Former PBOC Member: "The Situation Is Unsustainable. The Longer It Continues, The More Violent And Destructive The Final Adjustment Will Be."

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Sun, 08/07/2011 - 13:10 | 1532981 Mongo
Mongo's picture

Now, this will be interesting. Will China put their money where their mouth is...

Sun, 08/07/2011 - 13:13 | 1532989 Highrev
Highrev's picture

Are you getting ready to buy from the dumb money sellers?


Sun, 08/07/2011 - 13:29 | 1533055 qqqqtrader
qqqqtrader's picture

He might want to look at these technicals before he buys...

Sun, 08/07/2011 - 17:06 | 1533889 Highrev
Highrev's picture

Nice work and I can say I agree with your main points like the big level 1261 SPX and that it will most likely hold on the first attempt and that the odds favor a retest of the initial lows (once those are known to begin with). That will be a huge level, and the price action at that point, and on the retest will be huge also.

I was a little confused by your comment that the expanding triangle’s E wave rarely gets retraced. By definition it would get fully “retraced” (and more) every time the pattern resolves in a continuation breakout, correct?

Sun, 08/07/2011 - 14:18 | 1533210 rwe2late
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 But China and USA are 'frenemies'.

The relationship is explained here:


Sun, 08/07/2011 - 13:14 | 1532993 bigdumbnugly
bigdumbnugly's picture

is his conclusion anything anyone doesn't already know?

Sun, 08/07/2011 - 13:26 | 1533044 SlipStitchPass
SlipStitchPass's picture

             "is his conclusion anything anyone doesn't already know?"

That is what everyone here is thinking, but I guess it is how the game works. The big pink Elephant has been in the rood for 15years and now everyone decides to point at it and say " holy crap..there is a big pink elephant in the room". There are alot of things that need to be worked out in the final unwind

- derivatives

- global reserve dollars ( and what happens as they all pour back into the US to buy anything not nailed down)

-debt markets - federal, muni etc


- Pensions

- etc etc.


Sun, 08/07/2011 - 13:16 | 1532997 falak pema
falak pema's picture

Looks lik its gonna be decision time in Eurozone and China with this official knuckle rapping the US has just received, indicating that the Markets now esteem the US administration is totally toothless in being able to bite its own bullet, solve its own debt creation. 

Big, big, moments of global game change in coming months. We are at the brink. And its China and Eurozone that decide their own fate and that of the current world capital markets.

Sun, 08/07/2011 - 13:42 | 1533106 OpenEyes
OpenEyes's picture

It's mind-boggling how many crisis are erupting at once!

US downgrade

Euro crumbling?

China sweating that either, or both, of those will unmask their own problems

Swiss central bank interventions

Japanese central bank interventions

And these are just what we are seeing on the surface.  Doesn't take into account the huge derivatives issue lurking in the darkness.  Doesn't include the boiling cauldron of MENA.  

I agree with you re: "Big, big moments of global game change in coming months".. might even be less than months.

I also find very interesting the fact that there seems to be NO consensus among even the most astute observers as to exactly what the implications are going to me come market openings tonight and tomorrow!  I've been reading virtually every article and every comment here at ZH, over at Turd's, Naked Capitalism, you name it, and have yet to really distill a solid prediciton.  This tells me that we really are in un-charted territory!

Hang on to your hats folks.  

Sun, 08/07/2011 - 14:36 | 1533350 InconvenientCou...
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I predict Yuan de-peg within 3 years and gold to 3000 USD within 5. I'd prefer that no one was prepared except me, but it looks as though some are seeing the support gathering for this setup. QE3 puts us back to 1971.

Chances of a Chinese expansioninst pivot in the next 20 years is 100%. Taiwan is small potatoes. Iran in a hurry to develop nukes? The question you have to ask yourself is why wouldn't they?

Sun, 08/07/2011 - 13:15 | 1532999 oldmanagain
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"Middle East shares tumbled, sending Dubai’s index down the most since February, after Standard & Poor’s cut the credit rating of the U.S. for the first time and amid rising concern the global economy is faltering.

Emaar Properties PJSC (EMAAR), developer of the world’s tallest tower, slumped 5.3 percent. Arabtec Holding Co. (ARTC) dropped the most since March after it said second-quarter profit fell 74 percent. The DFM General Index (DFMGI) lost 3.7 percent, the most since Feb. 28, to 1,484.31 at the 2 p.m. close in Dubai. The measure has plunged 12 percent from this year’s high in April, entering a so-called correction. Israel’s TA-25 Index slumped 6 percent, the most since November 2008, at 3:51 p.m. in Tel Aviv.

