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As China Prepares To Bail Out Europe, Who Is Preparing To Bail Out China?

Tyler Durden's picture




 

In the past week, any and every move higher in the market, which is a direct consequence of the EURUSD seeing an uptick, has been as a consequence of rumor or statement or outright innuendo that China may either buy European bonds or European assets, but generally bail out the now ridiculously insolvent continent (and with Greek 1 Years at 150%, it is pretty clear what will happen). Yet, once again the conventional wisdom leaves much to be desired. Such as the answer to one very simple question: China just may buy up a whole lot of Greek and Italian bonds, and even EFSF issuance, but... who will bailout China. Wait, China is in trouble? Why yes: from Marketwatch: " China’s real-estate market may face an escalating credit crisis, with industry data for August providing clues that big developers are running short of cash, according to Credit Suisse analysts. The unfolding situation heralds a perfect storm for China’s home-building industry, and China’s deteriorating credit backdrop should be viewed by investors with alarm, the Credit Suisse analysts said." That's ok, by the time China is insolvent, Chinese stabilization of Europe will be complete, and Europe can boldly step up and rescue China in turn. And so on... And so on... In the wacky, wonderful, ponzi world of ours.

From MarketWatch:

“I advocate selling all [Chinese] property-developer stocks because a credit crunch is coming,” said Credit Suisse analyst Jinsong Du, speaking with MarketWatch about the research.

 

Du said worries he’s had for a while about the housing market were confirmed by the “big disconnect” in data released by China’s National Bureau of Statistics on Friday.

 

Among figures out late last week, investment in residential projects rose to 432.9 billion yuan ($67.75 billion) in August, up 37% on year, or 4% higher from the prior month.

 

Meanwhile, completed residential projects in August totaled 37,250,000 square meters, a rise of 1% from a year earlier, but down 6% from the prior month.

 

Credit Suisse analysts said the Statistics Bureau’s figures back its earlier research which flagged that China’s real estate developers were beginning to face major headwinds.

 

The report, published in May, forecast that payment disputes between developers and their contracted construction companies would become more widespread, eventually resulting in construction delays and pushed back delivery dates.

 

“It’s finally shown up in the numbers,” said Du.

Somehow Europe which is out of cash is relying on China to fund it. Yet the irony is that the biggest marginal driver of Chinese economic growth is also out of... cash.

In spite of curbing the acquisition of new land and pressing for builders to slow their work, developers appear to have exhausted options to preserve cash, Credit Suisse said in its report dated Sept. 6.

 

Net gearing rose slightly in the first half, even as firms scrambled to improve their balance sheets, with the result “financials [are] much worse than they appear,” said the Credit Suisse analysts.

 

Credit Suisse forecasts property prices will decline in the second half, as sentiment surveys show enthusiasm towards property ownership beginning to wane.

The irony is that with the entire world raging, raging against the dying of the leveraged night, China is doing all it can to sabotage its economy. And sooner or later it will succeed. How long before that terminal event is priced in, and those betting on a Chinese bailout finally start scratching their heads?

 

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Wed, 09/14/2011 - 12:46 | 1669014 Bob Paulson
Bob Paulson's picture

Bankrupting China is part of the plan.

Wed, 09/14/2011 - 13:03 | 1669098 Comay Mierda
Comay Mierda's picture

bankrupting everyone is part of the plan

Wed, 09/14/2011 - 13:24 | 1669240 fonestar
fonestar's picture

Ouroboros is broken.

Wed, 09/14/2011 - 12:47 | 1669019 game theory
game theory's picture

Krugman's aliens will rescue China. After that, it's turtles all the way down.

Wed, 09/14/2011 - 12:50 | 1669027 SeverinSlade
SeverinSlade's picture

TEENAGE MUTANT NINJA TURTLES!

Wed, 09/14/2011 - 12:51 | 1669036 TheLooza
TheLooza's picture

Ironic, because I like turtles.

 

 

Wed, 09/14/2011 - 12:59 | 1669069 TruthInSunshine
TruthInSunshine's picture

 

 

 

Myanmar (formerly known as Burma), Ethiopia, Haiti & North Korea are pooling funds to bail out China, according to reports just released by:

  • Reuters
  • Associated Press
  • CNBC
  • Bloomberg
  • MSNBC
  • The Economist
  • The Guardian
  • BBC
  • CNN
  • The Financial Times
  • Wall Street Journal
  • New York Times
  • Jib-Jab
Wed, 09/14/2011 - 14:51 | 1669711 11b40
11b40's picture

You left off THE ONION.

