China trusts the Euro more than the Greenback!

Given the crisis in the Eurozone, what on earth could motivate China to buy Euro-denominated bonds? It isn't for love of Europe, you can be sure. It's all just a comment on the Greenback. As troubled as the Euro is, China sees it as having a better future than the inflated dollar. What a comedown that is for the Greenback! The Mediterranean end of the EU might be in financial trouble but -- thanks to the dummy in the White House -- the WHOLE of America is in financial trouble

Europeans were of course both surprised and pleased to hear that China has declared its intention to buy more Euro-denominated bonds. And what will it be buying those bonds with? Any greenbacks it has. It is trying to get rid of greenbacks any way it can -- while they are still worth something.

China has vowed to increase its support of the eurozone after pledging to spend billions of pounds propping up the single currency. Premier Wen Jiabao said it will keep buying government bonds – the debts of stricken European nations.

In a boost for Greece ahead of a pivotal vote on greater austerity cuts tomorrow, Mr Wen said Europe could count on his ‘unremitting’ support.

However, according to billionaire speculator George Soros, the debt crisis has pushed the eurozone to the ‘verge of an economic collapse’. It was all but ‘inevitable’ that at least one stricken member will have to exit the euro because of massive debts, the hedge fund tycoon warned.

His warning came just days after Bank of England’s Governor, Mervyn King, branded European attempts to shore up Greece as a ‘mess’.

Huge demonstrations are once again expected in Athens as the government there makes a final attempt to approve almost £25billion of cuts which are a condition of the latest bailout. If the Greek parliament does not pass the austerity budget tomorrow, the nation will receive no more support and is likely to run out of money by the middle of next month.

But the turmoil engulfing the region has not diminished China’s desire to buy up more European debt. China has foreign reserves of around £2trillion and is the largest creditor to the United States.

At the start of a three-day visit to Britain yesterday, Mr Wen said: ‘China is a long-term investor in Europe’s sovereign debt market. In recent years, we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.’

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Posted by John J. Ray (M.A.; Ph.D.).