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As Draghi Fiddles And Madrid Burns, China Buys
At this point it is no longer interesting to recap the ever-growing list of problems facing Spain - we all know the country needs billions and billions in aid to merely contain its implosion, let alone grow. And while as of as of minutes ago we just got another rumor of "Accelerated Kinetic Action In Close Proximity To Cash Dispensing Machines" which is the proper nomenclature, as the B-R word is not in good form these days it appears, the real news is that as the ECB fiddles, and Madrid burns guess who is buying? Why China of course.
From the WSJ:
A debt-laden Spanish construction firm became the latest European company to unload assets onto eager Chinese buyers, as Europe's debt woes force firms to look to China for cash.
State Grid Corp., China's government controlled power-grid operator, said Tuesday it would buy high-voltage electricity transmission assets in Brazil from Spain's Actividades de Construccion y Servicios SA ACS.MC -0.55% for 1.86 billion reais ($938.2 million), including debt. The deal is State Grid's second investment in Brazil and its fourth major investment overseas, and is the most recent in a string of deals in which a European company has looked to exit an investment amid financial troubles facing the region.
The story is a well-known one: boom years leading to exorbitant growth, following by a liquidity crunch as the easy money punch bowl is pulled away.
ACS's standing has weaken because of its debts and the falling value of investments made during Spain's boom years. Chairman Florentino Pérez, who is also the president of Spain's soccer club Real Madrid CF, led ACS's expansion when liquidity was abundant and Spain's economy was booming on the back of a real-estate bubble that imploded about five years ago.
As credit dried up, ACS began to cut down on debt by shedding assets. ACS currently has more than €9.33 billion ($11.70 billion) in debt, about a half of what it had a few years ago.
Enter the white knight:
The move marks State Grid's latest effort to expand into more lucrative areas than its tightly- regulated home market. State Grid oversees China's power network over all but some southern portions of the country, giving it nearly nine tenths of the country.
Beijing also tightly controls the power market, limiting State Grid's ability to seek terms from power suppliers or pass on costs to customers.
Beijing's leaders over the past few years have pushed State Grid as well as other state-run behemoths to invest overseas as part of a broader effort to use China's financial firepower to strike deals.
The pressure has been especially strong on China's energy companies, which are seen as potential national champions in an increasingly competitive global market.
Perhaps this is why Greece is failing? Because China has realized it could buy Spain (and soon Portugal and Italy) for the same price, or even cheaper: remember - these are asset, not stock, purchases: one assumes liabilities as well. So $1 of equity value should be sufficient. And once China is done with the PIIGS, it can proceed to control the rest of the Europe... Which incidentally will still have to rely on Russia for its energy.
Is the New New World Order finally cristallizing to all?
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Yup China's in there buying REAL assets right in plain sight. Better brush up on your mandarin.
Learn to say this real quick and soon.
yaobuyao jia shutiao?
Anyone else get that feeling that the powers that be are wanting this to deflate, and deflate FAST........
like i said yesterday. China will not CNTRL+P or provide any other stimulus to save the world, because as the world crashes and burns it is precisely China that will, relatively speaking, benefit. This is one of many case in points.
Plus it gives china the chance to get out of dollars/treasuries in a rally and into hard assets as the price declines.
yes, which, at a later time China will repurchase at great discount all while bypassing primary dealers since essentially China is the new de facto primary dealer. fun times.
+ 1 Raynja and vast-dom for good observations re China deploying its cash $. If I were China, I would be buying real assets like gold and companies in Brazil and Australia. Oh wait! They already are!
Raynja spot on. China does not have to print they just spend those Greenbacks they have from our trade deficit on physical assets. I am sure China is laughing while we the USA taxpayers buy their assets for them.
And Spain beyond its current mess will end up with the unwanted US Dollars...bad luck..
How will China benefit exactly? They can buy some really nice vacation homes, but that's irrelevant in the big picture. They can buy natural resource rights and productive assets in the world, but assets outside of your own borders are ephemeral ... outright nationalization or simply making the investment worthless to foreigners through through tax, trade or capital controls are highly realistic if China ever tries reversing the trade balance in their favour through foreign holdings.
Also if the consumers of last resort collapse the billionaires in China's parliament will have to embrace Ford-like wage inflation and redistributive taxation ... and that shit doesn't come easy to billionaires. If they don't do that the productive part of their economy will collapse due to lack of demand ...
Ultimately the only thing they can buy which is not prone to confiscation is gold ... but that's only a delaying tactic, at some point they will need internal consumption to replace the US and the EU or they will be as fucked as the rest of us.
That really will be the interesting question. Aside from the Mongels, no history of China being imperialistic and venturing militarily outside their borders. But have the world's largest standing army, and plenty willing to spend human capital when they want to. Can't see China sending gunboats to Brazil and around the world like the Brits used to do last century. But maybe they don't have to - invest in the ruling class as their proxies to keep their assets? A new chapter of the Great Game ....