“We’re playing catch-up and trying to anticipate and price in the response to the downgrade by global markets tomorrow,” said Julian Bruce, equity sales head at EFG-Hermes Holding SAE in Dubai. “The impact on stock prices that we’re seeing reflects the feelings of uncertainty” about global growth, he said."

Sun, 08/07/2011 - 13:16 | 1533002 Boilermaker
Boilermaker's picture

The Chinese are shitting thier pants.  What to do with 200,000,000 uneducated young males without a slave wage jobs.

Good luck with that.

Sun, 08/07/2011 - 13:29 | 1533051 Lone Deranger
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What to do:  First assign blame - that's easy for the Chinese ruling party.  It will of course be the fault of the US. The now horrible situation should easily fill the ranks in the PLA with millions of new eager soldiers.  The entire country will be ready to get back what they feel belongs to them.  I'm sure that Iran and Pakistan will somehow end up being allies, to take out the "evil beast" lurking in the west.


Sun, 08/07/2011 - 13:35 | 1533071 Boilermaker
Boilermaker's picture

Agreed.  Now, just march that army across the Pacific and get us.  Good luck w/ that.  The US still maintains a massive advantage in air and naval power.

Without the ability to invade us, they are fucked.

Sun, 08/07/2011 - 13:48 | 1533140 Lone Deranger
Lone Deranger's picture

For sure we won't be seeing any Chinese flags being planted in Seattle or LA anytime soon.  I do think a more plausible course of action is to get the US out of their backyard - i.e. Iraq, Afganistan, and possibly the Middle East in general.  They might possibly help the the Iranians with their wet dream to occupy Israel.  There are all sorts of possibilities here...

Sun, 08/07/2011 - 15:23 | 1533518 Chuck Walla
Chuck Walla's picture

Why fight for them (except as population control) when they can buy them outright?

Sun, 08/07/2011 - 14:01 | 1533213 karzai_luver
karzai_luver's picture

You are fighting the wrong war. Don't feel bad , so are 99% of the rest of the lazy sheeple.


Your "massives" will be as useless as they are in Afg.


6 out.


Sun, 08/07/2011 - 15:06 | 1533460 Silver Dreamer
Silver Dreamer's picture

You don't need to invade something you do not plan to occupy. China has plenty of power to destroy us without touching foot on American soil.

Sun, 08/07/2011 - 13:52 | 1533160 rwe2late
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What to do:  First assign blame - that's easy for the US ruling parties.  It will of course be the fault of outsiders who "hate us for our freedoms". The now horrible situation should easily fill the ranks in the Pentagon with plenty of new eager soldiers.  The entire country will be ready to get more of what they feel belongs to them.  I'm sure that Iran and Pakistan will somehow end up being part of an evil axis, allegedly eager to take on the self-appointed "global policeman" lurking just about everywhere.

Sun, 08/07/2011 - 15:25 | 1533522 Chuck Walla
Chuck Walla's picture

No, it will be the Tea Party, 60 guys who just got there in January will be blamed for 50 years of excess - and people will believe it and push that line.

Sun, 08/07/2011 - 15:36 | 1533525 Chuck Walla
Chuck Walla's picture

I just put a deposit down on a brand new Porsche and mentioned it on Facebook. 

I said, "I can't wait for the new 911 to arrive!" 

Next thing I knew, 4000 Muslims added me as a friend.

Sun, 08/07/2011 - 15:40 | 1533601 Flakmeister
Flakmeister's picture

Bada bing.... rim shot...

Sun, 08/07/2011 - 13:38 | 1533089 Stuck on Zero
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200,000,000 uneducated young males without wives and girlfriends!

Sun, 08/07/2011 - 13:43 | 1533112 Captain Benny
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Sounds more like 200,000,000 educated young males to be without wifes and girlfriends!

Sun, 08/07/2011 - 13:17 | 1533006 alien-IQ
alien-IQ's picture

Isn't there a remarkable similarity between the events that have unfolded in the last 48 hours, and particularly the above statement by the PBOC, and the events theorized in this video?

The Day the Dollar Died

Sun, 08/07/2011 - 14:28 | 1533316 sqz
sqz's picture

Thank you very much!

This puts into video effectively what this report details statistically:

Shit's getting real ...

Sun, 08/07/2011 - 13:17 | 1533007 slaughterer
slaughterer's picture

China places a lot of faith in ratings.  Their reaction will be knee-jerk selling of dollars.  It might be the stupidest reaction from a ROI perspective, but they will be selling dollars and T-bills as quickly as possible.  

