CHANOS: CHINA IS NOW ON A BIGGER, FASTER TREADMILL TO HELL
Jim Chanos, the founder of hedge fund Kynikos Associates, offers some macro perspectives in an interview with Bloomberg. Chanos says we’ve kicked the can in Europe and provided nothing more than a short-term fix. Chanos thinks the crisis will flare up again in the coming months.
His most famous global bearish position is China and Chanos is growing increasingly bearish. He says the Chinese property prices are set to continue declining and that this could result in increased banking woes. He says the market is currently bifurcated and probably becoming excessively bullish about the soft landing and the ability of the global governments to fix all of these structural problems.
Watch the full interview here:
Source: Bloomberg
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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17 Comments
I wish there was someone who was neutral on this that could give ther perspective. The bulls go rah rah rah for China while the bears go boooooooooo. “Chanos is growing increasingly bearish” gee what has he been doing for the last 4-5 years? I don’t dispute Chanos’ investment track record but he’s been wrong on China for a number of years now and it’s getting tiresome.
Jon, while chanos has been bearish he has never committed to a date. He has been correct on how China was (is) failing.
As far as finding someonevwho is neutral about any market…good luck. Whether you r a trader or an investor you have an opinion. If yoy dont have an opinion u r uninformed…scratch that…we r all uninformed.:)
What goes up must come down. Timing is everything.
Oh for the love of everything holy. Oh yeah, I thought the whole world was going to collapse yadayadayadayada. Listen up and listen up good,
IT’S ALL FIAT MONEY BASED ON A SYSTEM OF TOO MUCH DEBT. WHAT DO YOU THINK THEY ARE GOING TO DO????!!!!!
Oh and where are the morons harping for copper’s collapse. After all, it was so financialized that under every rice paddy was a fully functioning mine, right?????
Chanos may be right, in 10 years. THAT’S WONDERFUL….
laugh it up clowns. where’s all the geniuses short on copper. I hope you loaded up near the low $3s….
just desserts. go back to reading zero hedge. they will be right eventually but not for a long time.
Bill Mitchell has an excellent MMT take on the China story.
Bottom line – China runs an autonomous Fiat currency system. The Banking sector is already “nationalised” – at least from an operational point of view.
There will be no financial crisis in China unless the authorities choose it. Inflation however, is another matter.
Full post here.
http://bilbo.economicoutlook.net/blog/?p=16523
I’m not sure whether Chanos understands MMT, so perhaps there may be something I am missing. However until I hear a convincing argument otherwise, I suspect Bill will be right.
This does not change miss-allocation of capital and excessive population leverage and asset prices. So hard or soft landing, but there will be one. You can’t keep kicking the can eternally.
In addition they have a quite high inflation, that hurts people too and the economy, so you may end with sort of a stagflation which the government will have to control at some point tightening money supply and can kicking with unproductive investment.
Agree.
Wasted resources and un-productive investment leads to inflation. A real problem in a country where so many spend most of their income on daily necessities.
Just don’t expect a financial meltdown.
I see two possibilities;
a) Slow grinding economy with persistently high inflation
b) Social upheaval
I think they will face the same limiting factor that we do – oil. It is only because their per capita oil needs are so much less than ours that they are able to grow 8%-10%. Wait till they all have cars, and all of China is covered over with 6 layers of elevated interstate highways. Ummmm.. there won’t be enough fuel available to get anywhere near that point.
A financial crisis is the least of their worries. When it gets serious, the Chinese govt will be able to act quickly and decisively and throw some money at the banks and they’ll be ok. The true problem is a more long-term structural issue. When 60% of their GDP comes from infrastructure (I have heard different numbers… but it’s high) and they decide to stop building empty cities and apartment buildings and malls and whatever, what happens to GDP should be obvious. You will have millions of unemployed Chinese people… back to the farms?
I think that’s right.
However, I do not think the Chinese will let unemployment rise – they will keep spending and issuing their own Fiat to maintain full employment.
Without a full market economy, the spending will probably be wasted on even more empty cities and bridges to nowhere. This will cause increasing inflation pressures.
No good news for the China bears (there will be no financial meltdown)
No good news for the bulls (probably much slower growth for longer)
That’s why i’m staying out of China – Europe is a much easier bet (short).
I’m always amazed that there are economists that think there is a flawless system and that some group somewhere has a handle on it. Too funny. As long as “people” are part of any economic formula there will always be booms and busts with excuses to follow. Bill Micthell, with his progressive push back, will certainly have his opportunity to make excuses.
No one except you has suggested anything like a flawless system, so your attempt to warp Mitchell’s argument into something it isn’t falls on deaf ears. The whole point of the post is that when recession hits, enact stimulus fast and don’t hold back. The consequences of overstimulation are far easier to deal with than the consequences of insufficient aggregate demand.
I like his quote “it’s all about credit” and he is right, indeed it is.
Chanos, you Chinese economy erudite!
When is Apple a short? or Netflix? or GE? or Argentina? or gold? or Sino Forest?
When so many v brilliant investment strategists don’t see his predictions anywhere in the offing, what then is his problem? Is it his ego?
When China is a short, so must the world be shorted.
Chanos said EU is good for HOW MANY MONTHS? 2 mo? a few months? 10 months? I can’t hear!!!
To say that there is a large real estate bubble in China is one of the most obscure “facts” widely accepted. I don’t think there is any bubble especially in 1st tier cities.
Chano’s day may be closer than we think. Look up the PMI news…