It all started yesterday afternoon, with a Bloombergblast reporting that China might buy Italian bonds. Markets soared. The blast cited an FT article which no one could find online. The FT also denied that it had published such an article. Markets tanked.
We got to the bottom of this, establishing that theBloomberg reporter responsible for the report had seen a preview of an FT article on the topic. That article was published later in the day.
Then today, Reuters cited Italian officials who said the talks centered around Chinese industrial assets, not bond purchases. The markets seemed unfazed by this news.
Ilargi: If anyone can see China buying up huge amounts of EU periphery debt, good luck. Here's thinking the Chinese would demand conditions that no country that is still part of the EU could give in to. Sure, China has European bonds, like it has US bonds, but propping up Greece, Italy or Spain at this point would be a great risk, for which "adequate" compensation would be demanded.
Besides, the ECB has bought well over $100 billion in periphery paper recently, and how helpful has that been? It's not like China would spend its entire foreign reserves on the topic, and it needs its printing press to keep the domestic Ponzi going. Hard to see as a life saver, and probably unfunded.
http://theautomaticearth.blogspot.com/2011/09/september-13-2011-he-said-she-said.html
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