【CNN】Dear China, please buy our debt! XOXO, Europe

lilyma06

Dear China, please buy our debt!XOXO, Europe
By Paul R. La Monica @CNNMoney October 27, 2011: 1:04 PM ET
原文链接：http://rss.cnn.com/~r/rss/money_topstories/~3/9XThvSEJJrg/


French president Nicolas Sarkozy and Chinesepresident Hu Jintao may have to do more than shake hands. Europe wants (andneeds) China to invest in the EFSF bailout fund.
NEW YORK (CNNMoney) -- New dad NicolasSarkozy is apparently hoping for a great baby gift from China president Hu Jintao.A couple of hundred billion euro or so should do.
With Sarkozy and other European leaders finally reaching a deal to cut Greece's debt load, bolster thebroader EU bailout fund and recapitalize the continent's banks, attention nowturns to just who will pay for much of the plan.
Once again, the world is hoping China will cometo the rescue.
One of the most tantalizing parts of Europe'slatest proposal is the creation of a special investment vehicle that wouldallow sovereign wealth funds to invest in the European Financial StabilityFacility (EFSF) bailout fund.
Sarkozy had a phone conversation with Hu afterthe debt deal was reached in Brussels early Thursday morning. I'm guessing theyweren't sharing war stories about late night changes of poopie diapers.
According to a report from Chinese news agency Xinhua, the two leaders spoke about more ways to work together topromote global growth. But there was no mention of China being asked to buyEFSF debt.
Still, it looks like Sarkozy won't be the onlyEuropean official making a pitch to China for much-needed funding. KlausRegling, the CEO of the EFSF, is said to be planning a trip to China (and possiblyJapan as well) in the next few days to meet with potential investors.
Why you should be worried aboutEurope
The push to get Asian central banks to investmore in Europe makes perfect sense. For one, the EU is a key export market forboth China and Japan. It is not in the best interests of either nation to letEurope sink even deeper into an economic morass.
Japan, and to a lesser extent China, have alsoalready invested in the EFSF. According to figures from the EFSF, Japan ownsabout 20% of the bonds issued by the EFSF so far. There are no specific figuresfor China but "Asia-ex Japan" nations are listed as sizeableinvestors in various EFSF issues as well.
So making further investments may be merely acase of being in for a penny and in for a pound. Or euro if you will.
The EFSF may also be a compelling alternativeto U.S. Treasuries. Chinaand Japan are the two largest foreign holders of Uncle Sam's debt, owning $1.14trillion and $937 billion in Treasury bonds respectively.
China has made no secret of its irritation withthe U.S. regarding the debt ceiling drama in Congress this summer and how thathas impacted China's investments. China also can't be thrilled that the Fed'stwo rounds of quantitative easing and Operation Twist have left interest ratesnear historic lows.
And the EFSF bonds have the Triple A stamp ofapproval from all the major credit rating agencies -- unlike the U.S.
Still, experts said it's not a given that China(or other sovereign wealth funds) will make a big bet on the EFSF.
"This is a big question mark goingforward. It's probably likely that China and others will participate, but it'snot definite. There is some skepticism," said Anthony Valeri, fixed incomeinvestment strategist with LPL Financial in San Diego.
Valeri said that while China does complainabout the many fiscal challenges facing the U.S., China realizes that no matterwhat Standard & Poor's might say, Treasuries are still a better horse tobet on than European bonds.
"China will need a lot of convincing thatEFSF bonds are an attractive option for them. At the end of the day, Treasuriesmay still suit their needs as a safe haven investment," he said.
Brazilcuts rates. Is China next?
And China and other sovereign wealth funds havecomplicated objectives, added Bhaskar Chakravorti, senior associate dean ofInternational Business and Finance at The Fletcher School at Tufts University.They have political interests as well as financial motives. That could makenegotiations difficult.
"The road to a beautiful end game inEurope is paved with potholes. The Chinese will still probably be quitecautious and demand a lot both economically and politically," saidChakravorti. "I'm sure that Germany will not be thrilled about that."
But Lionel Mellul, co-partner with MomentumTrading Partners, an independent broker-dealer in New York, thinks Chinaeventually will make an investment.
Still, he doesn't think that this isnecessarily great news. Mellul argues that it's a sign of how desperate Europeis and how nervous leaders are about the possibility that Italy and Spain mayalso need bailouts like Greece, Portugal and Ireland did.
"It just goes to show how bad thesituation is in Europe that they are forced to try and strike a deal withChina. Europe needs Asian participation for this to work," he said.
And that means that China and other potentialinvestors have the bargaining leverage. Mellul said China could make any EFSFpurchases contingent on more favorable trade deals, for example.
"China will probably participate, but thequestion is at what cost?" he said.
CNN's Jaime FlorCruz in Beijing contributed to this story.
The opinions expressed in this commentary are solely those of PaulR. La Monica. Other than Time Warner, the parent of CNNMoney, and AbbottLaboratories, La Monica does not own positions in any individual stocks.

yangfuguang

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我要凑够是个字符，烦

lilyma06

yangfuguang 发表于 2011-10-28 17:27
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我要凑够是个字符，烦

感谢认领~:D

yangfuguang

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