Wed, 09/14/2011 - 15:27 | 1669905 Milestones
Milestones's picture

Good line!!!    Loved it.     Milestones

Wed, 09/14/2011 - 17:24 | 1670389 arkel
arkel's picture

Ethiopia has come out and said reports are unfounded.

Wed, 09/14/2011 - 12:58 | 1669073 malikai
malikai's picture

You were waiting for this forever weren't you?

Wed, 09/14/2011 - 12:59 | 1669076 TheLooza
TheLooza's picture

I assume you are talking to me.  And yes.

Wed, 09/14/2011 - 12:49 | 1669026 SeverinSlade
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"That's ok, by the time China is insolvent, Chinese stabilization of Europe will be complete, and Europe can boldly step up and rescue China in turn. And so on... And so on... In the wacky, wonderful, ponzi world of ours."

That says it all.

Wed, 09/14/2011 - 14:01 | 1669445 LawsofPhysics
LawsofPhysics's picture

Wait, how does the good ole U.S.A. fit into all this?  Who is bailing us out?  We will need to be bailed out before China, or does China become the world's reserve currency holder?  I am confused.

Wed, 09/14/2011 - 12:50 | 1669029 TheLooza
TheLooza's picture

bankrupting china might just make it all worth it.

 

 

Wed, 09/14/2011 - 14:03 | 1669455 Mountainview
Mountainview's picture

Fortunately we have the US. of A. to print Dollars for all.

Wed, 09/14/2011 - 12:50 | 1669030 Cassandra Syndrome
Cassandra Syndrome's picture

I reckon Genghis Can.....

Wed, 09/14/2011 - 12:55 | 1669032 GeneMarchbanks
GeneMarchbanks's picture

China operates in complete darkness. These bailouts of Italy etc are in fact rumors and only rumors. What China is up to nobody can claim to know because it goes beyond the scope of finance and into geo-politics.

I'd speculate to say they are probably on the sidelines watching the West eat itself alive while remaining focused on domestic issues.

Wed, 09/14/2011 - 13:04 | 1669103 11b40
11b40's picture

Well, they do need to focus on domestic issues.

Talk about a collapsing real estate market:

http://www.pics-site.com/2010/05/21/a-13-story-building-lying-on-the-ground/

Anyone who bought an apartment here sure has a problem.
Talk about a collapsed market!

YES, IT'S An ENTIRE 13-STORY BUILDING IN CHINA LYING ON THE GROUND

Notice that there's NO rebar in the pilings!
Just some wire mesh.


They built 13 stories on grade, with no basement,
and tied it all down to
hollow pilings with no rebar.

Don't you feel better now that these are the folks that
manufacture nearly EVERYTHING we buy and use today?


Wed, 09/14/2011 - 13:52 | 1669394 Cleg1
Cleg1's picture

I won't buy Chinese - unless its stired fired in front of me.

Wed, 09/14/2011 - 12:51 | 1669035 TradingJoe
TradingJoe's picture

Just got me a new Glock, now that's shiny :))!

Wed, 09/14/2011 - 13:05 | 1669111 Comay Mierda
Comay Mierda's picture

time to get some high capacity mags and stock up on rounds too. all hell is gonna break loose when the welfare hordes cant afford hyperinflated food prices anymore.

Wed, 09/14/2011 - 12:51 | 1669037 scrappykoala
scrappykoala's picture

Poland. Nobody ever talks about Poland .... its the elephant in the room.

Poland can bail out China and keep this thing going.

Wed, 09/14/2011 - 12:52 | 1669040 tmosley
tmosley's picture

Russia will rescue China, duh.  Then Brazil will rescue Russia, then Europe will rescue Brazil, and the cycle of Ponzi will start all over again.  Unless it can't.  Don't think too hard about that, though.

Wed, 09/14/2011 - 12:52 | 1669041 Cdad
Cdad's picture

How long before that terminal event is priced in, and those betting on a Chinese bailout finally start scratching their heads?

