China & Japan Jawbone ESM

China, Japan Signal Support for Europe Rescue Fund as IMF Meets – Bloomberg.

In America, we tell people to put their money where there mouth is. Issuing politically bland statements in support of the ESM is nice, but the real measure of Chinese and Japanese faith in the eurozone is how much yuan and yen they are plunking down on ESM bonds.

In this article, we learn that China and Japan “indicated support,” will “cooperate,” and will even “consider” buying bonds issued by the ESM. The Chinese are even willing to play “a minor role” in supporting the efforts of the troika.

The Chinese even support austerity:

Yi, one of the leaders of China’s delegation to the IMF meetings, said that policies announced in the past few months by the European Union, the euro region, and individual nations now need to be fully implemented “to restore and rebuild confidence.”

There is only one thing that they are not doing: placing a large order for a big, steaming pile of ESM debt. Each country has a lot of euros in reserves to invest, but they would rather buy safer German debt than mess with the ESM.

Here is a chart of the countries underwriting the ESM:

The PIIGS-C are contributing to their own bailout fund. Don’t think that this absurdity has not been lost on the people investing Chinese and Japanese reserves.

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