The link will not work after today so I am copy / pasting the information here. With China's Evergrande in default, and possibility of major contagion, what does China do? Interesting article:
Bill,
Very concisely:
China has but 3 ways to go.
1/ Ignore the problem, which is impossible for a Maoist State long term about to survive as a staged planned economy.
2/ Do what we would try to do via debt self monetization.
3/ Use a balance sheet solution. They do not officially increase the price of gold but in partnership (so to say) open gold Monday $3500 bid – $3500 offered in terms of their external currency. They stand and take all offerings and fill all bids. This way the marketplace fixes the price of gold. No country by mandate. China has 2 reserves of gold, the official one and the public one. China now has the formal reserve and informal reserve that they can call on. The gold of the people and the gold of the state. This is like poker, calling the hand of all the other country gold liars.
The Comex cannot open but rather has only one choice. That is settle all open gold and silver contracts at the dollar price of the prior close and closed themselves. No short cover can be made except trading at $3500 bid – $3500 offered at the close of the day before in cash.
Now, where do you buy significant gold or silver? The answer is nowhere, except Russia or China.
This tanks the entire fiat system except for Russia and China, as they have used a balance sheet fix to handle the sovereign bankruptcy problem They immediately set up two companies. Good Property Company and Bad Property company. They immediately start to remediate the good and liquidate the bad. The good can issue bonds denominated in the good and bad property companies are transferred to the old bondholders. The stockholders are totally screwed.
China calls in the people’s unofficial gold reserve in exchange for the value of $3500 in an instrument to be paid overtime. Those that tender their gold go to the top of the Maoist state get top ratings in their index of Social Order with an adjunct membership in the CCP for their act a good Maoist citizen.
This will via credit collapse tank the dollar in its only real measure against gold, not the phony USDX.
China’s currency will emerge stronger than the dollars against its massive gold holding. True also for Russia if they play along with China on Monday’s opening, if they are enlightened economically and do as I say, any Monday or Friday.
Try and pick my thesis apart. You cannot, as the above is just the skinny of what I would do if I ran China. Win the economic war in one day. The USA would today not win a hot war with China and Russia because our two enemies have HYPERSONIC ICBMs plus leadership.
What you cannot catch you cannot kill. Our laser weapons are deficient in aiming and strength control at the target.
Number 3 wins the economic and political war in one-day choice #3.
Regards,
Jim