Sun, 08/07/2011 - 13:22 | 1533014 BKbroiler
BKbroiler's picture

This is the exact opposite of the "how China ate America's lunch" article a few weeks back.  Is the China the evil genius that gutted the us economy or the sucker left holding the bag of AA+ hot air?

Sun, 08/07/2011 - 13:24 | 1533041 falak pema
falak pema's picture

very good rhetorical question!

Sun, 08/07/2011 - 13:28 | 1533049 Azannoth
Azannoth's picture

USA and China are like 2 Siamese twins playing Russian Rulete against each other

Sun, 08/07/2011 - 14:05 | 1533222 karzai_luver
karzai_luver's picture

america puked it's guts out all over china again and again.


and then resumed porn surfing and more beers/burrito.


good night.


Sun, 08/07/2011 - 14:18 | 1533279 TaxSlave
TaxSlave's picture

This is the exact opposite of the "how China ate America's lunch" article a few weeks back.  Is the China the evil genius that gutted the us economy or the sucker left holding the bag of AA+ hot air?

Well that article was a bunch of mercantilist hot air itself.

Viewing 'China' or 'The U.S.' as a single entity obscures the fact that mercantilist policies always favor fascist corporate government at the expense of the hapless citizenry.

China is in bubble territory, and is ill-prepared to weather a collapse of their bubble coupled with a simultaneous loss of export customers.

Serves them right for inflating along with the U.S. in order to get market share.  Except perhaps maybe the unwitting citizen of China is blameless for wanting to work and feed his family.

The hapless citizens on both sides of this mercantilist game lose out when monetary policy is used as a trade war weapon.

Things are going to get bad on both sides of the pond.  Hopefully the people on both sides will refuse to be used as tools by their mercantilist masters.  History shows that there is not much hope in this regard.  People are taught that freedom doesn't work, every loss caused by the depredations of the predatory fascist corporate state is always blamed on not enough central control, and eventually legions are sent off to die in order to perpetuate that control.

Arguments over which policies to enforce, who should inflate faster, etc. all serve to focus the argument on how much control is needed, and how to exercise that control.  Accepting that set of blinders effectively blocks out the fact that freedom is not even considered.  So the slaves willingly toil for their masters.  And after their wealth is destroyed, their jobs lost, their homes lost, and hunger threatens, they will be all too willing to pour all their effort and might into the military-industrial machine and begin killing with gusto.

The slave-masters on both sides push the buttons from the comfort of their ivory towers, secure in their knowledge that the dupes will never catch on to the game.

A boot, stamping on a face, forever.

Sun, 08/07/2011 - 13:22 | 1533015 Transitory Disi...
Transitory Disinflation's picture

doom doom

coming soon

taking pm's

too the moon.


au, ag

wait and see

apmex is closed to thee

increasing profits for all too see.


like the titanic

there will be panic

then it sank

thanks bernank.


sack the geithner

he tell's thee lies

off with his head

were the cries.


riot riot

hear the disquiet

when is it coming, nobody knows

all we see is the infinite fire hose.


get ye popcorn, see the show

this fiat ponzi is about to blow

grab your pm's, grab your food

Monday morning will set the mood.




Sun, 08/07/2011 - 13:32 | 1533065 Hulk
Hulk's picture

You're going to scare the children...


Sun, 08/07/2011 - 13:20 | 1533016 working class dog
working class dog's picture

China and the US commerce department with the corporate elite are responsible for the present situation. You tell china to go to hell!! They have been manipulating currency and enslaving their people ever since the US saved their sorry asses from the Japenese.


Now when their piracy of our technology and methodology is in place they want to bail out. I guess they have learned thier lessons well. Lets see how they keep the billions of Chinese under thier boot over the  next 50years, I dont think so. My dad always told me when I asked him as a child how is it the US is the big dog? He said we are small in number but we do things together better as a nation than anyone else. Of course when my dad grew up and lived in this great country we had a decent educational system that produced critical thinkers, not morns who care for a gubbament entitlement to live. I for one want to get some of the money the gubbament took from me in taxes and social security. I for one despise the extremists on both ends of the US political spectrum who are trying to do what Hitler did, take control of the govt thru the use of taking the debt talks to push their fucked up agenda.

