This is not a new position for legendary short selling oriented hedge fund manager (who smoked out Enron) Jim Chanos, but he continues to pound the table on the dangers of China. [Dec 16, 2009: CNBC Video - Hedge Fund Maven Jim Chanos on Autos, Banking, and China] It's a tough environment to be short anything globally; I assume he is taking some pain even in his anti automotive parlays.
This is not a new position for legendary short selling oriented hedge fund manager (who smoked out Enron) Jim Chanos, but he continues to pound the table on the dangers of China. [Dec 16, 2009: CNBC Video - Hedge Fund Maven Jim Chanos on Autos, Banking, and China] It's a tough environment to be short anything globally; I assume he is taking some pain even in his anti automotive parlays.
As for China, while the positive story is obvious for the next 10, 20, 30 years, I have some serious concerns on what the effects of the misallocation of credit from the tsunami of bank lending that arrived in first half 2009 will be. [Feb 16 2009: Is China Pulling an Alan Greenspan?] But as we saw in the US early to mid decade - those short term "solutions" can take a long time to manifest their eventual evil. And between the here and now, and the eventual fallout you can see huge moves against you (think housing bubble mid decade or tech bubble late 1990s). [May 27, 2009: How is China Spending Their Stimulus? ... and How Many Loans will go Bad?] Chanos is concerned at an even larger level than just this subset of loans - he is worried about the whole China Inc situation - as he calls it.
Eventually I think Chanos could be very right; but standing in front of a freight train is something I'll leave to others more brave than I. As with all bubbles (a now much over used word) you can identify them early but it is almost a penalty to be ahead of the herd - since the herd tends to trample you - before they themselves jump off the cliff en masse. Instead, we'll remain very aware that there will be some serious fallout from this flood of loans to all parts of the Chinese economy, and as we get closer to when these bad loans should start falling apart - have it more front and center on our radar. I'm thinking this is more of a 2011-2013 event.
Either way you can see this now global adoptation of Alan Greenspan's way, is going to lead to a very hectic decade again as cycles of central banker "easy money" led booms and busts envelop multiple countries who have followed his playbook. China itself has already said it hasovercapacity in multiple industries, but continues to build. The fallout should be interesting; I expect another decade where "buy and hold" is going to disappoint people.
Via New York Times:
Trader Mark
http://www.fundmymutualfund.com/
This is not a new position for legendary short selling oriented hedge fund manager (who smoked out Enron) Jim Chanos, but he continues to pound the table on the dangers of China. [Dec 16, 2009: CNBC Video - Hedge Fund Maven Jim Chanos on Autos, Banking, and China] It's a tough environment to be short anything globally; I assume he is taking some pain even in his anti automotive parlays.
As for China, while the positive story is obvious for the next 10, 20, 30 years, I have some serious concerns on what the effects of the misallocation of credit from the tsunami of bank lending that arrived in first half 2009 will be. [Feb 16 2009: Is China Pulling an Alan Greenspan?] But as we saw in the US early to mid decade - those short term "solutions" can take a long time to manifest their eventual evil. And between the here and now, and the eventual fallout you can see huge moves against you (think housing bubble mid decade or tech bubble late 1990s). [May 27, 2009: How is China Spending Their Stimulus? ... and How Many Loans will go Bad?] Chanos is concerned at an even larger level than just this subset of loans - he is worried about the whole China Inc situation - as he calls it.
Eventually I think Chanos could be very right; but standing in front of a freight train is something I'll leave to others more brave than I. As with all bubbles (a now much over used word) you can identify them early but it is almost a penalty to be ahead of the herd - since the herd tends to trample you - before they themselves jump off the cliff en masse. Instead, we'll remain very aware that there will be some serious fallout from this flood of loans to all parts of the Chinese economy, and as we get closer to when these bad loans should start falling apart - have it more front and center on our radar. I'm thinking this is more of a 2011-2013 event.
Either way you can see this now global adoptation of Alan Greenspan's way, is going to lead to a very hectic decade again as cycles of central banker "easy money" led booms and busts envelop multiple countries who have followed his playbook. China itself has already said it hasovercapacity in multiple industries, but continues to build. The fallout should be interesting; I expect another decade where "buy and hold" is going to disappoint people.
Via New York Times:
- James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true. Now
Trader Mark
http://www.fundmymutualfund.com/