Monday, January 11, 2010
Investment Guru Forecasts China Economic Collapse
Investment guru James Chanos makes a contrarian prediction that China will undergo economic collapse. Let's hope that we stay in good enough shape that we can grab our land back from them when that happens.
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I thought that this was already brought up earlier?
Look China may have an asset price bubble, however it is much much smaller relative to the west. It can have a mild correction in real estate, that is true. However, overall in terms of China modernizing and building out new infrastructure for their people, it seems to be going well compared to the US which has a declining infrastructure.
The problem is that Jim Chanos predicts deflation. Deflation is not possible in terms of USD over any longer period of time, as simply the US government and the Federal reserve are spending too much to keep the economy alive relative to the economic output. For the Treasury market this will cause yields to eventually rise, leading to a lack of confidence in the treasury market and therefore the dollar. There literally is not enough real money (not derivatives play money) worldwide to buy such massive quantities of treasuries over the next few DECADES as the gao is projecting will be needed.
So what does this mean? This means that China's influence and projected power worldwide will continue to grow as the west continues to decline.
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