Breaking : China pulls the plug on Europe, especially on France

Uh oh.

China Pulls The Rug From Under Europe, Halts French Bank Transactions, Makes Good On Trade War Ultimatum

A flurry of headlines out of China suggest global macro-economic volatility may be ready to take it to the next level. We discussed last week how China's oh-so-generous offer of help to Europe was merely a veiled threat playing US against Europe in a game of who-gets-the-funding. Well, tonight, it seems, they are making good on some of those threats. Aggravated by EU's lack of market economy recognition, they pull trading lines with French banks, express concern at the EUR's safety (preferring US Treasuries), and indicate a clear preference for bonds over stocks - all the while warning of growing trade tensions - consider the sabre-rattled.

France is in big big big trouble. All of Europe is really.

A big market-making state bank in China's onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday.

The European banks include French lenders Societe Generale , Credit Agricole and BNP Paribas.

"Apart from spot trading, all swaps and forwards trading (with the European banks) have been stopped,"

``Good news`` for the US.

China, the largest foreign holder of U.S. government debt, will keep buying U.S. Treasuries, the official People's Daily, the ruling Communist Party's mouthpiece reported on Tuesday, citing government researchers.

But don't fool yourself into believing them. Art of War my friends, Art of War.

Wang Chaocai, a Ministry of Finance researcher, was quoted as saying that "what else we can buy if not U.S. Treasuries? It's more risky to buy into equities."

You can buy gold...

Time to print ECB! Or let the big banks fail, which will be epic... since the banks are bigger than almost every country in the EU they are in.

Switzerland is the worst, with banks holding 594% of GDP in assets... good luck bailing them out...

UPDATE :

Well apparently it didn't take long for the US to respond to protect their friends in the EU...
U.S. to announce China trade enforcement action

U.S. trade officials will announce a major trade enforcement action against China on Tuesday, according to an advisory from the U.S. Trade Representative's office.

The advisory, which was obtained from a business group, said U.S. Trade Representative Ron Kirk "will hold a press conference to announce a major trade enforcement action against China." It gave no other details.

That means imported stuff from China will be more expensive.

Of course they gonna say ``it's good for jobs``. It will be... in the long term, if they do it correctly. But considering how a failure congress is, forget it.

Begun the trade war has.

Update 2 :

The ONLY important factor in this is this : What were the size of the swaps they were typically doing. If they were big, well Europe is pretty much done.... this is very very very very bad. Aka all the banks targeted are gonna BLOW UP... some of them THIS WEEK probably.

But IF the swaps were small, no biggie. But still not a good sign, since FX swaplines are among the most secure credit there is out there... that means China doesn't believe in Europe at all. They think they won't get paid back...


But the funniest thing about all this is that China is in a big bubble too and their banks are in big trouble too!

Altogether good news if you ask me, means the Euro will have to adjust to what its worth. Either the Germans will help their socialist comrades out and live to see another day or they'll come up with a feasible plan for once.

Even if the China is buying US Treasuries, I wish they wouldn't... the more we do this the deeper in the hole we get.

I have a feeling the whole world is on the verge of some major, painful changes and over the coming weeks not months or years. Good catch on this and you're picking up a lot of what is happening right now under the radar. It's helping to get the true perspective of whats about to happen IMO. Don't stop your hunting and posting!

Originally posted by Vitchilo
Uh oh.

You said a mouthful brother... that sums it up beautifully. The last thing we need is a corporate war, because we all know where that leads. This will be a major cross road in this new world that is changing and growing right in front of us, it is the first time in my life anyway that this much financial political civil and esoteric chaos has been happening all at once. One thing is for sure, TPTB have never quibbled about their bottom line and anything that effects it...how far will they cut the cord to protect their investments in each other?

