Report from China on Zhou Xiaochuan

The Ming Pao report out of China states that trading losses by Zhou, the Governor of the People's Bank of China (China's central bank.)  were on investments in Fannie and Freddie.

A translation (with commentary) provided to ZH reads:

It says that "China may punish Zhou because China lost $430 billion foreign exchange on its Fannie and Freddie bond investment". It doesn't say anything about U.S. Treasury Bonds. The truth is that many Chinese thought China lost all its investment in Fannie and Freddie after they were delisted from NYSE. It is also wrong because China doesn't invest with their stocks."

We are sure to get further details in upcoming days as to what if anything is really going on. The markets are not waiting,though, China's 1 Month Repo is up by nearly 50%.

China can, of course, can print itself out of any losses, but this would add to their current inflation problems.

Bottom line: I a very fragile global economy, we have a possible new tremor out of China, the full ramifications are as yet unknown.