Thursday, November 18, 2010

Links November 18: European resolution

How to resolve Europe. Simon Jonson
Versus the growing anger at Germany. FT
Versus Europe's doom. Ambrose Evans-Pritchard
US, UK houses falling again. Independent, Calculated Risk
US construction down and out. Steel Orbis
The way out. Martin Wolf
China to buy gold. Zero Hedge
Even as it buys more Treasurys. WSJ
Unleash QEIII-X. Econompic
More bank irrelevance. SMH
Quarterly contracts here to stay. Baosteel
Chanos reiterates massive short on Australia:

Longer piece here.
Chinese divorcing to buy more property. American in China (h/t The Lorax)


The Lorax said...

China bubble anecdote: Chinese gettting divorced to circumvent the one-home-per-family restriction

The Lorax said...

Everytime I listen to Chanos I wonder what Glenn Stevens would make of it. His views aren't dissimilar to Michael Pettis who seems eminently sensible. Both repeatedly drive home the point that China is a giant economic experiment with levels of investment way beyond any other economy ever.

And yet, our central bank has literally bet our future on it continuing forever.

What are the counter arguments that the RBA board are listening to? Can someone please present the case why China will boom forever, and why rules that applied to other economies don't apply to China?

Bear Feller said...

Jim Chanos, Hugh Hendry and other China bears seem to have the logic on their side but their timing and track record to date on China has been poor. As much as I'm a bear as well, by name and nature, I completely understand the smug disdain of Stevens, Pascoe and others whenever the Chinese bear case is aired.

Perhaps DLS could write a piece on the China bubble through a political-economic lens. Considering that we're dealing with a hybrid command economy, not a market one, the Chinese political machine is so much more powerful at stemming the inevitable and unsustainable. As we’ve seen in Australia and with Professor Keen, it only takes a few government policies to keep the bubble happy and Beijing has far more fiscal and monetary ammunition than Canberra.

So, assuming that Chanos et al are correct – that China is in a bubble – the ultimate question is: what will pop it? And considering that China is a controlled by a Communist government (a Communist government that loves capitalist bubbles), will the pin-prick be political rather than market-driven? We can say it could be market-driven, like a trade war, food inflation, currency crisis or hot money surge, but for some reason I don’t think it’ll be this. I think it will be political. Just as any totalitarian state, governed by the whims of man rather than the rules of law, is inherently instable and unsustainable, I fear that China could be approaching a political dénouement ahead of the 2012 change in power.

With you impeccable diplomatic sources, what say you?

David Llewellyn-Smith said...

Impeccable diplomatic

dingo said...

What was the prick that burst the Japan bubble?