Contrarian Investor Sees Economic Crash in China

[kelsey59]

James S. 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 Mr. 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, Mr. 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 percent.

link

If he is right, we are in deep doodoo.

[Far from home]

I disagree.
It will hurt, but what it will really do is usher a massive change in the world economic system.
He's also not the first to talk about how China's growth is unsustainable.
To be honest, a lot of their growth is contrived due to their activities in currency manipulation and illegal manufacturing/smuggling.

It will definitely be interesting to see how this all plays out.....

[OctoberSky]

In the meantime I'm buying packs of soup and tuna in cans and stashing it in the basement. This crazy system where we don't have any connection other than some valueless token to the food we eat will end. The amish had it right all along.

[Dean]

In the meantime I'm buying packs of soup and tuna in cans and stashing it in the basement. This crazy system where we don't have any connection other than some valueless token to the food we eat will end. The amish had it right all along.

they did?how so??

[MrRational]

Based on the woefully inadequate and self serving performance of our own amoral MBA's over the last thirty or so minimally regulated years (that's a bad combination btw... amoral insiders and no meaningful oversight) can anyone doubt the effect of even a 10% misrepresentation by Chinese insiders?

Forget the deliberate and coordinated government directed efforts ftm...
(that is an order of magnitude above what is needed to still screw us royally)

[macaroniman]

I disagree.
It will hurt, but what it will really do is usher a massive change in the world economic system.
He's also not the first to talk about how China's growth is unsustainable.
To be honest, a lot of their growth is contrived due to their activities in currency manipulation and illegal manufacturing/smuggling.

It will definitely be interesting to see how this all plays out.....

I am no big time Hedge fund investor, just an avid reader of History. A couple years back I saw an interesting news clip, only once, that was immediately buried from China. China has been a communist country where everyone lived at a poor subsistence rate since the Boom. The "Boom" has created a very small elite who ENSLAVE, EXPLOIT, and STEAL from a nation of over a Billion. In the age of computer technology, they cannot sustain this cloak of exploitative secrecy. But back to the clip. On of these boom time factories was built on and STOLEN from villagers that had farmed it for hundreds if not more years. They were armed with pitchforks and angrily demonstrating and fired on by the military. That is what is unsustainable. Enslaving your own and the rest of the industrial world EXPORTING jobs to the lowest paying countries where they ENSLAVE their people in rat infested slums to work like the worst slave of ancient Rome. We( the entire industrial elite) are all in on the exploitation. That is unsustainable.

China will fall in on itself. And as we cripple our middle class and export more jobs and import cheap labor and DEFRAUD our own citizens , we will Collapse as certainly as did Rome. The ignorant rulers of history always thought THEIR WEALTH insulated them from the consequences of their exploitative behavior. History shows it NEVER DID. The collapse brought about by this ponzy scheme of greed that defrauded the many for the benefit of the few always engulfed the few eventually as well. So not only will China fail, so will the USA as our elected have become pimps for the insider cheats, schemers, and manipulators of our economic system. China is Doomed but so are we. AS people are comfortable with government stealing as long as their ox is not gored.

[Far from home]

I am no big time Hedge fund investor, just an avid reader of History. A couple years back I saw an interesting news clip, only once, that was immediately buried from China. China has been a communist country where everyone lived at a poor subsistence rate since the Boom. The "Boom" has created a very small elite who ENSLAVE, EXPLOIT, and STEAL from a nation of over a Billion. In the age of computer technology, they cannot sustain this cloak of exploitative secrecy. But back to the clip. On of these boom time factories was built on and STOLEN from villagers that had farmed it for hundreds if not more years. They were armed with pitchforks and angrily demonstrating and fired on by the military. That is what is unsustainable. Enslaving your own and the rest of the industrial world EXPORTING jobs to the lowest paying countries where they ENSLAVE their people in rat infested slums to work like the worst slave of ancient Rome. We( the entire industrial elite) are all in on the exploitation. That is unsustainable.

China will fall in on itself. And as we cripple our middle class and export more jobs and import cheap labor and DEFRAUD our own citizens , we will Collapse as certainly as did Rome. The ignorant rulers of history always thought THEIR WEALTH insulated them from the consequences of their exploitative behavior. History shows it NEVER DID. The collapse brought about by this ponzy scheme of greed that defrauded the many for the benefit of the few always engulfed the few eventually as well. So not only will China fail, so will the USA as our elected have become pimps for the insider cheats, schemers, and manipulators of our economic system. China is Doomed but so are we. AS people are comfortable with government stealing as long as their ox is not gored.

The real question is, are we the pimps, or are we just being used....

[OctoberSky]

they did?how so??

In the face of economic collapse the amish will but yawn...rise early from thier beds and tend the fields as they always do because it'll just be another day. The rest of use will beg, borrow, steal and shoot each other for what little food is available because we have no way to feed outselves.

[Foggy Dewhurst]

In the face of economic collapse the amish will but yawn...rise early from thier beds and tend the fields as they always do because it'll just be another day. The rest of use will beg, borrow, steal and shoot each other for what little food is available because we have no way to feed outselves.

I don't think it will be just another day for them, they'll have to protect their fields and animals from the scavenging hoards that would invade them. I don't think anybody would come out of this unscathed..

[georjec2]

I wonder what things he's been wrong on.

[david wayne osedach]

For China 10% growth is considered small. Not only will they weather the global meltdown they will be well poised for the recovery!

[MooGoo]

you may be onto something.

See here:

http://www.youtube.com/watch?v=p8E0V...embedded#at=17

[BS21213]

He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent

Wow. He must be a genious to have figured all this out. I think there's enough book cooking, faking etc... going on in the US as well. Greed run rampant. And I'm not even a genious!

[birdwatcher55]

In the meantime I'm buying packs of soup and tuna in cans and stashing it in the basement. This crazy system where we don't have any connection other than some valueless token to the food we eat will end. The amish had it right all along.

Aren't you going to get sick of tuna?? Try mixing in some spam

[zenwalk]

They're communists. They still see things in terms of plans and it is heresy to question the 5 or 10 year plan. But, as the Soviets proved, even communism has to pay its bills. It's too close to call whether expecting China to save the world's economic butt is more dangerous or ludicrous.

[Evil_Eye_21201]

I disagree.
It will hurt, but what it will really do is usher a massive change in the world economic system.
He's also not the first to talk about how China's growth is unsustainable.
To be honest, a lot of their growth is contrived due to their activities in currency manipulation and illegal manufacturing/smuggling.

It will definitely be interesting to see how this all plays out.....

The problem will be that if the Chinese Economy collapses two things could happen. 1st they will stop buying our debt. That would be a big problem but not the biggest.

2nd they will start dumping the US Treasuries they already own that have not matured. That will push prices down and the interest rates will be push up. Pushing the treasure rates up will really hurt.

You will see this on a smaller scale when the Fed stops buying mortgages. The primary mortgage rates will start to go up to attract private investment.

With unemployment remaining high and rates increasing will kill what is left in of the housing market.

Another problem that is around the corner is the Muni bond default wave. Harrisburg Pa. is about to go under. They are saying they may not even be able to make payroll in a couple of weeks. You look at the number of houses in default or foreclosure, no taxes are being collected. No tax, no revenue.