesfully.

Now the distraction; Hey! Isn't that the 'super committee' over there? Don't they have a deadline coming up? Never mind europe is fucked and we made it worse, lets all focus on kicking the 'super committee' can for a month!


Thu, 10/27/2011 - 15:17 | 1818304 Dave Thomas
Dave Thomas's picture

There is always something bad just round the corner. It's called being mortal. Right now is a GOOD time, a GOOD time to pile into equities.

Quit being so negative.


Thu, 10/27/2011 - 16:39 | 1818635 Smiddywesson
Smiddywesson's picture

OK, the can was officially kicked succesfully.

Now the distraction; Hey! Isn't that the 'super committee' over there? Don't they have a deadline coming up?

Yes, and the rumor mill can be reset.

Thu, 10/27/2011 - 17:13 | 1818729 knukles
knukles's picture

They have a can, too.
Everybody but me's got a fucking can.

Thu, 10/27/2011 - 14:49 | 1818188 wang (not verified)
wang's picture

What is ironic is that when the next European bail out has to happen, and China is indeed seen as an actual source of dumb money

author misses the point, the Chinese view this as the European Spring but instead of squadrons of Mirage jets strafing the landscape this conquest will be orchestrated from the halls of the NPC including dearest uncle Zhaoguo

Thu, 10/27/2011 - 14:52 | 1818196 Vuvuzela
Vuvuzela's picture

You guys think China is real ? you realy think they act independent both economic and financial?

Lets be serious, China is the brainchild of NWO and the controller was/is Kissinger.

China is the New World for those NWO parasites, and after all world will be enslaved to debt china will be the new master

Simple. Stop beeing blind

Thu, 10/27/2011 - 14:57 | 1818220 jowenchrist
jowenchrist's picture

Lay your belongings down and walk towards the rail cars; stay in line and be quiet.


Thu, 10/27/2011 - 15:00 | 1818241 Vuvuzela
Vuvuzela's picture

you dumb or you just pretend ?

Thu, 10/27/2011 - 15:08 | 1818271 jowenchrist
jowenchrist's picture

Learned everything I know from reading your posts, master sensi -

Thu, 10/27/2011 - 15:16 | 1818302 Vuvuzela
Vuvuzela's picture

is that because i included kissinger a king bulan descendent as the handler of china ?

its a fact and if you deny that you dumb

Thu, 10/27/2011 - 17:01 | 1818699 Vuvuzela
Vuvuzela's picture
Mao with Sidney Rittenberg. Wikipedia claims he "observed" the upper levels of Chinese leadership:

Sidney Rittenberg (August 14, 1921; Chinese name: L? D?nbái ???) is an American interpreter and scholar who lived in China from 1944 to 1979. He worked closely with People's Republic of China (PRC) founder Mao Zedong, military leader Zhu De, statesman Zhou Enlai, and other leaders of the Communist party during the war, and was with these central Communist leaders at Yan'an. He witnessed first-hand much of what occurred at upper levels of the CCP and knew many of its leaders personally. He was the first American citizen to join the Chinese Communist Party (CCP).

Sidney Rittenberg WPP group and Martin Sorrell

Rittenberg's connections and experience have enabled him to run a successful consultancy business representing some of the world’s biggest brands, such as Intel, Levi Strauss, Microsoft, Hughes Aircraft and Teledesic.

1. Foreign nationals are not allowed to be naturalized as Chinese citizens. How did these Jews magically do it?

2. Rittenberg's "consultancy business" is in fact one of the largest, or largest, advertising agencies in the world. Was he the actual Chinese minister of propaganda?

A note about Mao: He was picked up to play puppet leader with resourced funneled through Yale University (whose symbol has Hebrew on it), in a Skull and Bones type scheme. The location was Yali Highschool in Changsha, Hunan Province - a branch of Yale. Mao was a disturbed young man - a completely controllable, blackmailable puppet for their purposes.

Thu, 10/27/2011 - 15:23 | 1818334 JR
JR's picture

Whatever the price of the Chinese Revolution, it has obviously succeeded not only in producing more efficient and dedicated administration, but also in fostering high morale and community of purpose. The social experiment in China under Chairman Mao's leadership is one of the most important and successful in human history.– David Rockefeller 

The price? 65 million dead... and counting...

"...conspiring with others around the world to build a more integrated global political and economic structure -- one world, if you will. If that's the charge, I stand guilty, and I am proud of it." -----David Rockefeller

Thu, 10/27/2011 - 14:57 | 1818223 Let them eat iPads
Let them eat iPads's picture

Don't do business with these Chinese pricks, you'll regret it.

