China Invokes A “Stop Loss” On OTC Derivatives
How many times have the so called economic "geniuses" on the daily paul called the Chinese backword peasants... Some here do not see that we have a bunch of idiots running this country. None of them are forward thinkers or leaders. We are in for hard times because people of this nation are not holding our "leaders" responcible..
China Invokes A “Stop Loss” On OTC Derivatives
Posted: Aug 31 2009 By: Jim Sinclair Post Edited: September 1, 2009 at 1:19 pm
Filed under: General Editorial
My Dear Friends,
China tells the Wall Street OTC derivative manufacturers and distributors to go straight to hell.
China has invoked a "Stop Loss" on these fraud ridden instruments.
If you create a specific performance contract that you know under even the slightest pressure cannot perform, you have committed fraud.
My English bull dog Mia, bless her soul, figured out the non-performance characteristics of these financial WMDs.
This will have a MAJOR impact on the sociopath US manufacturers and distributors of OTC derivatives like CDSs that struck the world over with these weapons of mass financial destruction.
This could roll the financial world one more time.
Doing the right thing is never easy. Doing the right thing takes character and courage.
The Chinese are doing exactly the right thing and exactly what the West should have done years ago when long term capital flopped.
Now the rest of the BRIC nations will follow suit.
China’s actions here are another reason why China is headed for the largest economy on the planet.
While the West enriches the creators of this disaster, China herein tells them, to go straight to hell, and that they will not get their money to enrich themselves more. China has invoked a "Stop Loss."
Here is an example of how China will act with regards to the dollar late this fall. You can take that to the bank if you can find a solvent one in the USA, GB or Euroland.
The Wall Street types who are talking heads surmise that China thinks and will act like the Wall Street Weenies. They are so very WRONG.
Screw with China and you will get bitten in the ass by a real dragon. China leads the BRICs.
This will have a MAJOR impact on the sociopath USA manufacturers and distributors of OTC derivatives that struck the world over with these weapons of mass financial destruction, enriching themselves in the process by many trillions.
If China’s banks were the losers on these instruments then the winners, now not getting paid, are the sociopath USA manufacturers and distributors of OTC derivatives. These instruments were not created between Chinese banks, but made and packaged primarily in the good old US of A. Think it out. This is a stop loss for the Chinese.
I was correct 10 years ago when people denigrated me. I am correct on the price of gold as people still denigrate me.
I will have the last word with all these jealous fools.
Respectfully yours,
Jim
China warns banks on OTC hedge defaults -report
Sat Aug 29, 2009 9:47am IST
BEIJING, Aug 29 (Reuters) – Chinese state-owned enterprises (SOEs) may unilaterally terminate derivative contracts with six foreign banks that provide over-the-counter commodity hedging services, a leading financial magazine said.
China’s SOE regulator, the State-owned Assets Supervision and Administration Commission (SASAC), had told the financial institutions that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying.
It did not name the banks or the firms in question, but said Keith Noyes, an official with the International Swaps and Derivatives Association, had confirmed he was aware of the letter to the banks. He declined to comment further to Caijing.
It also cited a SASAC official as saying that almost every SOE involved in foreign exchange or trade had some exposure to derivatives such as crude oil, non-ferrous metals, agricultural commodities, iron ore and coal, although only 31 SOEs were licensed to do so.
Nobody at SASAC was immediately available to comment on Saturday.
SASAC took over the job of overseeing SOEs’ derivatives trading from the securities regulator in February after several Chinese firms reported huge losses from derivatives, and quickly tightened the rules, ordering firms to quit risky contracts and report their positions on a quarterly basis.
More…
http://in.reuters.com/article/oilRpt/idINPEK33016020090829
UPDATE 1-Beijing’s derivative default stance rattles banks
Mon Aug 31, 2009 7:42am EDT
By Eadie Chen and Chen Aizhu
BEIJING, Aug 31 (Reuters) – A report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades provoked anger and dismay among investment bankers on Monday as they feared it may set a damaging precedent.
The State-owned Assets Supervision and Administration Commission, the regulator and nominal shareholder for state-owned enterprises (SOEs), told six foreign banks that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying in an article published on Saturday.
Maybe we might want to
check our spelling and syntax a little better. Could the literacy rate have anything to do with it? Try :called the Chinese, (comma) "backward" peasants, and "responsible".
AND THE TRUTH SHALL SET YOU FREE
sorry mr. anal retentive.. I
sorry mr. anal retentive.. I did not take typing or go to secretary school as you obviously did.. get over yourself.. did you learn anything from the article? why not talk about the importance of the article?
