Just In Case You Thought China Would Bail Out Europe

China Can’t Use Reserves to ‘Rescue’ European Countries
China can’t use its $3.2 trillion in foreign exchange reserves to “rescue” European nations and the country “has done its part” to help the region deal with its financial crisis, Vice Foreign Minister Fu Ying said.
Foreign reserves are not revenues,” Fu, whose portfolio is European affairs, said in a question and answer session following a speech in Beijing yesterday. “It’s not money that can be used by the premier or the finance minister.”
Fu said China can’t use its reserves to fund poverty alleviation at home or to bail out foreign countries. The country learned from the 1997 Asian Financial Crisis that it needs to keep large reserves to maintain liquidity in order to honor obligations, she said.
Europe is struggling to contain a sovereign debt crisis that has forced Portugal, Ireland and Greece to seek bailouts. After leaders in October agreed to increase the region’s rescue fund, French President Nicolas Sarkozy said he planned to call Chinese President Hu Jintao to discuss how the Asian country can contribute.
China’s foreign exchange reserves, the world’s largest, stood at $3.2 trillion at the end of September. The country invests in U.S. Treasuries, sovereign debt sold by European Union countries and other international bonds. A portion is also invested in equities and other financial instruments by China Investment Corp., the country’s sovereign wealth fund.
My view:

Eurozone leaders will not be able to count on China to bail them out of all their bad loans as a way to alleviate the growing sovereign debt crisis.

We will likely see continued austerity as nation states and the ECB coordinate an attempt to bailout their banking system and the Euro currency itself.  Bank nationalizations are likely to accelerate in this stressful environment of inverting bond yields.

One thing is clear.

Germany is dominating the balance of the Euro members.  We examined this in an earlier post, but the rate of  German influence seems to be increasing. 

It appears that calls for increasing fiscal coordination with Germany, that the German goal is to turn the Euro into a form of  super Deutsche Mark.


  1. False Break on the Bull Wedge
    The neat part about this one is that the false break, an Egg embryo pop, and the Bernoulli 177 support were all at the same place. I went seriously long. Seriously enough that I was questioning my sanity on Saturday.

    Here is the prediction

    Here is the results (so far)



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