sathruvinasakh
BANNED
- Joined
- Oct 15, 2009
- Messages
- 210
- Reaction score
- 0
Chanos, a billionaire, is the founder of the investment firm Kynikos Associates and a famous short seller an investor who scrutinizes companies looking for hidden flaws and then bets against those firms in the market.
His most famous call came in 2001, when Chanos was one of the first to figure out that the accounting numbers presented to the public by Enron were pure fiction. Chanos began contacting Wall Street investment houses that were touting Enrons stock. We were struck by how many of them conceded that there was no way to analyze Enron but that investing in Enron was, instead, a trust me story, Chanos told a congressional committee in 2002.
Now, Chanos says he has found another trust me story: China. And he is moving to short the entire nations economy. Washington policymakers would do well to understand his argument, because if hes right, the consequences will be felt here.
Chanos and the other bears point to several key pieces of evidence that China is heading for a crash.
First, they point to the enormous Chinese economic stimulus effort with the government spending $900 billion to prop up a $4.3 trillion economy. Yet Chinas economy, for all the stimulus it has received in 11 months, is underperforming, Gordon Chang, author of The Coming Collapse of China, wrote in Forbes at the end of October. More important, it is unlikely that [third-quarter] expansion was anywhere near the claimed 8.9 percent.
Chang argues that inconsistencies in Chinese official statistics like the surging numbers for car sales but flat statistics for gasoline consumption indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.
Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.
This, Chanos and others argue, is happening in sector after sector in the Chinese economy. And that means the Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.
The Pivot Capital report was extremely popular in Chanoss office and concluded, We believe the coming slowdown in China has the potential to be a similar watershed event for world markets as the reversal of the U.S. subprime and housing boom.
And the bears also keep a close eye on anecdotal reports from the ground level in China, like a recent posting on a blog called The Peking Duck about shopping at Beijings stunningly dysfunctional, catastrophic mall, called The Place.
I was shocked at what I saw, the blogger wrote. Fifty percent of the eateries in the basement were boarded up. The cheap food court, too, was gone, covered up with ugly blue boarding, making the basement especially grim and dreary. ... There is simply too much stuff, too many stores and no buyers.
Is China headed toward collapse? - Eamon Javers - POLITICO.com
Like what I have been saying,the bubble is getting itself ready for the big burst.I love to see the faces of these so called racists who boast about their han and communist culture.
His most famous call came in 2001, when Chanos was one of the first to figure out that the accounting numbers presented to the public by Enron were pure fiction. Chanos began contacting Wall Street investment houses that were touting Enrons stock. We were struck by how many of them conceded that there was no way to analyze Enron but that investing in Enron was, instead, a trust me story, Chanos told a congressional committee in 2002.
Now, Chanos says he has found another trust me story: China. And he is moving to short the entire nations economy. Washington policymakers would do well to understand his argument, because if hes right, the consequences will be felt here.
Chanos and the other bears point to several key pieces of evidence that China is heading for a crash.
First, they point to the enormous Chinese economic stimulus effort with the government spending $900 billion to prop up a $4.3 trillion economy. Yet Chinas economy, for all the stimulus it has received in 11 months, is underperforming, Gordon Chang, author of The Coming Collapse of China, wrote in Forbes at the end of October. More important, it is unlikely that [third-quarter] expansion was anywhere near the claimed 8.9 percent.
Chang argues that inconsistencies in Chinese official statistics like the surging numbers for car sales but flat statistics for gasoline consumption indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.
Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.
This, Chanos and others argue, is happening in sector after sector in the Chinese economy. And that means the Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.
The Pivot Capital report was extremely popular in Chanoss office and concluded, We believe the coming slowdown in China has the potential to be a similar watershed event for world markets as the reversal of the U.S. subprime and housing boom.
And the bears also keep a close eye on anecdotal reports from the ground level in China, like a recent posting on a blog called The Peking Duck about shopping at Beijings stunningly dysfunctional, catastrophic mall, called The Place.
I was shocked at what I saw, the blogger wrote. Fifty percent of the eateries in the basement were boarded up. The cheap food court, too, was gone, covered up with ugly blue boarding, making the basement especially grim and dreary. ... There is simply too much stuff, too many stores and no buyers.
Is China headed toward collapse? - Eamon Javers - POLITICO.com
Like what I have been saying,the bubble is getting itself ready for the big burst.I love to see the faces of these so called racists who boast about their han and communist culture.
