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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Bob Paulson's picture

Bankrupting China is part of the plan.

Comay Mierda's picture

bankrupting everyone is part of the plan

game theory's picture

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

SeverinSlade's picture


TheLooza's picture

Ironic, because I like turtles.



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
  • The Economist
  • The Guardian
  • BBC
  • CNN
  • The Financial Times
  • Wall Street Journal
  • New York Times
  • Jib-Jab
Milestones's picture

Good line!!!    Loved it.     Milestones

arkel's picture

Ethiopia has come out and said reports are unfounded.

malikai's picture

You were waiting for this forever weren't you?

TheLooza's picture

I assume you are talking to me.  And yes.

SeverinSlade's picture

"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.

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.

TheLooza's picture

bankrupting china might just make it all worth it.



Mountainview's picture

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

Cassandra Syndrome's picture

I reckon Genghis Can.....

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.

11b40's picture

Well, they do need to focus on domestic issues.

Talk about a collapsing real estate market:

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


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?

Cleg1's picture

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

TradingJoe's picture

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

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.

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.

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.

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.

luciusfargo's picture

I've always maintained that ZH can never have too many allusions to Welsh poets.

oogs66's picture

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

ian807's picture

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

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?

espirit's picture

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

Uh, pass that hot potato - will ya?

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.

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.  

docj's picture

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

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.

Sambo's picture

Mutually beneficial position...69.

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?


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

...comrade BiCheZ?

reader2010's picture

Free Chinese crap with Free Chinese pussy for everyone.

slewie the pi-rat's picture

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

how about bob_diabolina?

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.

PulauHantu29's picture
China Must Avoid Lending to ‘Troubled’ Euro-Area Nations, Yu Yongding Says

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.