Jump to content
House Price Crash Forum
Realistbear

China Is Holding The E U Up - They Can't Afford To Let It Down

Recommended Posts

http://uk.finance.yahoo.com/news/Forex-focus-end-euro-euphoria-tele-2450433681.html?x=0

Forex focus: the end of euro euphoria
The cracks in the eurozone structure are widening, writes Liz Phillips.
It didn’t last long, then, last week’s euro euphoria. There was temporary relief at the successful mid-week bond sales by Portugal, Italy and Spain, and the euro strengthened to a one-month high.
However, it soon fell back as profits were taken and reality kicked in: the patient may have been given a shot in the arm, but it’s still pretty poorly.
Alone among the EU nations, Britain’s currency is surging on the back of yesterday’s high inflation figures.
The pound pushed above the $1.60 mark for the first time in nearly two months leading to increased speculation that interest rates will rise sooner rather than later, according to analyst Duncan Higgins at Caxton FX .
...../
A major plank in keeping Europe afloat has been support from Asia. Christina Weisz, director of Currency Solutions , comments: "Last week China and Japan (NYSE: MCO - news) reinforced their roles as global players by pledging to buy billions of dollars' worth of bonds in European governments.
Europe is China's biggest trading partner while China is a significant export market for the eurozone and with both economies so closely linked neither can afford a collapse of the euro. China already has significant holdings of European debt.
"Buying European bonds also strengthens trading links between China, Japan and the Eurozone, a move that will reinforce Asia as a global economic power.”
John Freeme, foreign exchange dealer at HiFX agrees: “The support of the wall of money from Asia has certainly turned the outlook for the euro as both China and Japan have committed to supporting the eurozone bond markets. Needless to say it is in China's and Japan's interest that Europe as an economy stabilises and that the euro does not become too weak.

So, both the E and US are dependent on China to keep things going as more and more Chinese tat is sold building up larger and larger currency reserves. Looks like the US and EU are deep in it together.

Currency traders are seeing Sterling as the best bet which may see £ rise against all currencies in the ST before hitting a wall and then down it comes. Not a good thing to have your currency rise on what is really awful news (inflation).

Share this post


Link to post
Share on other sites

I think Max Keiser on today's Keiser Report hit the nail on the head as to the main reason they are propping up Europe - Europe has most of the World's gold reserves and in the event of defaults (high chance) the Chinese will only settle these debts by being paid in gold.

Share this post


Link to post
Share on other sites

I think Max Keiser on today's Keiser Report hit the nail on the head as to the main reason they are propping up Europe - Europe has most of the World's gold reserves and in the event of defaults (high chance) the Chinese will only settle these debts by being paid in gold.

Is there enough? 10000 tons ~ 291699274 troy ounces $408378983600

Four hundred eight billion three hundred seventy-eight million nine hundred eighty-three thousand six hundred.

Yup China'll settle for that all your gold for all our paper what a clever plan!

Share this post


Link to post
Share on other sites

I think Max Keiser on today's Keiser Report hit the nail on the head as to the main reason they are propping up Europe - Europe has most of the World's gold reserves and in the event of defaults (high chance) the Chinese will only settle these debts by being paid in gold.

The possibility of that happening will be zero. The Chinese will not get the gold. They would have to invade and that isn't going to happen.

If Europe defaults it's game over for the fiat system.

Share this post


Link to post
Share on other sites

I think Max Keiser on today's Keiser Report hit the nail on the head as to the main reason they are propping up Europe - Europe has most of the World's gold reserves and in the event of defaults (high chance) the Chinese will only settle these debts by being paid in gold.

Is there enough? 10000 tons ~ 291699274 troy ounces $408378983600

Four hundred eight billion three hundred seventy-eight million nine hundred eighty-three thousand six hundred.

Yup China'll settle for that all your gold for all our paper what a clever plan!

I heard Max Keiser as well this morning and that one sentence made it all make sense!

Share this post


Link to post
Share on other sites

The Euro seems to be defying gravity still. Everything from 'fat fingers' selling treasuries, to the Chinese buying dodgy debt. I just got burnt with a few mistimed* (early?) shorts, but I wonder how long it can hold out, when it seems to be peering over the precipice.

