Wait, wtf? CCP Central Bank Chief "defecting"? $430 billion loss on US bonds?

[Cain]

This story is flat out strange

http://www.stratfor.com/analysis/20100830_china_rumors_central_bank_chiefs_defection

Rumors have circulated in China that People's Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within the PBC, including Zhou. Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou's defection have spread around China intensively, and Zhou's name has been blocked from Internet search engines in China.

STRATFOR has received no confirmation of the rumor, and reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment. However, the release of this rumor and its dispersion throughout the public is significant, particularly as the Communist Party of China (CPC) is preparing for a leadership transition in 2012.

Chinese state-run media and official government websites have run several high-profile reports about Zhou, which should be seen as an attempt to refute the rumors. The PBC website published two articles on its homepage reporting on Zhou's meeting with visiting Japanese Financial Services Minister Shozaburo Jimi during the third China-Japan high-level economic dialogue as well as a meeting with an Italian delegation. Xinhua news agency reported that Zhou told the PBC Party Committee Enlargement meeting on Aug. 30 it should "continue to implement justice and strengthen legislative work in the financial system." Prior to this news, Zhou appeared at the 2nd annual conference of the heads of the Chinese, Japanese and Korean central banks held on Aug. 3, and his most recent public appearance was Aug. 10 for China's Financial System Anti-corruption Construction Exhibition.

Zhou is known to have lofty political ambitions and is believed to be a close ally to former Chinese President Jiang Zemin, as well as a core figure for Jiang's "Shanghai Gang." There has been no shortage of rumors about Zhou's possible dismissal in the past five years, as he is believed to be associated with several high-level financial scandals. For example, Zhou was rumored to be under "shuanggui," a form of house arrest administered by the CPC, during the massive crackdown of Shanghai Party Secretary Chen Liangyu in 2006, which was perceived in the country as a crackdown of the Shanghai Gang and part of President Hu Jintao's effort to consolidate power ahead of the 2007 power transition. There was also a rumor that he might have been detained following the investigation and arrest of Wang Yi, the vice governor of the China Development Bank, along with several other officials in the financial circle. Currently, several financial scandals are still under investigation, and it is likely that Zhou, as PBC governor and one of the most powerful economic players in the country, could be associated with some cases. Therefore, whether or not the rumor is true at this time, the leaking of this news is very likely to be associated with a power struggle within the Communist Party's economic hierarchy.

There is no way China has suffered losses of that magnitude on US bonds.  The "internal politics" thesis certainly makes most sense....but who is orchestrating the campaign within the Chinese government against Zhou Xiaochuan?  And just how ugly will the power struggle within the party be?  Especially with the Chinese economy in the uncertain condition it currently exists in, and with ugly nationalism and general unrest on the rise....

[Jenne]

So they are ousting him through a rumor mill.  Nice.  But then, the Chinese are crafty this way--they ruin people frequently like this, through reputation and innuendo.  From what I studied of their culture and politics from the 1800's-on, scandal is a big fucking deal, even if everyone KNOWS it's bullshit.

...also, the guy probably deserved it. /wade defense.

[Cain]

Although, to be honest, that is no different from Washington, London, Paris, Frankfurt and Moscow.

[Jenne]

Tr00f, but I'm not sure the people in the above-named countries would flee on the basis of rumor ALONE...would have to be something a little more tangible.  Or outright threatening...just the rumor alone may not have that large of a galvanizing effect.

[Cain]

I would like to extend a welcome to our friend from the Vietnamese FPT Group, the telecommunications giant of Hanoi, who is currently reading this article.

[Adios]

I would like to extend a welcome to our friend from the Vietnamese FPT Group, the telecommunications giant of Hanoi, who is currently reading this article.

[Cain]

Noticed a strange IP reading the article.  Did a trace, came back to the FPT Group's server - the FPT being the most highly ranked publically traded company in Vietnam, based on revenue, growth and other economic indicators.

[Adios]

Damn. They got good dataminers.

[Triple Zero]

I bet they're just using Google Alerts, just like the Poker without Cards dude was.

That's a Google service where you can enter a search phrase, and you get an email every time it's mentioned somewhere (as long as Google indexes it).

[Jenne]

...PD reaches deep

[Iason Ouabache]

...PD reaches deep

That's what she said.

[Jenne]

...PD reaches deep

That's what she said.

Bow, chika, bow, bow.

[Doktor Howl]

...PD reaches deep

That's what she said.

Bow, chika, bow, bow.

I think that was the song at one of my weddings.