Everyone’s favourite China short, Jim Chanos warned Bloomberg overnight that the China slowdown has just begun. The anchor give bearish Jim a fair beating and I found a few of his responses were a little thin. But on the whole, the Chanos view that there is some distance to travel before China pulls off any kind of “landing” makes sense to me.
So really no change at all.
If anything it is getting worse in Chimerica.
And now that the Communist Party Elite have rules that Developers can’t lower their prices with the strangest price freeze I have ever seen this will hit one hell of a tipping point and the implosion will be beyond belief.
Or they just print more Yuan?!
Good luck to Chanos … odd though that he does not fancy stopping off in China proper?
Bit of cha siu bao and some Yum Cha would be ideal in Beijing from my experience?!
Each to their own.
TM.
He may be right, he may be wrong – but he’s spruiking it for the position…
Nonetheless, this Michael Pettis interview from a week or so ago is in similar vein, Pettis seeing likely commencement of ‘landing’ 2012/13ish and hard landing up to five years hence.
http://paul.kedrosky.com/archives/2011/10/michael-pettis-talks-china.html
He and Chanos make some interesting points. I think Chanos is right on the money. This is just the start for China going down the tubes. Central Govt trying to slow everything down and the SOE trying to keep the building going. I hope Australia is ready for a China slow down. Lets just see how lucky Australia is in the next year or so.
3d1k this Michael Pettis talk is very interesting I actually listened to the whole thing. Its is amazing how he talks about Germany, Brazil, Russia who ran similiar models like China and they all slowed down to a crawl after time. Interesting.
Thanks for the link – it was well-worth listening to the entire interview.
Thanks also to Jim for explaining that foreign reserves are in effect purchased with local currency, adding to the local money supply and creating a liability against the ‘so called’ foreign currency reserve.
Have I got this right?
Calling it just a liability is a bit simplistic. By that logic a Foreign Debt is an asset?
A country like Aus could certainly do with some foreign reserves instead of this massive external liability.
Foreign Reserves are the end result of activity not the cause of activity.
Thanks 3d1k, great talk by Pettis, Applies not only to China in many ways. It applies to the whole world except others have to head in teh opposite direction…less consumption, more savings, more investment.
It’s one on the nose for all those who promote NATRIR as the answer to our problems.
Thanks 3d1k, that was very interesting and in line with the Reuters files on China.
I’m having deja vu moments thinking of the time when Russia was growing fast and was expected to become the next superpower. The memories are vague though as I was too young to pay close attention at the time. This is however the second time in my life living in a country with such close ties and trade interests to the next “super economy” to be. Very interesting times ahead.
Check this out
http://globaleconomicanalysis.blogspot.com/2011/10/shanghai-homeowners-smash-showroom-in.html
that’s interesting – same day as:
http://timesofindia.indiatimes.com/tech/news/internet/China-censors-Web-after-tax-riots/articleshow/10528798.cms
Most reassuring. An equilibrium being re-established.
+1
Thanks Velociraptor for the link.
During my short stay in Shanghai (2 days after the high speed train deadly disaster south of Shanghai in July) I discovered Shanghai Daily newspaper which seems to be more balanced than any major Australian newspaper. Here is more on that (home buyer’s riot) event: http://www.shanghaidaily.com/article/?id=485501&type=Business
I found a few of his responses were a little thin
Which responses?
Dunno why he doesn’t go to China. Does he think he’ll get locked up or something? If they haven’t locked up Pettis and Chovanec yet then I reckon Chanos would be ok.
Yep! They wouldn’t lock him up so much as not let him in in the first place.
This looks like an interesting paper.
“The Finnish great depression: From Russia with love.”
http://www.nber.org/papers/w14874