Jim Chanos went to Wall Street in 1980, doing investment banking deal. In 1982 got the first short idea. That got him thinking about short as a business. Now running $6 billion. $5.5 in short. For short, does not require different skill set? The actual skill set is the same. You should analyze the same type of business, make the same kind of phone call. But short selling requires negative enforcement. Wall Street is a giant positive enforcement. Most of reports and news are noise, but positive noise. If you are a short seller, it becomes a difficult environment. A lot of people don’t like it. People are good at both long side and short side are very rare.
One thing people always say that “I don’t want to short because it can go to infinite.” But I have seen much more 0 than infinite.
If China is going to crash, we came to China in 2009. What about the Chinese demand, there is a huge contribution from constructions. This cannot be right. 30 billion square feet of office building. They are building more. Property companies, miners, Chinese banks are all credit driven.
I have no doubt that Chinese government’s goal of 7.5% growth will be there. They will print it. The problem is the bad credit. If you get to the micro companies, it is even worse. If you dive deeper and deeper, it gets worse. You don’t own the production assets of the companies, you own a holding company. Many of them don’t even file financial statements.
Europe: in this case it is especially bad.