Some interesting state intervention by the Chinese today in their “free market for capitalism”, China’s central bank will conduct a bill swap operation to support the issuance and liquidity of perpetual bonds issued by banks to replenish capital, it said on Tuesday. As per https://www.reuters.com/article/us-china-pboc-swaps-idUSKBN1YS01X
Translated into English, that means that China’s central bank, is going a credit swap with Australian banks, because the Chinese have huge investments in Australian real estate, some of which literally went up in flames. Most likely because back in china there is a whole lot of loans based on those Australian real-estate owernship/loans. Another way of looking at that is, in a bid to grab international currency since many western central banks are being a lot more stingy with making loans to each other, preferring for the safety of government bonds that are not exhibiting a negative yield curve, but china offered to buy a lot of questionable and possibly on fire debt from Australia for those sweet sweet Australian dollars which can be traded internationally with more stable value than the Renminbi. This will be to the tune of $855million over the next 3mo. Hard to say which is more probable, possibly a mix of both. But It appears the central banks might be tightening under the presence of the ghost of Christmas past … The only question that remains, is who will heed this wakeup call.