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Meanwhile "Global Bailout Fallback Plan B" China Is Pumping 1 Trillion RMB Into Its Banks

Tyler Durden's picture





 

Yesterday, Barclays' Ben Powell of macro sales sent out the following note to clients, which referenced a as of then unconfirmed report in the China Securities Journal: "China putting 1Tr RMB into its banks?? Very positive no? The attached bloomberg story suggests that China may inject >Tr1 Yuan into its banks deposits before the end of the year. This is a meaningful number vs the Tr7.5 RMB that the banks are expected to lend in 2011 as a whole. So what? 2 things. Most obviously this is cheap liquidity to Chinese banks that should see SHIBOR continue to fall and banks shares to rise. And secondly more broadly this would seem to suggest (again) that the rumours of easing are true. This will add fuel to the soft landing argument that I have been pushing. Remain long Chinese banks on very simple easing + bearishness = up thesis." Granted the Barclays spin was to go long China (incidentally just in time for the biggest drop in the Chinese market since October 20), but the real take home here is that China is now actively pumping money to bail out its own banks once again! And not just token money - €158.2 bilion. So how much money will be left to fund the European bailout which is oh so contingent on Chinese generosity? The short answer? Pretty much nothing, as confirmed by the fact that today's €3 billion EFSF deal was underbid and the underwriters were left holding about €500 million of the total issue. As usual, good luck Europe with your multifunctional Swiss EFSF Army knife.

More from Bloomberg:

More than 1 trillion yuan (about 158.2 billion U.S. dollars) of treasury deposits are expected to be allocated by the Ministry of Finance (MOF) to government departments in November and December, according to a report by China International Capital Co., Ltd. (CICC), the country's top investment bank.

 

China allocated 700 billion yuan of deficit in the 2011 Budget  adopted in March this year.

 

MOF data showed fiscal revenues amounted to about 1.2 trillion yuan between January and September. That implies fiscal expenditure will top 1.9 trillion yuan in the fourth quarter of this year.

 

As the massive fiscal funding was made near the year-end in the past years, CICC predicts the country's banks will boost their capital strength by 1.2 trillion yuan.

 

Liquidity conditions for Chinese banks started to improve since the beginning of November, after People's Bank of China (PBOC), the country's central bank, stopped draining liquidity from banking sector through its open market operations this week.

 

Last week, PBOC released 96 billion yuan of cash into the money market in its first liquidity injection through open- market operations in four weeks.

So while China is desperately trying to steer the crash landing into some semblance of softness, Europe is left to hope, and pray, that Beijing will find several billion under the couch to last its BTP purchases for at least one more day.

 


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Mon, 11/07/2011 - 15:51 | Link to Comment BaBaBouy
BaBaBouy's picture

Next Leg Bitchez...

GOLD set to take run to 1999.

Then 2500?

Then 7500?

Then 20500?

 

Follow the Chinee?

Got Some ???

Mon, 11/07/2011 - 15:52 | Link to Comment CPL
CPL's picture

Fucking knew someone was on the printing press!

 

Everyone out of the fucking Bond, equities and paper pool.   All into gold and silver.

 

Fuck this shit.

Mon, 11/07/2011 - 15:56 | Link to Comment Troll Magnet
Troll Magnet's picture

Don't go all in yet.  There will be more sales before all this SHTF.

Mon, 11/07/2011 - 16:00 | Link to Comment EL INDIO
EL INDIO's picture

Yep, chasing prices higher is not a good idea.

Buy the dips not the spikes.

Mon, 11/07/2011 - 16:11 | Link to Comment bill1102inf
bill1102inf's picture

Many readers on here get great joy of buying high and selling low.

Mon, 11/07/2011 - 16:43 | Link to Comment Troll Magnet
Troll Magnet's picture

I used to buy on the way up as well as on the way down.  I got some horrible deals and then I got some unbelievable bargains.  It all ends up averaging itself out.  That said, I'm fed up with this game they're playing.  I don't know what's driving the PMs today but I have no doubt that TPTB will intervene again.  This game is far from over, IMO.  No sense chasing prices anymore.  Just wait for them to smash it down and then back up your truck.  Gold will see 1600s again before it breaks 2000. 

