Not To Be Left Out, China Announces Its Own Bank And Stock Market Bail Out

Tyler Durden's picture

To anyone still believing that capital markets around the world express something other than government policy, the latest news out of China may come as a surprise: "Beijing will buy more shares in China’s biggest banks, in an expression of support for the beleaguered stock market and most concrete state action to date to shore up confidence in the slowing economy." The FT reports further: "Central Huijin, the domestic arm of China’s sovereign wealth fund, will buy the shares to help stabilise the pillars of the country’s financial system, the official Xinhua news agency said on Monday. Coming as the Chinese stock market closed at a 30-month low, the move was the strongest sign that Beijing wants to engineer a restoration of confidence in share prices and the economy. It paid instant dividends with a rally in the final minutes of trading on Monday." And there you have it: stocks are now nothing more than a means for governments to validate their "success" in something, since they have no more control left over either employment or inflation, or public expression of affection with capitalism as per #OWS. So why not ramp up the DJIA to 36,000? Granted that will happen as all global currencies get terminally davalued against gold, but so what - after all that only thing that matters now is whose stock market is the biggest.


Although Chinese growth has so far held up well, the European debt crisis and the risk of a double-dip recession in the US have cast a shadow over the country’s economy. With inflation running near three-year highs and debt levels swollen by heavy spending, economists doubt that Beijing could launch the kind of stimulus it did when the global financial crisis struck in 2008.


Sensing vulnerability, investors have turned against China, driving down commodity prices, betting on the chances of a government default and selling shares in the banks that are the economy’s lifeblood.


The government, through Huijin, is already the majority shareholder in all of the country’s major banks. While the announcement gave no details about how much more it intends to buy, it was unabashed in declaring that it aimed to halt the roughly 30 per cent slide in bank stocks in recent months.


In a rebuff to traders who have been betting that the renminbi will weaken as the Chinese economy slows, Beijing also allowed the currency to record its biggest one-day gain in years on Monday, letting it rise 0.6 per cent against the dollar.


The motivation for that also appeared to be diplomatic, with the US Senate set to vote on Tuesday on legislation that would punish China for keeping its currency undervalued.

And so on.

We could say "we told you so" but so what - at this point only the biggest idiots don't realize that is the last ditch desperation manoeuvre to preserve social stability by keeping stock markets at a level that will prevent all out panic. Yes, someone will have to pay the piper at the end of the day because not even Keynes could have envisioned this kind of wholesale lunacy, but by then it will be "someone else's problem." For now - it is time to buy, buy, buy and, to those who listen to Berlusconi, create some market volatility.

h/t Mario

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Mongo's picture

Global keynesian brain damage syndrome

mfoste1's picture

maybe big pharma will deem a new disease called "keynesian sickness".....long pharmas

DeadFred's picture

After a depressing morning watching the euro soar through all manner of resistance a nice thought occured to me, maybe the Slovaks will ratify the bailout and then the markets will turn and stop their climb.

Really, financials are up 3.7% today, really?

Ancona's picture

I see we've gone full on slapstick comedy today. WTF??

Up 286 on shit for volume? Man, I 'coulda been a contender.

RSloane's picture

Yup. So much for the markets being wiped out today. Its nothing short of mind-boggling.

jdelano's picture

This market has the memory of a goldfish.  How many times have we done this now?  Here we are slamming against the ceiling at S&P 1190, but everybody's still absolutely convinced it's a real rallly.   The presses are rolling! Europe's saved! Game on!    

(Just doubled my puts.  market 180 time.  see you at 1080 when everyone will be screaming, "there's no bottom to this, there's no bottom!!!)


heeheehee, morons.  

covert's picture

bailouts lead to more, etc. esentually, it's a domino effect leading to global poverty.

part of the lemming effect, more shorting to come.


GeneMarchbanks's picture

At least we know who owns who in China.

dick cheneys ghost's picture

Governments only do what Banksters tell them to do.................

kito's picture

not in china bro. the govt is the bank

SheepDog-One's picture

This is actually quite humorous from an Oriental mindset....theyre NOT 'bailing out' anything....they just threw a trump card in Europes face!

You talk about bailing out...OK we bail out too, negating you, SUCKERS!!

Irish66's picture

 waited all day for China and Putin

Caviar Emptor's picture

I was just predciting this on the last thread: China will join the US and ECB in printing Trillions. 


SheepDog-One's picture

So they keep moving the decimal point to the what? Means nothing to anyone but the top .001%.