I cannot help but be struck by the relatively recent parity between the Canadian and U.S. dollar and the Euro's inevitable decline to match. Will there ever be an easier time to introduce a single currency or "basket exchange" than when the major economic players are on equal footing? All engineered if you ask me. Which, of course, does not at all rule out an increase in trouble on the China front for the entire western world. But, there is an upside to that too. All of us are likely guilty of despising the situation while still purchasing our cheaply made foreign goods. I know I am... Jobs back to the U.S. will be the outcome. And, we need them.

I just really hope that there isn't a big shocker on the horizon. Whether I say there will be depends on which day of the week you ask me. The indicators are all there but I am trying to stay positive.

Eep America isn't really in a position to be making demands of China... This is some big, scary stuff that could lead to a whole bunch of hornets nests and cans of worms.

Will definitely keep my eye on this.

Originally posted by watcher3339
I cannot help but be struck by the relatively recent parity between the Canadian and U.S. dollar and the Euro's inevitable decline to match. Will there ever be an easier time to introduce a single currency or "basket exchange" than when the major economic players are on equal footing? All engineered if you ask me. Which, of course, does not at all rule out an increase in trouble on the China front for the entire western world. But, there is an upside to that too. All of us are likely guilty of despising the situation while still purchasing our cheaply made foreign goods. I know I am... Jobs back to the U.S. will be the outcome. And, we need them.

I just really hope that there isn't a big shocker on the horizon. Whether I say there will be depends on which day of the week you ask me. The indicators are all there but I am trying to stay positive.

Not to mention the Australian dollar also being above the US & Canada....

reply to post by Vitchilo


So do i understand this correctly, China is witholding trade to prove a point to Europe so America is witholding trade to prove a point to China? I find it difficult to see a positive outcome from punking out your bookie...

Originally posted by watcher3339
I cannot help but be struck by the relatively recent parity between the Canadian and U.S. dollar and the Euro's inevitable decline to match. Will there ever be an easier time to introduce a single currency or "basket exchange" than when the major economic players are on equal footing? All engineered if you ask me. Which, of course, does not at all rule out an increase in trouble on the China front for the entire western world. But, there is an upside to that too. All of us are likely guilty of despising the situation while still purchasing our cheaply made foreign goods. I know I am... Jobs back to the U.S. will be the outcome. And, we need them.

Funny you mention that because the Australian Dollar is also falling toward parity with the USD. It's even making news headlines today here.

I decided to take a look at marketwatch.com and saw this on the latest news.

China bank halts forex swaps with Europe banks

HONG KONG (MarketWatch) -- An unidentified Chinese state-run bank has halted foreign-exchange swaps with several European banks, with the suspension believed to include BNP Paribas SA and and UBS AG according to reports citing unnamed sources. The Chinese bank involved is the "most active" in the market for trading those products according to Dow Jone Newswires, which reported that the halt began Monday. Societe Generale SA is also included in the ban along with BNP and UBS, according to Reuters.

ETA - I wonder how the Euro banks will take this when they open in a few hours

Now that´s the real meaning of downgrading the credit rate for France. The global melting is on its way right in front our eyes right now. China will keep buying US treasury bonds but till when?

Originally posted by greenCo
Now that´s the real meaning of downgrading the credit rate for France. The global melting is on its way right in front our eyes right now. China will keep buying US treasury bonds but till when?

Till when indeed. Especially when the US is about to start a trade war.

China could just say screw ya, I'm going home and dump US treasuries.

If Europe-US-China were to collapse tomorrow, I think China would come out faster of the chaos because of the political system they have.

Democracies in crisis is not too good.

I´m reading some interesting opinions like this...

Read some weeks back about US companies that "discretely" had been pulling out of EU for about a year, today the Australians declared they have pulled out, and have no exposure to EU and now,... Chinas trading desk...This still doesn't take away China as a possible bond buyer, and China may very well have more channels to buy and sell the EUR currency, you don't necessarily have to have an office in Europe to do that...but...they're pulling back, as well as other investors.

What's left...************whirling drums******* .

France will have 53 Billions....ladies and gentlemen..yes...that's with a B,... 53 Billion EUR worth of exposure to Greece. Or put it in another perspective.....about 30% of France GDP...all at stake. Germany will "only" have 34 Billions in the hole, if Greece goes down.

