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Clutching At Desperation Straws - China To Bail Out Europe... Again
Hours after the details of the Euro Summit were released when it became clear it will be yet another failure, following a drop in the Euro Basis Swap by 10 bps to 127 bps, to week earlier levels, and not following a rise in the all important EURUSD, it was time to recycle old rumors all over again, knowing full well some positive market reaction had to be engendered or else the entire rally of the past two weeks would be undone, here comes the latest regurgitation of the tried and (very much un)true "China to Rescue the World"TM rumor, this time from Reuters. The media company which has become the latest conduit of favorable market rumors says that "China's central bank plans to create a new vehicle to manage investment funds worth a total of $300 billion to improve returns on the world's largest stockpile of foreign exchange reserves, a source with knowledge of the matter told Reuters. The vehicle would operate two funds, one targeting investments in the United States and the other focused on Europe, said the source, who asked not to be named because of the sensitivity of the matter. The vehicle's goal is to make more aggressive overseas investments for higher returns, said the source along with a second, independent source, who also declined to be named." So far so good. And the bad news: "Details of the venture are still under discussion but key personnel for managing the venture have been agreed upon, the sources said." Oh, and the funds have names, but that's all. So to summarize: details are unknown, China growth is collapsing, home prices and inflation are supposedly plunging, and it is now conventional wisdom that the PBoC will have to bail out China all over again from a hard landing, but... the key personnel for a fund that may or may not exist and which will have no impact whatsoever on the $2 trillion in rolling European debt over the next two years, have been selected? And futures are up on this?
More on this latest farce:
The investment vehicle would be affiliated with China's State Administration of Foreign Exchange (SAFE), the part of the central bank in charge of the daily management of China's $3.2 trillion in foreign exchange reserves.
One of the funds would be named Hua Mei, or China-US, for investments in the United States, and the other is named Hua Ou, or China-Europe, for investments in European markets.
The style of the funds will be similar to the low-key Hong Kong-based Hua An, also known in English as SAFE Investment Company Ltd, said the source, through which SAFE has purchased stocks in dozens of overseas listed companies.
The People's Bank of China, the central bank, was not immediately available for comment.
That's probably not surprising.
As for the natural next question where funding will come from, apparently China will now fund investment into Europe, by selling bonds into the domestic market!
The second source said the new venture would likely be based in Shanghai and may also sell yuan bonds in the domestic market.
"The company will issue yuan bonds," the source said. "Then it can use the yuan to buy foreign currency from the central bank or even commercial banks for overseas investment."
So the fate of Europe rests in the bond buying appetites of "one billion red Chinese"?
Check please.
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That fund will end up buying Chinese provincial debt.
This is the time for Pres. Van Rompuy to shine. Van Rompuy needs to seize this moment and push for new economic reforms to strengthen the union and bolster confidence in the European banking system. This is the beginning of the Rompuy rEvolution: Moving the world forward, one step at a time.
I would be more confident if he composed a haiku about his great intentions first.
Pres. Van Rompuy's choice of the Haiku is symbolic of his quiet integrity. A man of few words, but none the less a pioneer with great ambitions and temerity of spirit.
You are a nut. WOOO YAY BANKERS WIN!!!
I believe it is called Rompeyism
Mwhahaha..............Ha please MDB, cut the crap.
Now THAT would be a circle-jerk personified. And very likely and more so very likely already happening.
Imagine, all those years ago, some triad members and white guys sat around a table and said...
Lookee here Chinaman...we will make you very rich. And build up your factories to better enslave your people. You will have about 15 years of gross exploitation and we will buy all your toxic crap.
In exchange you must buy our toxic crap. We will also "leak" sensitive 'secrets" to you.
In exchange, when we are busy blowng up the Euro, you must keep putting our crap back in the mix, so it burns and burns well.
Then, when your people riot, we'll share microwave trucks and ultrasonic mad-makers with you.
Easy.
This was perhaps in the late 70's.
ORI
/the-plan/
still waiting to see what happens when the sterilization limit is breached. I assume that's when shit gets real.
Do as the Yanks do, lift the limit.
Current rumor half life: 4 hours.
how long will it take for the chinese workers to figure out that eu workers have a better lifestyle and they are funding it with their slave wages?
Great everything is fine in China, they can help Europe now !
All this talk of a Euro bazooka...
The only leader with a bazooka is David Cameron.
KA-POW, BITCHEZ
http://azizonomics.com/2011/12/09/did-cameron-just-kill-the-euro/
Cameron has not killer the Euro, but he has given the Euro commies a major headache.
If all 27 do not sign up to fiscal union there can be no EU treaty changes.
Therefore if 17 or whatever countries DO sign up, they may not use the current Euro institutions to administer their new common abandonment of sovereignty. The Euro parliament, Commision and all their attendant aparatus belong to and are financed by the 27.
As I understand it the British position is hardening.
I do not see the UK lettinig an inner circle of Euro countries use the current institutions for their own agenda. Uk foreign secretarY William Haig said so thismorning on the BBC.
He was VERY CLEAR the fiscal union plan is entirely outside of the current EU treaties. There have not been any treaty ammendments. Current treaties do not give the EU institutions a mandate or a mechanism for managing fiscal union.
Seems Cameron did not have such a weak hand as everybody said.