Panafrican Funktron Robot's picture

Long term holders of physical gold at least have some comfort in the non-destruction of their real wealth.  In that sense, meaning is present here.  I think I share the opinion of the most of us who are correctly prepared in not wishing what's coming to actually occur.  It's a slow motion train wreck, and stupidity is entertaining to a point, but this is starting to get dangerously close to actually breaking down, and that is frankly a grim, if unavoidable, thought.  

moskov's picture

Most of the Chinese would be satified with this. It's far better than baiting out US treasury bonds

mn1's picture

the Dow will go to 36,000 just give it time....and please continue your negative articles coming...theres nothing like freaking out people to dump so you can pick it up on the cheap...

GeneMarchbanks's picture

It won't matter with the DXY @ 40.

Hedgetard55's picture



DOW at 35,000 means gas at $20, and no economy, jobs, law and order, etc.

dracos_ghost's picture

But the elites will have their crappy sovereign debt reallocated to taxpayer backed stock prices.

Johnny Lawrence's picture

I really hope you don't manage anyone's money.  Using an internet blog as a contrarian indicator is pure idiocy.

SheepDog-One's picture

DOW 36,000 also means gas $40 a gallon and trip to the store for the week costs around $12,000....OK bring it on whatever!

Kina's picture

With the DOW at 36,000 one USD would be worth a teaspoon of dog shit. Enjoy cashing in your 'wealth' in pounds of dog shit.




We are all socialists now.

monopoly's picture

And here come the flippers.

Caviar Emptor's picture

Banks are the easiest problem to solve in China. They're going to need trillions more as the economy totters especially in second-tier cities (which are huge) and smaller cities (lots of them). And the Fed is still doing Pomos, Obama and Congress will announce trillion+ stimuli imminently, ECB needs trillions to bail its own governments out so they can bail out their banks and their citizens.....we gonna need a bigger printing press

SheepDog-One's picture

'So they can bail out the banks, and their citizens'....LOL no ones bailing out their CITIZENS at all!

John Law Lives's picture

DJIA up 900+ points off its intraday lows in the last 5 trading sessions.  Nothing like a pump job based upon rumors of bailouts.

FUBAR market.

HelluvaEngineer's picture

I just got a friggin' margin call!  First ever.

John Law Lives's picture

I got a one of those about 10 years ago when I used to trade stocks. I even got a few phone calls from my broker telling me to sell stock or deposit cash ASAP or they would liquidate my other position(s) until I was whole again. Scary when it happens. Alas, I no longer trade stocks. The little guys are seriously outgunned these days, and the SEC doesn't give a damn.

HelluvaEngineer's picture

Well, it was just an email (for now), and not that much money, but completely related to the 5% run in high beta momos that I'm shorting.  This market is completely insane.

John Law Lives's picture

I seems obvious that Central Banks are establishing policy with the intention of pumping markets.  What a joke.  Governments don't know how to solve REAL problems like high unemployment and massive deficit spending, so Central Banks create more fiat currency and goose the stock markets.  No wonder so many people are cynical.

Wu Qi Ming's picture

This explains the very brief mention of an upcoming extraordinary share holders meeting of Industrial Commercial bank of China where they plan to discuss new share issuance AND short term bond generation on the Chinese english speaking media today.

achmachat's picture

I have a smallish investment in China and because I knew that this was going to happen sooner or later, my investment profits get changed to gold at the end of each month.

I was not comfortable with heaps of RMBs just sitting there waiting for me.


edit: yes, this means that I actually have a small side-income that comes in gold! I feel so barbarian!

SheepDog-One's picture

Good luck just trying to keep even, be nimble...VERY nimble!

achmachat's picture

i did better than keep even. As of a few weeks ago, it's already paid me back what i had invested.


Fips_OnTheSpot's picture

Yield in cocaine nowadays? ;)

maxw3st's picture

Very high according to the Mexican drug cartels.

PulauHantu29's picture

Right Ball.

Left Ball.

Dick in the Middle.


Why not?

HD's picture

If that's accurate I gotta see a doctor!! I wondered what all the pointing and laughing was about...

Lady Heather...UNCLE's picture

"To anyone still believing that capital markets around the world express something other than government industrial policy"

fixed it.

This is a corpocracy after all (fascism)

jekyll island's picture

Did these banks pass the initial stress test too?  

Lady Heather...UNCLE's picture

hmmm...I was supposed to have crossed out the world government

Lady Heather...UNCLE's picture

...another mistake...signing off...sorry all. Good luck out there