Monetary tightening in China threatens to pop the $1.7 trillion (£1.07 trillion) credit bubble in local government finance and expose the country's simmering "subprime" crisis, according to the Communist Party's economic guru.
China may have had a gigantic bubble; some sectors of the economy will collapse: Marc Faber
THREE:
Fund manager Jim Chanos spoke to Bloomberg TV’s Carol Massar about China's economy, debt and real estate market.
Chanos said that growth in China may be zero and that China has “European kind of numbers” when it comes to debt.
On how a Chinese property bubble will play out:
"I think that will be the surprise going into this year, and into 2012 - that it is not so strong. The property market is hitting the wall right now and things are decelerating. The CEO of Komatsu said last week that he is having trouble getting paid for his excavator sales in China. Developers are being squeezed. They're turning to the black market for lending, this shadow banking system that is growing by leaps and bounds like everything in China.
"Regulators over there are really trying to get their hands around the problem. In the meantime, local governments have every incentive to just keep the game going. So they will continue with these projects, continuing to borrow as the central government tries to rein it in."
Chanos on his long and short positions:
"We are short Chinese banks, the property developers, commodity companies that sell into China, anything related to property there is still a short."
FOUR:
Thanks to this rampant use of credit, homes are now selling at outrageous levels when compared with personal incomes, 22:1 in some coastal regions. Investors should note that this ratio is far worse than anything the American property market experienced before its bubble burst suggesting that rough times could still be ahead for China and the likely overbought real estate market.
FIVE:
China’s biggest builder in the eastern province of Zhejiang, Greentown, appears to be in trouble and may provoke the start of contagion in Chinese property.Chinese property stocks are plunging (by 10% a day in some cases). Developers in China are starting to have their liquidity challenged and their access to finance locally and globally is drying up.
THE FED AND THE ECB ARE DESPERATE TO SOLVE THEIR OWN PROBLEMS BEFORE THE SHIT HITS THE FANS IN CHINA.
SIX MONTHS - THAT ALL THEY HAVE.
STAY TUNED...
2 comments:
It would be much better for all of us if we would just stop propping up bad ideas with money, and creating false bottoms to this terrible world economic situation.
The quicker we find the real bottom, the quicker we can fix everything, because the only thing that is going to fix everything is new ideas, new investment, and new productivity, which is not going to happen as long as we are all playing CYA.
China is more than toast. China will not be back for awhile. It could be that China will turn into India of 30 years back.
Europe will be back on it's feet.
But, you know, if you think about it, if Europe would find it's bottom, it would be better for the situation with Islamization too, because then Europeans would be forced to actually think about what is happening in their borders.
GOOD POINTS.
NEITHER EUROPE OR CHINA OR THE USA CAN COME BACK FROM ANY REAL BOTTOM UNTIL SOCIALISM IS ERADICATED BECAUSE IT'S THE SOCIALIST POLICIES THAT CREATED THE BUBBLE.
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