What we're seeing is the rats leaving the ship.

The players are folding one by one, and the desperate guys, that knows they have a losing hand, can't do anything else other than continue the game...raise the bet, raise the bet....just to keep the game going. The hand France and Germany, especially France is sitting on, is terrible. The scope of this, it's not only Greece, the way this will go around in the EU will be like a bull in a porcelin shop.

This one resumes what´s happening in Europe.

Originally posted by greenCo
I´m reading some interesting opinions like this...

Read some weeks back about US companies that "discretely" had been pulling out of EU for about a year, today the Australians declared they have pulled out, and have no exposure to EU and now,... Chinas trading desk...This still doesn't take away China as a possible bond buyer, and China may very well have more channels to buy and sell the EUR currency, you don't necessarily have to have an office in Europe to do that...but...they're pulling back, as well as other investors.

What's left...************whirling drums******* .

France will have 53 Billions....ladies and gentlemen..yes...that's with a B,... 53 Billion EUR worth of exposure to Greece. Or put it in another perspective.....about 30% of France GDP...all at stake. Germany will "only" have 34 Billions in the hole, if Greece goes down.

I'm not sure where you got these figures from, but while €53bn is a lot of money, it's nowhere near 30% of France's GDP - which is over $2trn...

Everything to China is a war, even the economy. You can bet your last penny, whatever theyre up to its primarily for their own benefit.

We've been seeing a rising trend of cyber crime in the U.S. and it's not U.S. citizens perpetrating it, it's China thats robbing peoples identities and perpetrating fraud. Keep this is mind, when you go to purchase a product thats made in china from the internet, they could be hacking you and stealing your credit card numbers.

www.zerohedge.com...

Maybe this is correct.

reply to post by Vitchilo


Market hardly cares about what China says. Market only cares about what China does.

China is in no position to take a dramatic action in the near term, except making some dramatic comments.

We shall know if China is serious, when China stops shipping real goods in return for Jeffery money printed by the West.

This Sucks. I Love China!

My lithium batteries for my electric-bike come from China. Lots of parts for my electric cigarette comes from China. (just call me Electric Man - worked on my wife ) I cannot afford for those things to go up in price, they are hard enough to get shipped over here now.

Originally posted by Vitchilo
If Europe-US-China were to collapse tomorrow, I think China would come out faster of the chaos because of the political system they have.

Democracies in crisis is not too good.

On the contrary, China's current system is only made possible by the compliance of it's 1.5 Billion people, who in turn are only compliant because of the rise in wealth, living standards etc... Should that be taken away, the Chinese would have an extremely hard time keeping a lid on things.

Should the US or Europe collapse, chances are they would become more isolationist and look inward for recovery, meaning Chinese exports would tank, they would lay off millions and the simmering discontent with the system there already would boil over rapidly.

Much like what MI5 says about the UK; "we're only 3 meals from revolution", China is in the same boat but much worse given the fact they are much more oppressive. If the new middle classes suddenly find themselves unemployed, they will get quite touchy very quickly..

Then there are the hundreds of millions of rural poor which, up till now, have been ignored by the Urban rich. If the two should combine... Bang..

China is buying leverage in the US throught bonds.
leaving the EU because they think the euro-zone will be throwing good
money after bad. It will prop up it's own banks, and start
marching across SE asia, gaining realestate and resources.
we'll that's what I'd be doing if i were an evil geniouse and in
charge of china... A new era of empire making. It would be big
and no one could stop it, so long as they use conventional wepons
their isn''t a lot anyone will do, the US would be between a rock and
a hard place, an europ wouldn't be able to pay an army to go into the
field, not that they have mutch in the way of national interests in asia
anymore.
Quick piont if china want to have an underclass, which is not han chines
then conqued peopels would make excelent candidates for cheap labor.
I don't agree with the method, but it has always been a quick way of increasing
your ecconomic potential, just ask the romans. not that you can their all dead,
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