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
My guess is that they want China to become powerful enough
Those who expect to reap the blessings of freedom must. like men, undergo the fatigue of supporting it.-Thomas Paine
so that the chinese can spread communism throughout the world. Dominating countries usually spread their politics around the world, as we have for so many years. We won't even have the money to defend ourselves against it. Didn't Kissinger say he thought that China had the model society? My guess is that they handed all this power to China for a reason.
Those who expect to reap the blessings of freedom must. like men, undergo the fatigue of supporting it.-Thomas Paine
The R3volution requires action, not observation!!!!
Uh-oh..
If you wont fight for the right when you can easily win...you may...have to fight with all the odds against you and only a precarious chance for survival [or] when there is no chance of victory...it's better to perish than to live as slaves.
W.Churchill
Mathew 5:9 Blessed are the peacemakers: for they shall be called the children of God.
Here's what a google news search turned up
On Tuesday a government official moved to downplay the significance of letters that were reportedly sent to six unnamed investment banks last week warning that state-owned companies could be allowed to default on OTC derivative deals.
"The move is not meant to cover a comprehensive range of businesses and companies. It's mainly to deal with some problematic contracts that were signed before, especially those that might have insufficient information disclosure or two parties have disputes over certain details," a government official with knowledge of the issue told Reuters on Tuesday.
But even the forced unwinding of those positions would be unlikely to cause waves in the vast futures markets for copper or oil, traders and industry officials say. There has also been no suggestion that importers of physical commodities like soybeans could default on trades, as some grain traders feared.
http://www.forbes.com/feeds/reuters/2009/09/01/2009-09-01T10...
Thomas Jefferson once said, "The natural progress of things is for liberty to yield and government to gain ground."
Well, I guess he called that one.
A Republic, If You Can Keep It
to bad_karma and jeff34761
as per michael's instructions you cannot post an entire article.
just a paragraph or two and then the link for further reading.
if any of what you posted fits that description, please edit your posts.
it's rule #3 of the DP guidelines on the front page.
Ron Paul is my President
Ron Paul is My President
thats what I did.. the rest
thats what I did.. the rest of the article is on www.jsmineset.com
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
The rest of the story....
http://dealbook.blogs.nytimes.com/2009/08/31/china-derivativ...
While Sasac is a powerful agency whose broad mandate puts it in charge of Chinese government assets and the state-owned enterprises, or S.O.E.s, that manage them, the contracts signed by S.O.E.s to hedge against changes in commodities prices fall under jurisdictions outside of mainland China — notably Hong Kong and Singapore.
A Hong Kong spokeswoman for the International Swaps and Derivatives Association, Donna Chan, said the group was aware of the report, but had not seen any such letter and could not comment further.
Representatives for Sasac were not immediately available for comment Monday.
A source at a bank involved in commodities hedging in Hong Kong said it had received no such letter from Sasac, and questioned whether any had been sent at all. “That would be unprecedented and quite unusual,” he told DealBook.
Chinese firms have booked huge losses on derivatives during the global financial crisis.
Citic Pacific, a Hong Kong-based conglomerate almost one-third owned by the state enterprise China International Trust and Investment Company, reported real and potential losses valued at more than $2 billion in December on foreign exchange positions gone wrong. Its chairman and managing director later resigned.
A month later, three airline companies — Air China, Shanghai Air and China Eastern — posted total losses of 13.17 billion renminbi, or $1.94 billion, on fuel hedging contracts, whose flaw may have been that they were just too simple.
“They were less expensive contracts,” the banking source said, because Chinese companies were making market bets without hedging against prices going the wrong way. “They don’t want to pay the additional fixed cost of insurance on those hedges.”
While the existence of the letters is in doubt, the debate over what to do about losses at Chinese state-owned enterprises, and the search for a political solution, is real.
The state-run Shanghai Securities News said at the beginning of this month that Beijing planned to tighten the rules on trading in over-the-counter derivatives.
The same week, China Business News cited an unidentified source as saying banks and business trading in financial derivatives would be more heavily regulated, speculation discouraged, and derivatives trade between foreign institutions and domestic companies banned.
and here more of the same from a different source:
http://www.rapidtrends.com/2009/09/01/china-shuns-otc-deriva...
Beijing-based derivatives lawyers said the so-called “legal letter” has no legal standing — SASAC as a shareholder has no business relationship with international banks.
“It’s like the father suddenly told the creditors of his debt-ridden son that his son won’t pay any of his debt,” said a lawyer from the derivatives risks committee of the Beijing Lawyers Association.
It’s also unclear why Chinese state firms, which have complained that their foreign banks sometimes did not disclose full information of potential risks when selling them complicated products, did not seek redress through the courts.
