Is China's economy headed for a crash?

Discussion in 'Economics' started by toc, Jan 9, 2010.

  1. toc


    Is China's economy headed for a crash?

    David Barboza, NYT News Service, 9 January 2010, 01:54am IST

    SHANGHAI: James Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose
    stories were too good to be true.

    Now Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.

    As most of the world bets on China to help lift the global economy out of recession, Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 — or worse", he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8%.

    "Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger credit excess than in China." He is planning a speech later this month at the University of Oxford to drive home his point.

    As America's pre-eminent short-seller — he bets big money that companies' strategies will fail — Chanos's narrative runs counter to the prevailing wisdom on China. Economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.

    Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal and steel.

    Chanos, whose hedge fund, Kynikos Associates, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal. He has been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.
  2. But when that time comes, won't they just liquidate some bankers, and threaten others that their kidneys will be sold if they don't essentially turn back the clock before the you-know-what hits the fan?
  3. Lethn


    I burst out laughing at this part, they're one of the most productive countries on the planet and so that means they're going for a crash?

    These damn neo-cons are pathetic.
  4. S2007S


    Arent they hoarding commodities as well.

    Damn, when this bubble bursts I don't think all the money in the world is going to stop this collapse.

    Our markets are in a bubble, stocks are up hundreds of percent based off of nothing else but cheap monopoly money being used to prop up the entire system.
  5. Lethn


    I'm fairly sure China is easily one of the majority buyers of commodities lately, that's probably why they're getting attacked by these damn fascists. Yes, I call them that because that's what they freaking are. They're a bunch of rich assholes who are completely terrified that China has found out they're using as you said monopoly money to fund their garbage and they're trying to use every attack at their disposal.

    America's economy is a farce and I think even the UK is beginning to catch onto that too. Apparently the EU countries have started switching their reserve currencies to the euro now though they haven't gone to the old standards we used to have.
  6. no, worst. They are the most serious national security treath that the USA is facing... their way of thinking aren't compatible with China, the security of Israel, the integration of american products in the muslim world, and the personal freedom of Americans... to name a few...
  7. Taiwan is still a sovereign country, regardless of mainland China's "wrath." China has no right to dictate terms, and we should not buckle under the pressure.
  8. China is headed for a crash, it's a bubble. But how does this signal a crash?