I have been saying for some time that the Chinese economy is a basket case. With a highly insecure political system to boot, it is only a matter of time before it crashes and burns. And now, it seems, I have company. Mind you, I would say the same of India. I do not believe the hype about that country. It will be dragged down by its innate inefficiencies and most particularly by the corruption of its ruling elites.

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Good video here: Chanos: China's treadmill to hell. (Scroll down).

60% Chinese economy is dependent on construction.

I wonder what the effect will be of all the major world powers facing financial and governmental collapse at the same time.

Celtic tiger today, PIIG tomorrow.

BRIC today, PIIG tomorrow.

Every bubble will burst. Things swing one way, then swing back. The funny thing is that people, some purported to be experts, don't seem to notice. The same thing applies to scares, of course. When you've seen fifty years of them, you learn to disbelieve the next even while it is being swallowed whole by intelligent people.

Apropos of my last, even if a little OT, here is the master...I know most will be familiar with it, but it may be new to some.


http://www.kipling.org.uk/poems_copybook.htm

You might find this interesting, RAE North.

http://www.telegraph.co.uk/finance/economics/8166298/Chinas-food-crisis-spells-end-of-record-highs.html

"Rampant food price inflation – of more than 10pc last month – is causing extreme concern and radical action from the Chinese authorities while the world's political and economic attention has been on Ireland, Spain and Portugal."

Although, I notice that Simon Heffer still has his work cut out for him in correcting the grammar of the writers.
"This appears to be the discouraging investors from piling into the alternative asset class of commodities for all their nervousness about European sovereign debt."
Seems to have been rewritten in a hurry.

Thanks for that ... I've linked it in the piece. I've always felt that agriculture is the weak link in China. If they can't feed their population, they are in seriose schtuck.

In good company? - well its not exactly new news - almost a year old!
http://www.zerohedge.com/article/contra ... l-together

And they are happy to lose 20% of investors cash each year until they are "proved" right - so after 5years you're left with 300,000$ out of your stake of 1m$ if they're wrong

Sounds like a route to the poor house unless used as a hedging strategy!
typo corrected

Perhaps for the investors this is the hedging strategy.

I spent a month in China last year, teaching at a college in Hangzhou.
I was in one of 14 identikit university/colleges, all built within the previous six years.

Everywhere the eye could see, there was construction on a massive scale.

The Chinese students were bright, but most of them - studying computer science or engineering - were looking for a career outside of China.

I did get the bubble feeling, just like I did on a trip to Dubai; and we know how that ended up.

A hedge fund manager will be attracting $millions to bet on China's collapse. In China, money is being invested in engineering and construction whereas, in the US, it's being 'spent' on hedge-fund gambling - and we're supposed to believe that China will collapse?
China's debt, whatever it may be, is internalised which means that China has no external debt and it is that fact which enrages the Wall Street bankster cartel. China doesn't borrow from them nor does China allow its currency to be subject to speculative attack from the same bankster cartel. By the time Wall Street has destroyed the US, the Chinese economy will be richer by simply selling its own products to its own people.

India has been accelerating downhill after 2004 when the current Congress Govt. came to power. I am surprised it took western analysts so long to decode the hype. But to be fair, finding the truth about India is not easy because most of the Indian media and government departments are corrupt and efficient at suppressing facts.

You don't need an economist to explain the situation, just have a chat with any Indian. Our bubble burst 5 years ago and all this talk about "the resilient economy survived Global depression" is rubbish. Everything is 10 times costlier and of bad quality. China is flooding our market with its garbage products while our smug leaders keep giving them a red carpet welcome.

For the past 3 months, a number of scams have been exposed, starting with the ₤ 70 billion CWG scam leading up to the current 2G spectrum scam (more than ₤ 150 billion lost).

The leading industrialist Tata (yes, the same one) has already dubbed us as the next Banana Republic.

The wasteful, gaudy and over-the-top ceremonies at the Indian CWG, Chinese Olympics and Asian Games prove how desperate these people are to show off non-existent wealth. China went to the extent of seeding clouds to ensure "perfection". Reminds me of Nazi state control.

There may be a bubble because there are always business cycles but in the last 4 years, as our economy has declined 4% their's has increased 50%. I very much doubt there will be a crash that will get them anythinjg close to back there. The basics - a relatively free market & low electricity prices - are fine & are missing in the west.

The Food Crises of 2011
http://blogs.forbes.com/greatspeculatio ... s-of-2011/