Mon, 11/07/2011 - 21:03 | Link to Comment trav7777
trav7777's picture

I thought China was the FUTURE?  You mean they have fucked up banks and a country full of bad debt?  There's no occupants for those empty cities?  The vaunted high-speed rail that was supposed to go 224mph is really going 0?

Mon, 11/07/2011 - 17:08 | Link to Comment DaBernank
DaBernank's picture

Ummmm, who SELLS Gold?

Things are sold FOR Gold.

Mon, 11/07/2011 - 15:56 | Link to Comment BaBaBouy
BaBaBouy's picture
More EU Schite ...

 

IMF Lagarde Warns of East Europe Liquidity Squeeze

 

Lagarde’s remarks echoed the European Bank for Reconstruction and Development, which warned last month that regulatory pressure on euro-area banks to raise capital ratios may result in less support to local units. About three-quarters of eastern Europe’s banking industry is owned by western lenders such as Italy’s UniCredit SpA (UCG), Austria’s Erste Group Bank AG (EBS) and France’s Societe Generale (GLE) SA.

 

http://www.bloomberg.com/news/2011-11-07/lagarde-says-emerging-european-...

Mon, 11/07/2011 - 16:05 | Link to Comment EL INDIO
EL INDIO's picture

It could be that or just a retrace before the next leg down.

Be prudent.

Mon, 11/07/2011 - 15:46 | Link to Comment Dr. Engali
Dr. Engali's picture

You'll get my gold when you pry it from my cold dead hands.

Mon, 11/07/2011 - 15:50 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

Hope you've had a good life.

; )

 

( ! )J Hook Line and Sphincter

Mon, 11/07/2011 - 15:46 | Link to Comment Rhone_Ranger
Rhone_Ranger's picture

Look for a lot more Chinese food restaurants and dry cleaners on those nice, warm Cyclades Islands?

Mon, 11/07/2011 - 15:47 | Link to Comment RobotTrader
RobotTrader's picture

Never underestimate the Power of Paper Printing

Mon, 11/07/2011 - 15:48 | Link to Comment SheepDog-One
SheepDog-One's picture

Zero power there robo....too bad you dumped all your gold gee look at it go!

Mon, 11/07/2011 - 15:55 | Link to Comment css1971
css1971's picture

You're talking to a machine.

I think occasionally someone logs into the account to post, I don't know which chatbot it is, but 99% of the posts are highly formulaic. You're basically getting wound up over a toaster.

 

Mon, 11/07/2011 - 16:21 | Link to Comment eisley79
eisley79's picture

90% of the posters on zerohedge these days are college kids with no real money, and no real investments.

 

Just everyone talking about what they pretend to own.

Mon, 11/07/2011 - 15:47 | Link to Comment SheepDog-One
SheepDog-One's picture

OH so thats why US HFT robots got all excited, Chinese robots told them theres money printing from thin air.

Mon, 11/07/2011 - 15:48 | Link to Comment Mike2756
Mike2756's picture

China can refi their way down, what about everyone else?

Mon, 11/07/2011 - 15:49 | Link to Comment RobotTrader
RobotTrader's picture

TIP about to break out to world record highs.

GLD still lagging "Paper"

Mon, 11/07/2011 - 15:50 | Link to Comment SheepDog-One
SheepDog-One's picture

And the DOW is up....+20...gee youd think Robo this excited would mean his Antonio Banderas blow up doll just arrived or something.

Mon, 11/07/2011 - 15:54 | Link to Comment RobotTrader
RobotTrader's picture

The way the perma-screechers were talking all weekend

The Dow should have been down 500+

Mon, 11/07/2011 - 16:02 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Eh, no one ever said the Dow would be down, just gold would be up.  What's right is right.

Mon, 11/07/2011 - 17:03 | Link to Comment SheepDog-One
SheepDog-One's picture

Oh, well i didnt havent any comment over the weekend at all so I dont know who youre directing your comment to specifically.

