Can anyone else provide some thoughts on what this may mean in the medium term for them and us? Along with the G8 thing, I think China has some fireworks up on deck.

http://news.bbc.co.uk/2/hi/business/8139....

Quote:

China's finance ministry has failed to sell all 28bn yuan ($4.1bn; £2.55bn) of one-year government bonds it offered at an auction.

It is the first under-subscribed government bond auction since 2003.

The ministry sold a total of 27.52 billion yuan of the bonds, which offered a yield to investors of 1.06%.

more .....

127, could you please change the thread title to "Chinese bond auction FAILS".

That would really make my day!

not what i wold call good news.

Hell, I call that GREAT news!
The more that fail globally, the better.
Bring it on, let's get this **** over with already.

wow .. and it was short term too .. just imagine how bad a 5 or a 10 year would have failed ..

Is there a way to put this in context? What have their auctions looked like the last few years?

Now we know the real reason the Chinese delegation left the G-8 meeting.

nah, I am not sure how they "auction" bond. But I don't think they sell bonds like it here. Why buy bonds when houses went up 6% a week?

govt controls the printing press. The auction of Yuan is like a dog and pony show.

If you think the USD is a piece of ****, then the RMB is anti-matter.

Quick, everyone fly to dollars!

Quote:

Meanwhile, the Chinese city of Hangzhou has started tightening mortgage lending terms, ahead of any changes to monetary and credit policies by the national government.

So the idea was that china was going to consume the world outta this mess, right???

Thanks 127!

Oh oh.....

Now THAT'S not good.

ok, so they were short, by .48 b RMB (.07 b usd)? Is this that big of a deal?

one year money not working? Maybe China could roll everything into the 30 day market. or maybe do some kinda intra day borrowing. you know, we will borrow your riminbi, but you can watch it the whole time we have it.

and the purchasors of US treasuries find themselves a little more strapped. karma's a bitch.

Well, isn't China supposed to be wearing a superhero costume under it's suit? If you would buy bonds, any bonds, it would be Heroic Chinese Global Economy Lifter Bonds.

That they failed to earn a full subscription bodes ill.

The fail is a big deal. You have to wonder what caused the sudden drop in interest being that they haven't had a fail since 2003. My guess is liquidity is a problem....although I'm curious as to whether sentiment has really turned a corner regarding the 'China will save us all' meme.

Would be interested in Sushihorn's take. Hopefully he'll see this thread and comment.

Wow, a country that actually holds a positive balance of reserves fails auction. I wonder how successful our auctions here in the US would be if the primary dealers weren't forced to bid.

Wow. A one year auction fail.

For reference does anyone have the previous bid to cover numbers on their one year notes?

Mliu
Correct on China and the printing press. They seem to be doing that now. Why would anyone be surprised when people there would rather speculate than fund the government? No one trust to CCP and with good reason if their memory runs back any further than 20 years. If they can't borrow, they will print - but this time it won't be backed by more dollars held as PBOC - total fiat. That jacks interest rates higher and kills of the credit stupidity faster.

The only reason that this has gone on so long and to such extremes in the US and Britain is the misplaced faith due to LONG histories (centuries) of fiscal responsibility. It is that faith on which much rests right now and governments all over the world tried to piggyback on that confidence - which was precisely the point of dollarization, Bretton Woods, etc. Once it is broken those who tried to hitch a ride on the dollar get crushed first and most comprehensively until a new foudation is built since they are farthest from the source of new dollars. There is no free lunch.

Is it a possibility that a 1 year auction fail is indicative of a high inflation scenario being expected in their economy in the very near future?
Hence, returns on the bonds not able to meet inflation in a 12-month period?
What happens to our economy if China has a ramped inflationary period right now?

Quote:

Chinese bond auction FAILS

Excellent thread title, btw!

agree with sushi - the chinese are ready for a corrupt government - they are cutting this one off from the money supply.

it will take a little longer in the US, but that day is coming.

Wow...Sushi that was....uh....so Zen. Two posts above, I hope that you see this thread and viole! There you are.

So, the way I see it, China is about to have a serious problem with hyperinflation.

Steph
That really is a cool coincidence. Hadn't seen your post so I was probably typing when you entered it. The inflation thing in China is a given. THEY are the ones with a total fiat currency - no need for debt to back it so they have a lot fewer barriers to a Zimbabwe scenario than we do.

This looks like the result of a "beggar thy neighbor" devaluation plan by China. Think about it. China's exports are falling so their dollar earnings are looking a lot less rosy than previously. They have traditionally bought Treasuries to manipulate their currency downward and secondarily to help fund consumption in the US. They see that likely won't be possible in the near future - certainly not on the same scale as the last several years. So how do they keep their currency (and exports) cheap? They print, inflate and devalue - that's how. Once again, they suppress the living standards of their people to further industrialization - a less brutal version of Stalin's plan. Except this time they do it directly by inflating-devaluing their currency instead of supporting the dollar.