The Chinese are investing in assets / doing debt transactions in lots of places. Ecuador is one - Chinese are building hydro dams, roads, and now maybe an oil refinery in return for preferential access to resources. Pretty smart way to trade paper reserves for real assets. And the US military is the only force capable of stopping the Chinese military. Would the US really go to war over power lines or other assets in South America or Africa? Would the US go to war against China to protect a country like Argentina from seizing foreign-owned assets? Knowing that plus or minus a million rural farmers in the Chinese Army are considered quite expendable?
25M+ single Chinese males with no marriage prospects because of one child rules and selective abortions of female babies over the past 30 years.... Maybe the US would not want to get into a hot war with China to bail out a government like Argentina seizing both US and Chinese-owned assets. The US might be right along side the Chinese...
Why should I trust a con-man?
What if : yaobuyao jia shutiao
means Waiyousodum?
I'll stick with Knee How for now! ;-)
ori
How does India's mercantilist expansion in Greece fare, oh regional Indian ?
obviously china won't ctrl-p... this is about china turning paper into tangibles..
eur, usa, etc...
all your property ( land, homes, companies.. not toilet paper fiat ) ARE belong to us...
but who is moving to control china...
+ 1
On the other hand, the US$ is not doing badly at all. For now. Holding real assets (especially gold) AND cash $ is just smart diversification after all.
Yep. Will get interesting when it is time to take delivery. LMFAO!
Good, now ... about those property taxes, we were thinking about raising them.
Not with out a hanbaobao, ni xiang?
nega bu hao
China knows that it has to get rid of all of its USA t-bills before the last inning.
Its great to have money that others want. You can trade for valuable assets that have cash flow for pennies.
China is gonna be saying this for a long time ---
FukushimaAs in, " Sure glad the prevailing wind and ocean currents are taking all that Fukushima radioactivity towards the US West Coast, and not towards us! "
"yaobuyao jia shutiao?"- More potatoe fries?
What's the meaning of asking that question?
A country in the outmost Southeastern part of the EU has grasped the headlines for quite some time. With only 2% of the EU's economy and just 2.5% of its debt it became the "Witch" that is haunted by puritan Northern Europeans. It is claimed as the epicenter of laziness, lust and unproductively for the whole of the Continent, a bad example that pious Northerns should be feared and loath at the same time.
This country is Greece and it must be punished! But is it really the witch hunt that has started in 2009 the most stupid move ever made in the entire European history? Is it worth to blame Greeks for the lonely dark winters up in the North and for the depression syndrome that cripples the lives of dozens of millions northern Europeans, as if Greece makes the weather?
In reality the Northern Europeans risk of pushing Greece into the broader global community where it is going to be free from investing heavily in its defense of the Eastern gates of Europe and it will bring about the greatest change in the balance of powers that Europe has felt since the collapse of the Berlin war. This time Germany will not be re-united, rather it will has to pay a dear price for its energy security. Netherlands will not become richer; rather it will have to pay from its own pocket in order to save itself from the flood of narcotics and Asian immigrants.
Austria will not be greater, rather it will have to deal with powder-keg named "Balkans" that has markets Vienna's history.
How Northern Europe shoot its leg, in order to satisfy the populist sentiments of an electorate being used to the fairy tales of "bad witches and pious farmers".
Panagiotis Traianou answers to many of the aforementioned questions and gives a proper solution on his article entitled “GREECE RANKS AMONG THE WITCHES OF SALEM”
http://eamb-ydrohoos.blogspot.com/2012/05/greece-among-salem-witches.html
Greece was forced from the so-called Troika (EU-ECB-IMF) to get loans from them and only from them, while prohibiting them to get any external bi-lateral agreement with countries such as Russia or China.
" the most stupid move ever made in the entire European history"
If you mean by giving Greece unfettered access to the rest of Europe's wallet- the Euro, then you have my agreement.
Now we have a clusterfuck, and someone is always dropping the soap.
FWIW I'd really like to swap the whining selfcongratulatory Greeks for the hardworking prosperous Turks who have been blocked from joining the EU for decades.
Trouble is -- the Turks are too smart to want to join nowadays.
"Netherlands will not become richer; rather it will have to pay from its own pocket in order to save itself from the flood of narcotics and Asian immigrants." Sorry, the Dutch people are waking up to that now and every anti-western ideology (I can play that PC game too) "Asian" that enters strengthens Geert Wilders and his party.
Olympic friend, I'm with you on the witch hunt part, and feel sorry about it.
This, however, is understandable. The Northern politicians just can't be expected to stand up and tell truly to their peoples: "All this money is for our banking giants -- again."
Default is the only remaining option, and it will come in one way or another.