* Back to the penny trades for practice, methinks! :)

Share this post


Link to post
Share on other sites

I think Max Keiser on today's Keiser Report hit the nail on the head as to the main reason they are propping up Europe - Europe has most of the World's gold reserves and in the event of defaults (high chance) the Chinese will only settle these debts by being paid in gold.

You really have no idea how bonds work do you?

Share this post


Link to post
Share on other sites

Cynus you are right... they don't have a clue. As for Max Khyber he realized a while ago that it's easier to poke fun than make wise, constructive, commentary. Nowhere does it say the on the Euro Bonds that are being bought by China that they are redeemable in gold. Now having said that, let's suppose China wants to engineer a move in which all reserve currencies are backed by gold (i.e. USD, Euro, Real, Sterling, Rubble, etc.). If they see the need to move away from our fiat money system, to one backed by gold then things will get interesting. Here is the data for reserves:

Gold Reserves

At a price of US$1000/oz., exceeded in 2008 and 2009, one tonne of gold has a value of approximately US$32.15 million.That means the EURO zones gold reserves are worth 0.3trln EURO dollars today, then it would take something like a 100-fold increase in gold price to equalize total european money supply with gold price. Preposterous? Maybe not. Imagine if China, Europe, Russia, Brazil, and India decided they were sick of US fiscal hegemony and abuse - they could coordinate global purchase of all gold and bid up the price to a point where it balances money in the participating countries. I read somewhere that gold production is so limited it would not be hard to continually inflate the price. Feasible? it would leave Europe in a strong position, and somewhat devalue the USAs money.

I have to stop here since i seem like a gold bug!

You really have no idea how bonds work do you?

Share this post


Link to post
Share on other sites

Cynus you are right... they don't have a clue. As for Max Khyber he realized a while ago that it's easier to poke fun than make wise, constructive, commentary. Nowhere does it say the on the Euro Bonds that are being bought by China that they are redeemable in gold. Now having said that, let's suppose China wants to engineer a move in which all reserve currencies are backed by gold (i.e. USD, Euro, Real, Sterling, Rubble, etc.). If they see the need to move away from our fiat money system, to one backed by gold then things will get interesting. Here is the data for reserves:

Gold Reserves

At a price of US$1000/oz., exceeded in 2008 and 2009, one tonne of gold has a value of approximately US$32.15 million.That means the EURO zones gold reserves are worth 0.3trln EURO dollars today, then it would take something like a 100-fold increase in gold price to equalize total european money supply with gold price. Preposterous? Maybe not. Imagine if China, Europe, Russia, Brazil, and India decided they were sick of US fiscal hegemony and abuse - they could coordinate global purchase of all gold and bid up the price to a point where it balances money in the participating countries. I read somewhere that gold production is so limited it would not be hard to continually inflate the price. Feasible? it would leave Europe in a strong position, and somewhat devalue the USAs money.

I have to stop here since i seem like a gold bug!

Thank goodness the One-eyed Snotgobbler held on to all our gold then

Share this post


Link to post
Share on other sites

Ah, another gold thread!

Buy low and sell high--hold too long and you get burned.

Gold is still 50% below peak 31 years ago so buying on the dips is not always a good strategy.

Gold has been oversold by more than 7000% of the world's actual supply and is, by definition, a Tulip market at best and a PONZI at worst.

Over the long term gold is the worst investment having lagged NSI by a considerable margin.

Most nations are facing deflation except the miracle economy which suggests the best hedge is cash and bonds--pick your currency well.

Zimbabwe's inflation rate is lower than ours now.

Buy low and sell high!

;)

Share this post


Link to post
Share on other sites

You really have no idea how bonds work do you?

I have a vague idea but no I will publicly admit that I am not an expert however are you honestly telling me if Spain and or Portugal default that China is just going to allow them to?

Also how can you say with certainty that this bond auction did not have some extra clause in it that did guarantee their debts via gold? Again I am no expert but without any of us seeing the terms and conditions of this specific deal we are all just guessing as to what was agreed behind closed doors.