None the less, the UK media is screaming that we will be `left out` as if that were some sort of disadvantage. The people of the UK only ever voted for a common market, nothing more. No political or fiscal union was ever openly proposed and if we had a referendum on that it would be DOA.
Being "left out" sounds bad, until you look at what being allowed in is leading to..
* Loss of democracy
* Austerity lead depression / low or no growth
* No solution to EU Bond / Debt crisis
* Huge tax bills to fund French / German covert banking bailouts
The EU has long been a French construction to "capture" Germany (who want export markets) and use the political union to bully all the other small EU contries.
The UK being out of these discussions is what the French diplomats wanted. They wanted a treaty of the 17, not 27 that Germany wanted (fearful about being out voted by latin countries on tax expensive bailouts). The easiest way was to split the UK away from the pack by challenging the City. Barnier is a French appointment - he is the guy who is pushing these regs. So the French have "won". However this will not end well the EURO will continue to destroy the European economy by dragging it in to deflation. Enforcing the treaty will be a night mare - how long before the Greeks, then others say no.
No prizes to win in this negotiation
Everyone knows this is BS, but S&P will probably not go through with the threats of the downgrades.
but they downgraded USA.
Do any of these news agencies have any journalistic standards or integrity? Can anyone phone in a rumor? You would think that with almost daily rumors being discredited that someone might engage a little more DD before reporting nonsense.
Of course, when CNBC replaces a Mark Haines with a Jim Cramer I guess I already know where the journalistic standards of financial news resides...
"Sweet free money from those suckers"
-Europe
China has a great track record at maintining the value of their investments, though they are still beat out by the Saudis.
China! ... FUCK YEAH!
dirka dirka ... ... this CAN get sillier... ... give it a minute ...
Of course the S&P is up- after China prints enough funny money to capitalize this deal, the US will print Dollars to cover THAT mess-
It's a second-derivative fuck up play......
There is only one solution no matter how much jawboning and haggling they do: Print! The banksters need to be made whole on their derivatives and fractional reserve hubris. The result? Hyper inflation and then meltdown of the financial world.
Jim Chanos founder of Kynikos Associates is on CNBC saying China's fund's are already papered over, saying there asset fund's are already insolvent. Saying there is no way for China to take on more bad debt out of Europe.
CNBC is even saying that this is not going to happen, lol.
Awe but the rainbow bright hopium allows for more to get their fiscal houses in order. The electronic financial curtain may fall in Celente's predicted 1st quarter of 2012. May all be prepared on ZH
Here's a clue. If/when a REAL workable long term solution is reached, the futures will be limit down. Because that would finally mean an end to fiat and excess "liquidity", and an all out liquidation of debt.
Why do they need three funds ? One designated bagholder or two ?
Hahahahahaa, poor equity people... (Yes Ben, that includes you)
This zEuro-farce truly and deeply deserves the miserable end it is so desperately trying to avoid. You just can't fight insolvency and failed political experiment with rumors and more debt.
What defines success and FAILURE? If the Euro is doomed by the math; if no growth and too much debt will kill it, then why fight the tsunami coming from other shores? Merkel is right, sooner better than later, if the GS cabal has the balls to pull the plug via market speculation on the Euro construct and spread contagion to homeland. The world is in a sea of fiat debt. So why rave and rant on Euro impotence, its in the image of World impotence; facing financial melt down, ecologial breakdown and energy strangulation. Good luck the 7 billion!
checking with local community colleges to see if Chinese language classes are available.
No need - the chinese know english.
maybe they are doing all this to hide the fact that they are. An Italian friend told me that a lot of assets are being sold to the Chinese there. Selling assets is the only way if you are not generating enough income.
Because of reckless spending and debt, for the USA it's Here Today, Yuan Tomorrow!
Oh, the Chinese will "save" europe alright.....once they go to the gold standard.
Dear Market, Regarding the Chinese saving the Europe banks rumors. When I, Wen Jiabao , read a statement while Angela is blowing me and Nico is boning her up the ass, then and only then can you can assume the rumor is true. Wen
There was a movie "Desperately Seeking Susan" .. everyone (including the mob) wants Susan (a suburban housewife with amnesia) or her jacket. Scale it up to europe and "desperately seeking money". Politicians (world leaders/scumbags) go hat in hand to any country that appears to have a positive cash flow. But all the candidate savior countries have amnesia like "Money? I have money? But I'm looking for more investors too!"
I can believe Merkel is blowing Wen but I don't think Sarko has a big enough penis to get up that ample ass
Inflation here has definitely slown down and food prices are coming back to normal. Beef is back to 18 RMB at the market, instead of the insane 23 it was for a while. Housing prices also down and they continue to fall with government pressure forcing the issue. Large houses have been banned on new land acquisitions until further notice with a very high emphasis being placed on affordable housing. Wages continue to rise and unemployment is stupidly low... hell, I have clients who I have never heard of calling me up and wanting to do business... Packed away a solid 100k this year and with this new business I'm looking at 250kish next year. My monthly "middle class" expenses to live here comfortably with my wife? Like $300 a month. And the biggest perk of all, of course, is that this is from international clients and thus exempt from taxes here. As for the US? Wife is a non-US person and there is no reporting required as long as it's her name on the account. Fairly sweet deal eh?