I can only agree with your point.
FIRE SALE!!!
EVERYTHING MUST GO!
ALL REASONABLE OFFERS CONSIDERED
You give me all of your assets and in exchange I take all of your gold.
Sounds perfectly fair to me.
all Leasonable offels consideled
And then they announce the new world currency..........that is coming too...
Yes, China is buying an asset - 10000 miles from China in a country full of unrest that it doesn't control politically or militarily. Anyone else see the risk there? How long until the Spanish unemployed masses start to resent the foreigners who control their power grid and keep jacking up their utility bills? How long after that until some enterprising Spanish politician suggests nationalization of all foreign-owned assets inside Spain. What is China going to do then? March the Red Army 10000 miles across Asia and Europe to reclaim them?
Muscle?
Thats what the US and UK is for.
Unrest?
With a 50% unemployment rate, the kids will be happy that they have a job, that earns some pieces of paper that can be exchanged for worthless crap that makes them temporarily feel better about themselves.
You're forgetting that nationalism is a very potent political force, and Europe has a long history of exploiting nationalism for political purposes. Add in a little xenophobia because the Chinese look and talk different than the Spanish, and voila.
if any unemployed masses start to resent the foreigners, it will be Brazilian rather than Spanish masses ... as I read it, the assets purchased seem to be in Brazil.
I was actually responding to the comment at the bottom of the article which referred to China buying Spain. Venezuela is a good recent example of what can happen to foreign-owned assets.
Ripping off the Spanish is one thing. Doing it to the Chinese is another.
China is buying "high-voltage electricity transmission assets in Brazil from Spain's Actividades de Construccion y Servicios SA ACS.MC". So buying assets in Braxil from a company in Spain.
They buy where the commodities are...Brazil has them...Spain not so much...
China will have to cozy up to the Mongels, the tribe that already vacationed in Europe.
Do the Huns sound familiar? They made the Roman empire pay a hefty price 1600 years ago.
The assets are in Brazil, not the EU. RTFA
draghi fiddles, bernanke diddles, but the unicorn WILL shit the skittles
If anyone has a beatnik poet routine, you might want to work this one in.
wasnt japan going to take over the wrold finacialy in teh 1980's..how did that work out??..you cant trust the numbers from a communist country..wasnt the good old ussr growing at 5% before it imploded in 1990??
No one thinks back that far, just run around screaming that China is going to take over the world by buying up assets that could later just be nationalized anyway...
On history, wasn't churchill playing nice with hitler after the nazis had walked into poland?
On nationalization, power lines are hard to defend, easy to sabotage, and essential to a happy populace.
On history, wasn't churchill playing nice with hitler after the nazis had walked into poland?
No.
Indeed: http://www.blogs.reuters.com/gregg-easterbrook/2010/08/18/china-as number-one-remember-japan-in-the-80s/ Oops: Google Search/ Scroll down #4
:(
Agree with China. Europe is a buy.
They notoriously top-tick... The more assets China keeps buying up, the more time bureaucrats will fiddle and let asset prices drop. Hell, we did it here in the U.S. with the SWF's leading up to the crash. (But those were stock and preferred buys, not direct asset purchases.)
The assets are in Brazil, not the EU. RTFA
Let the motherfarker burn!
Yep, China is buying whatever hard asset they can get their hands on to. Meanwhile, the geniuses over at the LBMA and the COMEX are doing their best to smash PMs through the floor with their paper game, so the Chinese can empty the vaults from the real stuff on the cheap, and render the exchanges worthless. Great.
"Accelerated Kinetic Action In Close Proximity To Cash Dispensing Machines"
I am going to be reusing this quote.
Classic Tyler..
Sorry duplicated post
FT Alphaville: China on the eurozone crisis, and vice versa (summarised succinctly)
lol, China doesn't realize that they are just doing the dirty work. Once they are done bailing out Europe on their dreams of European domination, the real ruler Germany will come through slap China in the face and take their shit like Deebo...
"You got knocked the fuck out!"
HAHA Deebo. Jaws music playing in the background and 'urrybody hiding they gold.
Who the hell owns Econoday and why is every crappy economic report that they put out have a positive spin on it? Are they affiliated with a political party in some way?
I said a couple of weeks ago that China was tired of picking up pennies bla bla bla. At this point the only money to be made is by buying good quality assets from foolish people who have become desperate.
Is it just me or does anyone else also get the feeling that while the world is about to explode, nations and bankers are still jockeying for position on the Titanic.
They are now throwing the women and children out of the lifeboat.
The more intrepid passengers are still selling life insurance policies to others on board.
Time to turn Southie Zoorope into the world's biggest pawn shop.
"What'll ya gimme fer it?"
would the latest "rumour" be from Rothchilds carrier pigeon, Reuters?
We're trying to convert it to picture books for your lot, but it takes time to render all the frames.
