The Chinese Agree To Bail Out Eurozone..In Exchange For..

China has cleverly agreed to help the EU out of the pit it dug for itself...but with certain conditions.

They obviously want financial guarantees on their investment. What they also want is in essence a silent veto on criticism or opposition to China's policies, like its opposition to sanctions on Iran, any disagreements with the US or China's currency policy, which artificially undervalues the renminbi to support Chinese exports at the expense of western producers.

If they get that, China could be willing to throw substantial amounts into the EFSF, the EU's bailout fund. Another possibility that's being looked at is a new fund set up under China's auspices in collaboration with the IMF.

French President Sarkozy is already prepared to take China's terms. “Our independence would not be put into question by this,” he said in a television interview. “Why would we not accept that the Chinese had confidence in the eurozone and place a part of their surpluses in our funds or our banks? Would you rather they placed it with the US?”

If President Sarkozy seriously thinks the EU's independence won't be compromised by a deal with the Chinese, he's in for a rude awakening.

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