...and its the Fed who holds the whip hand. Analysts seem to agree that if the Fed resumes it's taper then the renminbi will plummet relative to the dollar and the trickle of capital leaving China will become a flood. It seems that the China bubble has gotten so enormous that there are essentially no good positive return investments available in the whole country at current valuations. So money is getting hot and bothered and is liable to jump at the first whiff of smoke.
If you'd been listening to all the China pundits you would have thought it was China that held all the cards. Not this time. The 2nd Great Leap Forward looks as if it may end in an inelegant pratfall. At least millions won't starve as they did after the first leap.
This reminds me of an earlier post: surveys indicate that 20 percent of all Chinese housing units are standing empty. The country's a giant crash waiting to happen. The only question is what happens to the Mao Dynasty when the bubble pops? Reform? Repression? or Collapse, chaos and a return to civil war and warlordism. The history of China is replete with dynasties waxing and then falling apart with chaos following in its wake. Never underestimate the ability of the Middle Kingdom to fall apart. It's the thing that has kept China from ruling the world.
And when it happens, as it inevitably will, it will be a ginormous Black Swan.
This reminds me of an earlier post: surveys indicate that 20 percent of all Chinese housing units are standing empty. The country's a giant crash waiting to happen. The only question is what happens to the Mao Dynasty when the bubble pops? Reform? Repression? or Collapse, chaos and a return to civil war and warlordism. The history of China is replete with dynasties waxing and then falling apart with chaos following in its wake. Never underestimate the ability of the Middle Kingdom to fall apart. It's the thing that has kept China from ruling the world.
And when it happens, as it inevitably will, it will be a ginormous Black Swan.
No comments:
Post a Comment