Patience, precious.
I enjoyed their artistic depiction in the 1940 UFA screenplay...
This article is pure bullshit. Chinese are wasting savings in these European things. If China wanted to get stronger and rule the world, all they have to do is to increasingly back their currency with gold. A strong Yuan will do wonders for them. But this Euro shopping adventure is simply one more demonstration of their corrupt leadership, burning reserves.
I think they are dumping US dollars for anything more tangibe which also gives them a presence in foreign ountries.
Huh? Why wouldn't you swap confetti for tangible assets? Especially power companies..it just doesn't get any better than that! Unless they get nationalized by some whack-o dictator of course.
Of course swapping for gold would be plan A. But there is only so much of that to go around.
The assets are in Brazil, not the EU. RTFA
FB is now a risk-off trade.
I find it incredible that these people will sell their souls and their country instead of doing the right thing. I find it even more incredulous that the sheeple still let them get away with it. How pathetic we have become. Before Rome fell the sheeple would pay any price for "secuity". They even paid off their invaders. I can't believe I'm watching history repeat itself.
Roman citizens grew fat and lazy requiring the treasury to pay for endless entertainment. The Eastern Empire excepted, for a few generations, Roman leadership generally was out of touch with what was happening around them.
Hell, I don't see any parallels here....
You can only buy what you can hold. GL with the Chinese coming in and taking their so called 'assets' when these countries go up in flames from social unrest. Once the dust settles then the Chinese 'assets' will be appropriated back to their countries of origin and the only way the Chinese will get them is to send in troops to take them. GL with that.
Actually Brazil is doing quite well lately. And it has become one of China's largest trading partners, so investing there makes sense for both parties.
I guess we all just need to have a DNA check to see if we have some Rothschild blood to spare us from the NWO death camps.
I have French Huguenot ancestors from both sides and my family tree links directly to Bohun line from Charlemagne and the DuBois family. Maybe one of them hooked up with a Rothschild or two.
We're still trying to figure out if we have some long lost fortunes in New Rochelle, NY real estate.
It's 10:30 on Wednesday. Do you know where Jon Corzine is?
Don't know probably stil lin Montauk or the Hamptons. I do know PPT should make an apperance VERY soon.
I, for one, do not look forward to my future job slinging human excrement fertilizer on the chinese state-owned rice paddy that used to be my local mall parking lot in Tennessee. Don't know about the rest of you people.
"Whoever owns your debt controls you."
Frankly, it scares me shitless watching them buying all these assets on a global scale. Unfortunately Western governments are powerless to stop the red tsunami.
20 years ago it was Japan buying up US assets.... Difference here is China can sustain and is not greedy.
Oh but it will be far, far worse than that, Bogdog. You'll also be growing rice in your own garden after they tear up all your azaleas and fuchsias. Then they're gonna turn your living room into a barn and fill up all your guestrooms with derelicts and disabled vets; some of them are gonna be Black too.
After that, they burn all your credit cards at gunpoint, make you live on a real budget and force your wife to learn how to cook real food. Then they give you two chopsticks per person and nationalize all your silverware.
Next, they terrorize all your kids into actually studying at school and throw them in jail for economic sabotage if they miss a single day of class without Party approval. Finally, after the army of 50,000,000 has raped all the women, expect all your grandchildren to have buck teeth and sneaky slanted eyes as they torture little kittens for fun.
But hey, when they ship back West all the high-pollution factory equipment it sent here, it will put paid to unemployment and, once all the privately-owned firearms have been seized, most cops won't need guns anymore, just like on the Mainland. Like, maybe folks will be able to leave their Kevlar vests at home when they enrol at Virginia Tech or just head on down to the local shopping mall for another sixpack.
Ah what a grim, grim future awaits us all!
Anyone notice the approval of China's first purchase of an American bank coming right on the heels of the Clinton/Geithner visit? You wonder what else was dealt away. The human rights activist dust up was a smoke screen, a distraction, imho.
I did indeed notice, and I am wondering if it is connected to the direct Treasury Auction access given to the PBOC by the Treasury. The bank ICBC is said to be the biggest state controlled bank in china.
http://dealbook.nytimes.com/2012/05/09/fed-approves-i-c-b-c-s-takeover-of-bank-of-east-asia/
And the bank is apparently very interested in getting in on the trade of money:
http://af.reuters.com/article/metalsNews/idAFL4E8GS2OW20120528
Whether that is to level the playing field, or to get a cut, remains to be seen.
Do you have an idea as to why these two rather extraordinary events have occured now?
Will the directions to plug in my GM Volt be written in Chinese?
I've seen a great many Chinese around the US Capitol - inspecting their purchases, no doubt.
Probably find out Ben is underwriting the Chinese buy so the Amercian sheep don't find out.
W00ps.