Thu, 10/27/2011 - 15:00 | 1818237 wang (not verified)
wang's picture

LOL   unless you typed your comment on an IBM Selectric

Thu, 10/27/2011 - 14:57 | 1818225 paratrooper325
paratrooper325's picture

China knows who brought them into the world trade and allowed them to gain the wealth they have today. China is owned by American and European banks and businesses let alone the consumers from each of these entities. Stop shopping at Wal-Mart and see what happens when people just stop buying trinkets and trash. 


China also knows who feeds them. Let the drought and food shortages in Asia continue and see how their economy and people fare. America has China by the balls, people are just too stupid to realize it and the political spin doesn't fail to demonize everything either. Fuck this farce, the whole scheme and Kabuki show is halarious to watch as it is so fucking predictable. 

Thu, 10/27/2011 - 15:00 | 1818242 LawsofPhysics
LawsofPhysics's picture

Hey, you are not supposed to talk about fight club.

Thu, 10/27/2011 - 17:12 | 1818727 mjk0259
mjk0259's picture

When China got the new food crops from the Americas a couple centuries ago, they deforested the mountaintops and planted them there. The resulting erosion and land depletion (especially from tobacco) resulted in the soil washing into the previously fertile valleys and caused massive flooding which wiped out irrigation systems built up over centuries. In one ten year period, there was a Katrina type flood about 10 times a year in the main agricultural area. Mass starvation. Mass flooding deaths. Nothing happened. No revolution. No change in power. Some edicts to stop the mountaintop farming that were never enforced. More recently, Mao created similar havoc with counterproductive irrigation systems, crop planting schems based on a mad Russian's theories, forced farming of deserts, etc all done by slave labor after taking the peoples houses, property and even kids away. Tens of millions starved to death. Again, nothing happened.

Thu, 10/27/2011 - 15:11 | 1818230 jmac2013
jmac2013's picture

Obviously the big crash is not going to happen.  This ponzi is backed by every central bank in the planet.  Can zerohedge cool the iminient crash rhetoric that is the central theme of every story?  The reality is that government debt will not be written down but inflated away.  All this bailing out will lead to slashing social programs and an excuse to lower people's standard of living.  Cue the story below

Thu, 10/27/2011 - 15:06 | 1818259 Dr. Gonzo
Dr. Gonzo's picture

No Deal Wen Jiabao.  We take your money and make fun of you and not pay you back or deals off. Take it or leave it.

Thu, 10/27/2011 - 15:12 | 1818286 Mr_Wonderful
Mr_Wonderful's picture

A currency whose exchange rate is determined by a central communist party committee is going to bail out the world? Seems very far-fetched.

Thu, 10/27/2011 - 15:21 | 1818328 Banjo
Banjo's picture

Agree compared to our infinitely superior "free market" where we have limited to absoloutely no intervention in Bond, Property and Equity markets.



In my view China is going down the gurgler not due to interventions but 1.3 billion people. Put simply too many *shrug*




Thu, 10/27/2011 - 15:14 | 1818293 bankonzhongguo
bankonzhongguo's picture

Anything less than the physical transfer of sovereign gold stores to Beijing will lead to a complete screw job for China.

Without gold, with this bailout you get a green hat.

The Plan since the 1970's has been to screw China.

Dear Mr. China,

Please have the common sense to not hide behind the crybaby currency excuses.  You have the machines.  You set the price.  The Yuan will never be a reserve currency until it is backed by gold held in your territory. Also, you can probably negotiate for a lot of tall blonds to service your bachelor army - that is how bad the West has it right now.

China is selling dollars for physical.  That must be the deal.  You can take a haircut on bullshit bonds or at least hold physical and ride out the destruction of the USD and EUR for son of XDR. Time to start listening to the young guys with no memory of the cultural revolution.  The Motherland demands it.

Thu, 10/27/2011 - 17:14 | 1818732 mjk0259
mjk0259's picture

Technology is more valuable than gold if you are able to use it effectively. Look at the price of many drugs vs gold.

Thu, 10/27/2011 - 15:20 | 1818318 pauhana
pauhana's picture

"According to the FT: "China is very likely to contribute to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying some key conditions." 

Or they could just buy some CDS as insurance against a potential default.  Right?

Thu, 10/27/2011 - 15:27 | 1818349 Dick Darlington
Dick Darlington's picture

if we see protests and chaos all the time, then China won’t have confidence in Europe’s political ability.”

Seems they have continuous problems themselves with protests...

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