“If that is the case, these firms should seek through legal measures to safeguard their rights, instead of turning to the authorities for political interference,” said a different lawyer.
SASAC took over the job of overseeing SOEs’ derivatives trading from the securities regulator in February after several Chinese firms reported huge losses from derivatives.
thanks for the smoke, mirrors,...
and heresay!
O Captain, My Captain, rise up and hear the bells!
its 'cos I owe ya, my young friend...
Rockin' the FREE world in Tennessee since 1957!
The implications are huge.
The implications are huge. Things nearing the final play.
-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!
Get Prepared!
-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!
Get Prepared!
Yeah the Chinese traders will not be able to churn commissions
Unless I'm reading this wrong, and if its even true, what Sinclaire is claiming is that Chinese companies can back out of derivatives contracts. OK, but how does that benefit them? Unless it was the Chinese company that SOLD the derivative contract or holds the underlying asset of the contract, how do the Chinese companies benefit? How do you back out of a contract you paid for? I don't know of anyone handing out refunds for broken contracts.
The only benefit I can see here for China is to stop rouge Chinese traders from entering into contracts that are losing bets to begin with. The downside is far greater for Chinese manufacturers and exporters because if this is true, how are they to hedge their raw material, shipping costs, or currency risks? Remember the Chinese currency is pegged to the dollar.
Maybe its time for Jim to retire. I certainly am not one to take the giant mental leap he suggests and believe that this is true, or that the other BRIC nations will follow suit. This is great Chicken Little cannon fodder, but it makes no economic sense how any of the BRIC nations would benefit. Even if this magazine article is incorrect, I doubt there will be many takers for any Chinese derivative contracts those banks might offer.
dude... this stuff is way
dude... this stuff is way over your head....
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Apparently bad_karma Forbes and Reuters agree with me
Apparently bad_karma, once again, its you that is in over your head. Here are excerpts from the article, there's a link at the bottom of the post.
"But even the forced unwinding of those positions would be unlikely to cause waves in the vast futures markets for copper or oil, traders and industry officials say. There has also been no suggestion that importers of physical commodities like soybeans could default on trades, as some grain traders feared".
"Most imports of soybeans -- of which China is the world's biggest buyer -- are hedged on a short-term basis using Dalian or Chicago Board of Trade futures contracts, which are covered by margin requirements and outside the scope of Beijing's crackdown, which is focused mainly on more complex structured products".
But Beijing and its companies will pay a long-term cost -- the inability to adequately protect themselves from rising costs.
"It's quite a short-sighted move. In the long run it will harm China. It will be a loss of business for banks but then it's better to lose business than to lose money," said a separate investment risk marketer at a major financial institution".
But Beijing and its companies will pay a long-term cost -- the inability to adequately protect themselves from rising costs.
http://www.forbes.com/feeds/reuters/2009/09/01/2009-09-01T10...
Please explain it then
Please explain it then, since you are so knowledgeable. You the one who is always challenging people to back up theories with facts. So break it down. Explain how the regulatory arm of the derivatives market in China, that is only a minor shareholder in the Hong Kong banks is going to default on contract that they do not either write, or hold the underlying assets. I can't wait for this.
Thanks for the news.
Can you believe that a story was published recently that said the Chinese flag was going to be hung at the white house soon.....How do the American Korean Vets feel about that since they experienced first hand waves of Communist Chinese soldiers coming at them in Korea???? My own brother-in-law was one of those American "Drafted" soldiers !
The Commies are coming,,,the Commies are coming!
beesting
i guess I need to ask this
i guess I need to ask this question..... why were American Soldiers on foreign soil? if those waves of chinese soldiers were in LA or Fresno then they should feel bad...
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Good Question,,Because They Were Drafted.
The draft was a forced induction into the army for all able bodied boys over the age of 18. If you didn't go when called you faced jail time and the same thing as a police record when you applied for a job. It may have been considered a felony, I don't know.
Because patriotism was so high after WW II employers would not hire people that refused to go in the army. It wasn't until Vietnam several years later that young Americans hid out in Canada and other countries, probably illegally, to avoid the draft.
Ron Paul and I joined the Air Force to get out of the draft, because Korea and Vietnam draftees were considered cannon fodder by the crooked American politicians and I didn't like that label, even if you did became a dead hero !
Please check your history, the 26th Amendment was passed because so many young American soldiers were dying { 58,000 in Nam } who never had a chance to vote the scum bags out of office that were responsible for getting Americans involved in what was then called a police action.
beesting
no telling where this is heading...
this is the reason for the sell off....