I'll take a shot...head scratching to begin somewhere between 12 minutes and 48 hours from right now.

Wed, 09/14/2011 - 12:52 | 1669043 luciusfargo
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I've always maintained that ZH can never have too many allusions to Welsh poets.

Wed, 09/14/2011 - 12:53 | 1669049 oogs66
oogs66's picture

don't you see, germany can then bail out china, that is how a ponzi scheme works

Wed, 09/14/2011 - 12:54 | 1669055 ian807
ian807's picture

They'll each bail out each other on alternate weeks. Remember, check kiting isn't illegal when central bankers do it.

Wed, 09/14/2011 - 12:56 | 1669061 vast-dom
vast-dom's picture

SINKHOLE!

Wed, 09/14/2011 - 12:56 | 1669064 Arkaenun
Arkaenun's picture

I just want to assure everyone that I will buy Chinese bonds when the time comes. No, really, I will. Can I go ahead and get a rally on my comment now?

Wed, 09/14/2011 - 12:57 | 1669067 espirit
espirit's picture

Junk for junk for junk. Isn't that how the ponzi works?

Uh, pass that hot potato - will ya?

Wed, 09/14/2011 - 13:00 | 1669083 LeBalance
LeBalance's picture

Imagine there's no countries,

Only the B....I....S.....,

No China to be the white knight,

Just the man behind the curtain.

 

There is no spoon.

Wed, 09/14/2011 - 13:02 | 1669093 vast-dom
vast-dom's picture

PS the markets since DOW rebounded from 10,800 have been beyond schizophrenic and hoped up on hopium like never before. If global bailouts imply total market perversion, then anything is truly possible and hence clearly permissible.

 

China is a true transhuman fuckhole and subhuman sinkhole at same time. Schrödinger's cat ain't got nothing on 'em.  

Wed, 09/14/2011 - 13:06 | 1669117 docj
docj's picture

Who cares - today's hopium dose is enough to levitate Fraud Street for another day. Rally on, sheeple.

Wed, 09/14/2011 - 13:08 | 1669125 americanspirit
americanspirit's picture

See, the trick is that China is going to get a HUGE IMF loan which it will use to buy Eurobonds, and that loan will be collateralized by approximately 38 brand new Chinese cities. Problem solved.

Wed, 09/14/2011 - 13:11 | 1669151 Sambo
Sambo's picture

Mutually beneficial position...69.

Wed, 09/14/2011 - 13:11 | 1669161 milanitaly
milanitaly's picture

I have already seen this. In Greece!

http://videochat.corriere.it/index_H2401.shtml

 

Wed, 09/14/2011 - 13:35 | 1669275 slewie the pi-rat
slewie the pi-rat's picture

china is rilly postmodern cool...

...where else but in a planned econom, with power in WMDs, would the State ins-s-s-sissssst on 1 child per family, get female children killed or sold and entire vast "cities" built to house the dead and unallowed children?

huh? 

slewie calls this the malthusian maginot line, aka, the Great Wall of Imaginary Families...pretty "weird" correlation, eh?...

...comrade BiCheZ?

Wed, 09/14/2011 - 13:31 | 1669281 slewie the pi-rat
slewie the pi-rat's picture

FREE TIBET!!!

Wed, 09/14/2011 - 13:37 | 1669308 reader2010
reader2010's picture

Free Chinese crap with Free Chinese pussy for everyone.

Wed, 09/14/2011 - 13:38 | 1669317 slewie the pi-rat
slewie the pi-rat's picture

who will "bail out" [re-finance] china?

how about bob_diabolina?

Wed, 09/14/2011 - 13:48 | 1669373 LongSoupLine
LongSoupLine's picture

The skit "Who's on First" has been adopted (and twisted into a full retard version) by the powers of the world.

Wed, 09/14/2011 - 13:52 | 1669396 PulauHantu29
PulauHantu29's picture
China Must Avoid Lending to ‘Troubled’ Euro-Area Nations, Yu Yongding Says

 

http://www.bloomberg.com/news/2011-09-14/china-must-avoid-loans-to-troub...

Wed, 09/14/2011 - 14:07 | 1669477 Ramboy
Ramboy's picture

My guess is China will bail on any purchase last minute and let the West rot as the West did to them in the depression.  

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