Mon, 11/07/2011 - 16:01 | Link to Comment topcallingtroll
topcallingtroll's picture

ARE YOU SERIOUS?
THE ANTONIO BANDERAS BLOW UP DOLL IS HERE?
SPREAD THE WORD EVERYBODY.

Mon, 11/07/2011 - 16:51 | Link to Comment viahj
viahj's picture

and the McRib is back now also, for a limited time...better run!

Mon, 11/07/2011 - 15:51 | Link to Comment Messianic
Messianic's picture

Google equity market, and carefully read the first non-ad entry (in google, don't click on the link) - it's the wikipedia link:

 

stock market or equity market is a big fat penus with public entity and a fat girl(a loose network of economic transactions, not a physical facility or discrete ...

Mon, 11/07/2011 - 16:06 | Link to Comment topcallingtroll
topcallingtroll's picture

HEY HE IS RIGHT! LOL.

I DIDNT KNOW A STOCK MARKET WAS A BIG FAT PENUS.

(uh...what is a penus, btw?)

Mon, 11/07/2011 - 16:11 | Link to Comment Turkey
Turkey's picture

Beats me.  What's a dikfor?

Mon, 11/07/2011 - 15:54 | Link to Comment Mark123
Mark123's picture

So exactly how much credit has China created over the last couple of years to prop up its economy with crazy, speculative lending that was used to increase aleady excess industrial capacity, build more roads, railways, airports and empty condos?  Last time I looked it was about $3 trillion, which is about the total amount of reserves they have build up over the last few decades.  Maybe the reserves are not really so reservish after all??

 

Pedal to the metal baby!!!!  China is in the driver's seat....

Mon, 11/07/2011 - 21:05 | Link to Comment trav7777
trav7777's picture

yeah, and they already sterilized the reserves...they can't really be spent like true reserves anymore.

Mon, 11/07/2011 - 15:55 | Link to Comment ebworthen
ebworthen's picture

The last global currency/banking crisis eventually led to Depression then World War.

The craps table markets may be getting some 30 to 1 double sixes while the printing presses are humming, but sooner or later the plowshares will be beat into swords.

Mon, 11/07/2011 - 15:58 | Link to Comment Dr. Nancy
Dr. Nancy's picture

All that's happening is predictable, as there are 7 stages that every major economy goes through. Those who know how it works profit & massive wealth is transferred to them. Several months ago I learned this information from a millionaire whose site I found & am sharing it with everyone I know.

His free video

"How To Create Incredible Wealth in Today's Economic Crisis"

is at:

http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...

Hope this info helps everyone as much as it has me.

Dr. Nancy

Mon, 11/07/2011 - 15:59 | Link to Comment ZeroPoint
ZeroPoint's picture

And when China has double digit inflation, you can expect all hell to break loose. Can you imagine when millions of Chinese workers earning 3 dollars a day lose 20% of their purchasing power?

Mon, 11/07/2011 - 16:01 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Long plastic rice

Tue, 11/08/2011 - 01:48 | Link to Comment Belteshazzar
Belteshazzar's picture

long melanine milk, glow in the dark pork, and sewer oil.

 

Mon, 11/07/2011 - 16:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

So much for a strengthening Yuan.

Mon, 11/07/2011 - 16:02 | Link to Comment sabra1
sabra1's picture

all that money will be used to buy europe once it implodes!

Mon, 11/07/2011 - 16:04 | Link to Comment RobotTrader
RobotTrader's picture

Consumer credit up 3.5%

Retail spending is getting stronger, not weaker

That will be good for gold, more jewelry and trinkets.

Mon, 11/07/2011 - 16:04 | Link to Comment Hansel
Hansel's picture

OT:  Calculated Risk shares what he thinks about ZeroHedge:

"My reaction to ZH is very different. If you consider them the Onion of the financial world, then they are hilarious. As a real source of information, they are obviously clueless ... but I like to think I'm in on the joke!"

