Tuesday, December 15, 2009

Chanos: China Is Dubai Times 1,000; Autos Are a Wreck

Jim Chanos may be right about China being a bubble, but China can do something Dubai can't, PRINT MONEY. That can prolong a bubble a long time---ask Alan Greenspan. Dubai uses the currency of the UAE.

John Carney took some notes on what Chanos said when he was interviewed by CNBC:

He's not short the financial sector right now, although he thinks there may be another shoe to drop and more losses. He is short some select financial names but not the sector.

There are opportunities for shorting individual companies in this market but he would recommend shorting the market as a whole.

He's shorting autos again, after covering in late 2008 and 2009. He said he is short manufacturres. Which ones? "I wouldn't be long Fiat and Ford, the F brothers, right now," he said.

China is Dubai times 1000. The government has too much control of the economy. The GDP numbers are not credible.

Because China bans short-selling, you have to short derivative plays. Short commodities and people shipping raw material into China. Not gold but those commodities involved in the China construction boom. Copper. Cement. Iron Ore.

"We're often early. You never get the top tick. You never get the bottom tick. And anyone who says they do is probably...doing the Chinese GDP reports."

1 comment:

  1. They can print money but once they have a inflation problem with unempolyment then they are bust:
    "China Bluff Exposed, Regime Overthrown- China's communist regime continued to print money, lending it everybody that wanted and didn't want it. The giant housing, infrastructure, and manufacturing bubble came to a violent crash when the debts where not paid and inflation forced the authorities to tighten despite massive unemployment. The combination of high inflation and high unemployment in the urban centers took the people to the streets. The Chinese citizens refused to accept state intervention in the economy and their personal life demanding more personal and economic freedom resulting in prolonged civil unrest which almost reached a full scaled civil war. The collapse of the Chinese regime and economy resulted in a colossal bust for commodity prices, albeit temporarily and caused a severe recession in Australia, Brazil, Russia, Argentina, and the Gulf States."