Sun, 08/07/2011 - 13:23 | 1533028 Boilermaker
Boilermaker's picture


Sun, 08/07/2011 - 13:22 | 1533018 DormRoom
DormRoom's picture

So was Friedman wrong?  Is China the case study in which capitalism does not lead to democracy.  So will American capitalism mutate into its Chinese strain, implying a one party autocracy in which our liberties are slowly eroded?


Oh right, America is a one party system, but its inefficiency lies in the fact that it spends all that time, and resource, convincing the electorate, it's a two party system, unlike the Chinese.


Chinese capitalism: +3 trillion American capitalism: -3trillion

Sun, 08/07/2011 - 13:49 | 1533154 besnook
besnook's picture

friedman is as big a quack as krugman.


japan is technically a democracy even as the same party has governed it since post war but it's economy is centrally planned. germnay is essentially the same. russia is centrally planned period but has managed to become one of the strongest economies in the world compliments of oil and gas and of course china is china.

india is a democracy but closer analysis says that democracy has actually hindered it's growth. while that is admittedly a good thing it points out the fallacy of the friedman argument. a centrally planned economy works if the planning focus is dedicated to the welfare of the country in aggregate and allowing micro economies free range in the local domestic economy.

Sun, 08/07/2011 - 14:07 | 1533237 karzai_luver
karzai_luver's picture

you got it.

if it's a duck,errrrr golden goose.


Sun, 08/07/2011 - 14:29 | 1533321 TaxSlave
TaxSlave's picture

a centrally planned economy works

Uhh, yeah.  Here they are, crumbling before your very eyes, on a scale never before witnessed.

You want your freedom but figure everyone else needs to be controlled in order to secure an advantage for you.  Right.

Here, I'll help you out with some more intellectual ammunition.  Take it, and go forth and multiply:

[Adolf Hitler on Nazism and socialism:] “Each activity and each need of the individual will thereby be regulated by the party as the representative of the general good. There will be no license, no free space, in which the individual belongs to himself. This is Socialism—not such trifles as the private possession of the means of production. Of what importance is that if I range men firmly within a discipline they cannot escape? Let them then own land or factories as much as they please. The decisive factor is that the State, through the party, is supreme over them, regardless whether they are owners or workers. All that, you see, is unessential. Our Socialism goes far deeper . . . .

“[T]he people about us are unaware of what is really happening to them. They gaze fascinated at one or two familiar superficialities, such as possessions and income and rank and other outworn conceptions. As long as these are kept intact, they are quite satisfied. But in the meantime they have entered a new relation; a powerful social force has caught them up. They themselves are changed. What are ownership and income to that? Why need we trouble to socialize banks and factories? We socialize human beings.”


Sun, 08/07/2011 - 13:20 | 1533019 wang (not verified)
wang's picture

if you are blocked from FT via their paywall try this link

Sun, 08/07/2011 - 13:40 | 1533094 scratch_and_sniff
scratch_and_sniff's picture

Hey wang, how do you do that on a day to day basis?

Sun, 08/07/2011 - 13:21 | 1533021 midtowng
midtowng's picture

The Yuan readjustment is so slow it is barely happening. At this rate China will never decouple in time.

Sun, 08/07/2011 - 13:21 | 1533023 Peter K
Peter K's picture

You can throw Japan and the rest of Asia and most of Euroland in to the Mercantile bag. As to the bad position of the US, actually it's quite good in the sense that it can slap a 25% to 50% trade tariff on all imports and resolve their trade balance problem overnight. The reason for the present global recession is the boycott of the US consumer and the non existence of the Chinese counterpart.

Sun, 08/07/2011 - 13:24 | 1533036 Boilermaker
Boilermaker's picture

+$14.61 T

Sun, 08/07/2011 - 13:31 | 1533054 falak pema
falak pema's picture

A huge paradigm change you are pointing to there : USA goes 100% protectionist and guts the global economy. Nobody is considering that as a viable alternative...and that makes me wonder...To make it work, it means sacrificing the US oligarchs and their global banks and corporations. Looks difficult with the current ruling class. But it may be down the road if the hard core Tea Party makes headway...

Sun, 08/07/2011 - 13:48 | 1533141 MsCreant
MsCreant's picture

Because of our dependence on others for oil, I don't think this will work.

Sun, 08/07/2011 - 14:08 | 1533241 falak pema
falak pema's picture

the springs are really springing in your head!

Sun, 08/07/2011 - 13:40 | 1533095 Stuck on Zero
Stuck on Zero's picture

You can't make this up.  Obama gave a speech yesterday in which he stated that the way to get the economy moving was to sign four new trade agreements and extend unemployment benefits.  What is this character smoking?

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