Out of the goodness of their hearts.
Not if, but Wen-
China’s Wen Suggests Euro Funding After Meeting With Merkel
Feb 6 (Bloomberg) — Chinese Premier Wen Jiabao raised the prospect of contributing to the euro-area’s bailout programs, telling Chancellor Angela Merkel that China may be prepared to assist in resolving its debt crisis.
The Chinese government is considering funding options for the temporary European Financial Stability Facility and its permanent successor, the European Stability Mechanism, through the International Monetary Fund to help stabilize the monetary union, Wen said yesterday after meeting Merkel in Beijing. China has previously said that it needs more detail on any plan to contribute funds to the euro area.
China is “investigating and evaluating ways, through the IMF, to be more deeply involved using the ESM and EFSF channels in solving the European debt issue,” Wen said at a briefing alongside Merkel, who arrived in China early yesterday on her fifth visit to the world’s most populous country as chancellor.
There is something I don’t understand. How can China help finance anything in Euros? Do they have idle Euro balances or do they need to sell their Euro bonds which wouldn’t help unless they sold them to the ECB?
@MamMoTh,
What if China loans Yuan to the ECB, which then sells the Yuan on the FX market for, say, $US. The $US is reserves for the ECB, just as if they got a loan from the Fed, the dollar appreciates vs. the Yuan and China’s trade surplus policy is supported. And Europe “owes” them. Sounds like an offer they can’t refuse.
except they don’t do that.
they have euro from net selling things to the euro zone
@WARREN MOSLER, the question was euro balances or euro bonds?
@WARREN MOSLER,
…and they have dollars (on account at the Fed), from net selling things to the dollar zone. Dollars which are of course money-good in IMF/ESM/EFSF channels. And which are also eminently swappable among invited club members for the next year under the Fed/ECB swap agreement umbrella without creating big splashes in the currency trading pool. Euro valuation support and trade surplus dollar recycling in one easy step. Briar Patch Strategy at its best.
I’m surprised he didn’t break out in a giggling fit! Now, now…let me get this straight. You’ve run out of worthless digits that cost you nothing to create, so you’ve flown all the way over here to ask for some of ours? HAHAHAHAHAHAHAHA!!!!!!
Spain should really start referring to her as “Tia del Muertos”.
@Unforgiven,
Frau Merkel is smarter than you suggest. She wants to preserve the Euro but that involves more loans to PIGs. But she doesn’t want to be left holding worthless PIG debt. So she has flown to Beijing to see if she can sucker the Chinese into buying some bum steers. It’s always worth a try.
@Ralph Musgrave,
I’m with Unforgiven. Merkel doesn’t know what she’s doing. I think she really does believe that Europe is ‘out of euros’ and needs China to supply them. Our elites are not very bright.
@RWJ,
You’re probably right: I’m attributing more brains to Merkel than she’s actually got.
and, of course, a fallacy of composition for the eu
@Unforgiven, LOL! That is hilarious Unforgiven. 😉 She should turn it back around on him, now let me get this straight, you are gonna slave labor your people into making widgets and gadgets to send to us for worthless DIGITS! BWAHAHAHA! You can’t make this stuff up!
Exactly. And it will not “resolve” the debt crisis, as the first paragraph says, just keep the system functioning until the Greeks, Irish, or whoever cannot take it any more.
Also note that the funds will flow through the IMF, which skims a take off the top. Lagarde is paid some $470,000/yr tax free, plus expenses at Davos and elsewhere. They need to stay in the game.
@Jim Thomson,
If the IMF were a physician it would be the world’s leading advocate of applying leeches to any and all medical problems.
@RWJ, They are the universal cure. Are 2 enough? Is 5 too many? If the patient starts to decline, apply more.
or, it is the leech…
@WARREN MOSLER,
Maybe your opening comment should have been “Not imf, but Wen”;)
yes!
followed by Hu will save us…
hahahahaha!! warren, i just love your sense of humor.
y’know, maybe that’s what’s needed to draw the masses more into MMT–a little more comedy…
maybe in your UKMC talk this september, you should open with a comedic shtick. you have 7 months now to come up with some material and to work on your delivery…
thanks! seem my into for Paul Davidson?