Saturday, February 13, 2010


Jim Chanos on China

Von Pepe sends this interview with hedge fund manager Jim Chanos, saying that he makes some interesting remarks about GDP accounting. Start the video at 4:30.

Note that I am not endorsing Chanos' overall opinion of the Chinese economy; I haven't studied it enough. I know they have been inflating their money and credit, but on the other hand many Asian countries in general have been liberalizing their economies through various measures over the years, and I expect that trend to continue. It's possible that both Jim Rogers and Jim Chanos are right: China will be the dominant economy in the 21st century, but it's going to have a crash real soon.

Anyway, Chanos definitely makes some interesting remarks about Western analysts who decry intervention but then praise some particular micromanagement by Chinese communists. I have been frustrated by such analyses too.

By the way, mr. Murphy, I had this thought concerning the "when China starts selling US bonds, then it's all over" thing.
Namely - if the situation in China is relatively good, they don't really have a reason to do that (unless things go completely to hell in the US), but if Chanos is right and China crashes, that might put their government against the wall fiscally, and give them a good reason to sell what they have accumulated.
Does that make any sense at all, or am I talking nonsense?
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