Chanos Sees `Overheating and Overindulgence' in China

[TheDualEconomist]

@AUSM92 So you believe the CCP? Even China's own internal (but non-CCP) auditors say China's debt is atleast 90%. Nomura estimates its between 90% and 150% of GDP. Not only is that worse than Amerca, they do not have the safety nets that America or the West has.

Also, China's unemployment only factors in the residents of a city. MIgrant workers unemployment is close to 25%.

[MTeng1584]

@stealthpakfa I don't think you really understand who James Chanos is, he's not a random pundit, he's a hedge fund investor. So he can't just be a "broken clock" because then he would be broke. Truth is he makes a bet when he thinks the timing is right, if he's wrong he loses money.

What you mean by him being perma-bear is that he enjoys betting against the wider market rather than betting with it.

Like I said, he puts his money where his mouth is, so he's worth listening to.

[wintermute3d]

listening with headphones on full volume, cracking sound, FFFFFFFFUUUUUUUU

[minitrueful]

Dear God,

Please don't let China beat us economically, for if they have, then everything I have been taught - and everything in which I believe - is a lie and I am just a tool.

[Blokin]

This talk does not impress. The first 15 minutes are spend on making sure that the audience knows the speaker doesn't like China. Then he names places like Ordos, that mall etcetera which are mostly empty yes, but given the construction boom in a 1.3 billion people country it can't all be a success. He also speculates that the numbers the Chinese goverment supply are bogus, proof? Government employees in China do get a pension. He does make some valid points but most is pure speculation.

[temperex]

@Blokin Well this isn't just any random "speaker", this is the same person that foresaw the collapse of Enron and Tyco, he's definitely no lightweight and he knows what he's talking about. It doesn't make him infallible ,of course, but still...I wouldn't dismiss anything he's saying.

[mmmoroi]

Remarkably well organized articulate review of what is most likely going on in Chinese economy.

[DavidLS888]

terrible sound quality!

[g1981c]

what kind of a degenerate recorded the sound on this speech ?

[stealthpakfa]

jim chanos has never even visited china and now he is an expert on china. lol

these doomers have been calling china a bubble for the past 30 years.

[Nonamearisto]

@stealthpakfa It wasn't called a bubble until the 2000s, actually.

And Chanos never worked at Enron either, but he called that one.

[stealthpakfa]

@Nonamearisto

even a broken clock is right once.

he fluked enron since he is a perma bear on everything.

and a country is alot bigger and alot different to a company, especially a country that is so diverse with many different tiers as china.

china will never collapse, every nation on this planet will make sure china never collapses because as goes china, then so goes the rest of the world. china is the growth engine for the world now.

[pinoko1311]

its a huge mistake to depend on chinese economy

[qtonic]

in what ways are this speaker and rim rogers aligned? does he represent jim roger's views? honestly don't know too much about either person

[FactualSolutions]

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FS

[longtrader782]

Jim chanos is one of the best folks,

[TruthAxe]

Can someone earn money in China and get rich from Chinese, perhaps?

Why bother? Brazil, India, Russia, Chile, Argentina -- these countries have government corruption, yet far less, and no communists who can change rules on a whim.

[TruthAxe]

Can someone earn money in China and get rich from Chinese, perhaps?

Why bother? Brazil, India, Russia, Chile, Argentina -- these countries have government corruption, yet far less, and no communists who can change rules on a whim.

[purijagmohan]

Why China is so keen on keeping it's currency depressed?? Shouldn't they let it float and allow chinese to get rich?? That's what Rogers was predicting, if i am not wrong way back in 2003.He said China will let their currency float freely by 2008 Olympics.Olympics has come and gone.We are in 2010 and China is nowhere close to a free floating currency.What's the reason?? Who doesn't want to get rich??

[MsChench]

@purijagmohan : are you sure you know about the China ecomony? Manufacturing and export dominate the growth of Chinese economy, however as everyone know about the 'cheap' of Chinese products, profit made by such industry is actually very low, appreciation of Chinese yuan by only 2 to 3% means the profit will drop to zero, not even to mention about higher rate. The result will be bankcrupcy of large numbers of small companies, factories, milions of people lose their job.

[MsChench]

@purijagmohan @MsChench and with the inflation, no job, no income, where to talk about becoming rich? Please be responsible about your own words!

