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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

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Jan 9 4:00 PM EST

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To: TobagoJack who wrote (62736)	4/13/2010 3:00:32 PM
From: Elroy Jetson	2 Recommendations Read Replies (3) of 219225

China on ‘Treadmill to Hell’ Amid Bubble, Jim Chanos Says April 08, 2010 By Shiyin Chen charlierose.com (Bloomberg) -- In an interview on “The Charlie Rose Show” that aired on PBS, hedge fund manager James Chano said “The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction. The bubble may begin to “run its course” in late-2010 or 2011.” China is “on a treadmill to hell,” said Chanos, who said in January the nation is Dubai times a thousand. “They can’t afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing.” Property prices in China rose at the fastest pace in almost two years in February even after officials this year re-imposed a tax on homes sold within five years of their purchase to curb speculation and ordered banks to set aside more funds as reserves to cool lending. The boom in China’s real estate has fueled concern that China may face a collapse seen in Dubai that has hurt the ability of some of its companies to repay debt. Since his January prediction, Chanos, the founder of Kynikos Associates Ltd, has been joined by Gloom, Doom & Boom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s property market. Chinese state and local governments are among the most leveraged to property-related borrowings and the nation will “ultimately” have to nationalize a lot of the bad loans that will arise from the end of the bubble, Chanos said. In response to the suggestion that China’s $2.4 trillion of foreign currency reserves will prevent the property bubble from posing a problem, Chanos replied, “The most recent examples of nations which built-up large foreign currency reserves were Japan in 1978 and America in 1929 – neither turned out particularly well.” I expect China will need to inflate their way out of this problem in addition to depleting their foreign currency reserves.” “The one thing most people are not expecting from this situation is a plunge in the value of the Renminbi.” Chanos was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp. The investor said he is short-selling Chinese developers as well as companies supplying building-related materials to the country, without identifying any stocks. .

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