Mon, 11/07/2011 - 16:05 | Link to Comment Mark123
Mark123's picture

Why are gold and silver exploding higher today?  I could understand if gold was up and silver flat or down...that could be Europeans buying a safe hedge, but his looks more like the printing presses starting up again (QE3)??

Mon, 11/07/2011 - 16:07 | Link to Comment RobotTrader
RobotTrader's picture

Strong tape.

QQQ only $1 away from making 10-year highs.

 

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=qqq&inst...

Mon, 11/07/2011 - 16:13 | Link to Comment lizzy36
lizzy36's picture

Interesting from a G&M story this weekend that didn't get much play, basically discussing how the shadow banking system drying up in China is causing a credit crisis.

It has it roots in Wenzhou, China.

As loans from state-owned banks dried up, many in Wenzhou turned to shadier sources of money, eventually falling into a trap familiar to many on Wall Street and elsewhere – borrowing from one lender to pay off another, at higher and higher interest rates, sometimes 15 times the official standard.

It was very similar to the collapse of Lehman Brothers in the U.S., it spread so quickly,” said Mr. Huang, who is more than $2-million in hock himself.

As a result, while Chinese President Hu Jintao was being wooed in Europe this week to contribute to a fund to save that continent’s failing economies, his government was quietly setting up its own $160-million bailout fund to try to halt a domestic credit crisis that many say has already spread beyond Wenzhou to other parts of China. It threatens millions of small and medium-sized businesses, though larger state-backed firms thus far seem immune.

http://www.theglobeandmail.com/report-on-business/international-news/asi...

Mon, 11/07/2011 - 16:58 | Link to Comment Mark123
Mark123's picture

Great article...thanks for the link!

 

Meanwhile the world is relying on China's great piggy bank to bail us all out?  Classic train wreck coming.

Mon, 11/07/2011 - 16:49 | Link to Comment krispkritter
krispkritter's picture

"Me print you long time...me so SHIBOR-ny..." http://www.youtube.com/watch?v=12tce-THLUE

US, EU, China...a race to the bottom, supposedly cushioned by the amazing amount of paper they'll print. Somehow I don't think the Charmin-bucks are gonna cushion the blow enough.  Is a golden or silver 'parachute' enough to save the average Joe?  Hopefully Corzine and the rest of his ilk have a tungsten-lead parachute with a gold veneer.

 

Mon, 11/07/2011 - 16:58 | Link to Comment eaglefalcon
eaglefalcon's picture

the Chinese have $3 trillion forex reserve but with that amount they couldn't even cover their own ass, that's why the talk about contributing to esfe is all bluff

Mon, 11/07/2011 - 17:54 | Link to Comment kalasend
kalasend's picture

Those dollars are useless in defending losses in RMB's. Do some research.

Mon, 11/07/2011 - 17:00 | Link to Comment HurricaneSeason
HurricaneSeason's picture

So, China was buying U.S. treasuries and mortgage backed securities to the tune of $30 billion a month and quit right when we need them to buy $150 billion a month or more and Europe is in trouble? I thought total foreign held treasury bonds went down by $93 billion in the last couple months. If Europe offers bonds at 6% or better, they should be able to sell some. It'd be like a fart in the wind.

Mon, 11/07/2011 - 17:09 | Link to Comment CitizenPete
CitizenPete's picture

Where is the Bloomberg link?

Mon, 11/07/2011 - 23:39 | Link to Comment ACP
ACP's picture

So how exactly does one become a member of the Bailout of the Month Club?

Tue, 11/08/2011 - 01:52 | Link to Comment Belteshazzar
Belteshazzar's picture

funny that EU/US seemed to expect the poster child for bubble economies to ride in to the rescue. The PRC very much has its own mess to tend to without importing it from the developed world.

Ticktickticktick goes the real estate market...

Tue, 11/08/2011 - 05:32 | Link to Comment Overflow-admin
Overflow-admin's picture

Fortunately, you can always buy the same amount of Swiss EFSF Army knives for an ounce of gold

Do NOT follow this link or you will be banned from the site!