[purijagmohan]

What command economies can do as Chanos says is that they can marshal resources better, say let's build 1000 car manufacturing plants, since they already know how to build one.That will lead to overproduction, hence the need for a depressed currency to keep the redundant production being exported.That game going to be up soon.

[purijagmohan]

World GDP grows without any opportunity to eksport.Why hina needs depressed kurrensy, more eksports to grow it's GDP?

[purijagmohan]

Rogers will eat humble pie, I am with hanos.10 years bak Rogers made similar comment on India, claiming India is waste of time.India grew at 7% through the decade and doesn't depend on eksports to keep it's economy humming.

[purijagmohan]

Any one who claims he kan see what another country will do 50 years hence basically is fooling himself.Rogers is getting too big for his own shoes.

[turnbull82]

does anyone have the slides for this lecture?

[bmaverickoz]

Hi Turnbull. Just wondering if you got a helpful answer to your quesiton or not or are you still looking (?) - yep, I'd like to get my hands on the presentation too (!)

[shmulikber]

@turnbull82 i'd love to have them as well

[jmy2c]

It's hard to take him seriously when he says it's a national disgrace 30 million Americans 'don't have health care.'

For various reasons millions of Americans don't have health INSURANCE. Most of those without such insurance do so by choice. All impoverished Americans have access to the payment of their health care through state medicaid programs, and by law no one can be turned away from emergency care.

So he was either lying or clueless.

[maccaddy21]

@jmy2c - are you serious? wrong forum chief.

[jmy2c]

His casual lack of interest in fact demonstrates his lack of seriousness. He shows he is the kind of guy who shoots from the hip, and that could not be more relevant to his credibility.

[enguwu]

So, what is to be done now?

[GovWillKillU]

fact is, by western investment standards, the chinese residential and commercial real estate markets are a DISASTER waiting to happen.

[HuggumsMcgehee]

@GovWillKillU I came over here from Gonzalo Lira's site. The article "What China is Thinking." I think it's very telling that politicians (Chinese in this case, but they almost uniformly suck) can look at America and point out the stupid things it's done financially, but are totally in denial about their own country.

[GovWillKillU]

30,000,000,000 Sq Ft of office space.

Lawl.

[GovWillKillU]

24:17 real estate speculation in china.

[GovWillKillU]

so building new factories and commercial/residential buildings next to empty ones is a government manipulation to keep china's GDP @ 9%?

why dont they just create bailouts and create the money from nothing? more freshly created fake laws and fake money to go with the fake US and Chinese economies?

[GovWillKillU]

12:45 housing bubble

[3VALLEYS]

anyone find the powerpoint?

[thelelander]

Is the accompanying powerpoint online anywhere?

[kalm77]

interesting video. thanks schiff. I remember another project (american) that had depreciation costs higher than income.....that was that world phone sattellite system from Motorola...what was it called?

Needless to say it is dead! gone! poof.

[GovWillKillU]

at least they are being objective. schiff and rogers are usually bullish china; this video goes against what they are sellin'.

[kalm77]

is this the Oxford lecture?

[nickrhill]

Chanos mentions Chinese government deficit of around US$150Bn. I think we need to remember that the Chinese government has brought forward a great deal of capital investment spending to build infrastructure to stimulate the economy.

The issue is really whether that deficit spending was spent *efficiently* on infrastructure as a self-liquidating debt.

Whether or not there is a new empty city for 1.5m people is not the issue. The issue is: Does it have utility, or is it futility?

[TheCZMan]

The new empty city is located in Tibet.

Han are accused by the western world to try to outpopulate Tibetans in order to solve the Tibet issue. (The way the western world behaved in the US for example)

Somehow I am not unsurprised that this city is not populated.

[overseachininadoll]

" Chanos Sees `Overheating and Overindulgence' in China "

The key is what Chanos see the Chinese government already saw and knew. And they are doing something about it. Unlike the US Ben and the US government. They denied all the problems. Why? Because they can print dollar the world's reserved currency while China can't. That's why the Americans high power don't care very much. US can print money or go around the world bomb the hell out other people.

[TheCZMan]

Dont tell it too loud. True to say that any newly USD credit dollar is backed by wealth. Because it is. Any new credit USD can buy gold in Ghana, oil in Saudi Arabia, coltran in Congo etc

The USD is backed by something. It is backed by wealth hold by other people.

But you cant say it aloud. It is against PCness. Better to stick with the fiat mantra if you want to be popular.