Share this post


Link to post
Share on other sites

I have a vague idea but no I will publicly admit that I am not an expert however are you honestly telling me if Spain and or Portugal default that China is just going to allow them to?

Also how can you say with certainty that this bond auction did not have some extra clause in it that did guarantee their debts via gold? Again I am no expert but without any of us seeing the terms and conditions of this specific deal we are all just guessing as to what was agreed behind closed doors.

Cygnus Alpha (ra, ra, ra private school studied Ancient Greek at Oxbridge) had a secret microphone hidden, so he KNOWS what went on behind closed doors

He knows, he's an Alpha, don't you know - lives in Surrey probably and drives a Jaaaaaaaaagggggggggggg.

Ra, ra, ra, - crush the proles, how dare you criticise or even doubt him!

Share this post


Link to post
Share on other sites

Fair enough..... but in one respect you are right. China wants a deal. It deserves a deal. People slave in FOXCON factories for the west paid 35c per hour. Who is violating human rights? The Chinese employers or Apple Inc. who drive costs down to the bone and then take massive profits off their overpriced, expensive, goods.

I was hoping to get the gold bugs all excited but seem to have failed.

I have a vague idea but no I will publicly admit that I am not an expert however are you honestly telling me if Spain and or Portugal default that China is just going to allow them to?

Also how can you say with certainty that this bond auction did not have some extra clause in it that did guarantee their debts via gold? Again I am no expert but without any of us seeing the terms and conditions of this specific deal we are all just guessing as to what was agreed behind closed doors.

Share this post


Link to post
Share on other sites
Guest spp

Ah, another gold thread!

Buy low and sell high--hold too long and you get burned.

Gold is still 50% below peak 31 years ago so buying on the dips is not always a good strategy.

Gold has been oversold by more than 7000% of the world's actual supply and is, by definition, a Tulip market at best and a PONZI at worst.

Over the long term gold is the worst investment having lagged NSI by a considerable margin.

Most nations are facing deflation except the miracle economy which suggests the best hedge is cash and bonds--pick your currency well.

Zimbabwe's inflation rate is lower than ours now.

Buy low and sell high!

;)

Nothing but a dumb troll. How many have you now misinformed over the years on this website?

You wave those pom-poms at people losing their jobs...you sad person.

Share this post


Link to post
Share on other sites
Europe is China's biggest trading partner while China is a significant export market for the eurozone and with both economies so closely linked neither can afford a collapse of the euro. China already has significant holdings of European debt.

That's the important part. I think Europe exports more to Switzerland than it does to China.

If Europe goes down, Chinese manufacturing is toast. It's in their interest to keep the plates spinning.............not Europe's B)

Share this post


Link to post
Share on other sites

I have a vague idea but no I will publicly admit that I am not an expert however are you honestly telling me if Spain and or Portugal default that China is just going to allow them to?

Also how can you say with certainty that this bond auction did not have some extra clause in it that did guarantee their debts via gold? Again I am no expert but without any of us seeing the terms and conditions of this specific deal we are all just guessing as to what was agreed behind closed doors.

If Spain or Portugal default, China would have no choice. Neither would any other bondholder. Anyone holding Irish bonds would have been shitting themselves a few months ago.

Oh and if the Spainish and Portuguese had that much gold that they could guarantee their debts, they wouldn't really need to borrow the money in the first place.

Share this post


Link to post
Share on other sites

If Spain or Portugal default, China would have no choice. Neither would any other bondholder. Anyone holding Irish bonds would have been shitting themselves a few months ago.

How do you know what the terms of this deal were EXACTLY? Of course I know what happens with normal bond auctions in the marketplace but this wasn't a public auction was it?

Oh and if the Spainish and Portuguese had that much gold that they could guarantee their debts, they wouldn't really need to borrow the money in the first place.

Best gold holdings figues I could find with both Spain and Portugal in:

saupload_charlie7.jpg

They look like they are / were (2008) both in a better position than us. Also look at the ECB figure which might be relevant further down the line.

So in summary I still stand by my original argument that China buying bonds to get to the gold is plausible but I am not going to follow this thread further.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.