Jump to content
House Price Crash Forum
Tiger Woods?

Why Jim Chanos Is Short China

Recommended Posts

Jim Chanos, president of US-based Kynikos Associates and one of the world’s most famous hedge fund managers, talks to the FT's John Authers about China's property bubble and the implications for the rest of the world.

Basically he argues that the notion that the Chinese bubble is restricted to Shanghai and Beijing etc. is just rubbish. He also argues that a lot of the investment that is supposedly "infrastructure" is nothing of the sort.

Video Link

Share this post


Link to post
Share on other sites

A very good vid.

Thanks for posting.

A quick google tells me the US started putting their interest rates up in the second half of 2004 and were tits up summer 2007.

China started putting their rates up second half 2010.

So, summer 2013 looks good to me if only because the suggestion is so gloriously superficial.

I wonder if the US will be firing so that it can take up the slack by that time?

Quite possibly, methinks.

Share this post


Link to post
Share on other sites

A very good vid.

Thanks for posting.

A quick google tells me the US started putting their interest rates up in the second half of 2004 and were tits up summer 2007.

China started putting their rates up second half 2010.

So, summer 2013 looks good to me if only because the suggestion is so gloriously superficial.

I wonder if the US will be firing so that it can take up the slack by that time?

Quite possibly, methinks.

Do you understand the concept of totally dimantled factories and dispersed skills and workforce - a lot of whom wouldn't set foot back in one of the same brand of employers that slung them out last time?

Share this post


Link to post
Share on other sites

I wouldn't be so pessimistic.

The decrease in Chinese demand/relevance may be problematic but I do not think it will be the end of the game, which was in play before China got all the attention and Japan went all "lost decade".

Share this post


Link to post
Share on other sites

Anyone know where Chanos gets his numbers from?

Good question, bashers are quick to believe what they want to believe. If you do a cursory search for the breakdown of China's GDP, you get figures of nothing of the sort Chanos is spewing out. e.g.

China

agriculture: 9.6%

industry: 46.8%

services: 43.6% (2010 est.)

https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html

How do we get 70% from those figures above? I wouldn't be betting the farm on Chanos' trade

Best,

L

Share this post


Link to post
Share on other sites

Anyone know where Chanos gets his numbers from?

Chinese govt stats he says. Basically he is reading the fixed investment stats which are 70% in the FT video, then in the CNBC video saying the 70% is construction. He is assuming they are the same thing.

TMT says "When China pops 2008/09 will seem as nothing".

As long as our banks aren't massively long China we will be fine. A China bust would commodities prices down, hurting commodity based economies (Brazil, Russia, Australia)

Share this post


Link to post
Share on other sites

Very interesting video.

I found it singularly depressing that Chanos found so many western 'investors' (presumably banks and other financial institutions) against which he run his hedge trades. Clearly there appear to be many who simply went into blindly buying into the Chinese property bubble just as soon as the one in the west went bust. You have to wonder how much bailout money from the taxpayer and Central Bank QE etc provided to rescue the west banks is simply going to be pissed away in the Far East.

When this unravels I would not want to be the British or any other western countries politician telling their peoples that another bank rescue is required. It is one thing to demand people to endure austerity that has incurred in apart due to the madness of their own domestic property markets in which many of them had participated. It is quite another to ask for the same thing when the money has been lost on crazy speculation on some foreign shore.

Edited by stormymonday_2011

Share this post


Link to post
Share on other sites

When this unravels I would not want to be the British or any other western countries politician telling their peoples that another bank rescue is required. It is one thing to demand people to endure austerity that has incurred in apart due to the madness of their own domestic property markets in which many of them had participated. It is quite another to ask for the same thing when the money has been lost on crazy speculation on some foreign shore.

Will be interesting though.

This will pop, this will have rammifciations for our banks. It will be a mess. Looking at that Hugh Hendry youtube video of empty skyscrapers is fascinating.

Share this post


Link to post
Share on other sites

Will be interesting though.

This will pop, this will have rammifciations for our banks. It will be a mess. Looking at that Hugh Hendry youtube video of empty skyscrapers is fascinating.

It certainly has all the hall marks of the classic property bubble seen in Spain or the US with supply pouring onto the market at a rate that can not be matched by demand

Sometimes bubbles float on a breeze for a long time before they encounter that sharp object that causes them to pop.

I wonder what it is going to be this time. High oil prices in the early 2008 preceded the banking meltdown in the West later in that year. I think they will be the trigger this time as well..

Share this post


Link to post
Share on other sites

It certainly has all the hall marks of the classic property bubble seen in Spain or the US with supply pouring onto the market at a rate that can not be matched by demand

Sometimes bubbles float on a breeze for a long time before they encounter that sharp object that causes them to pop.

I wonder what it is going to be this time. High oil prices in the early 2008 preceded the banking meltdown in the West later in that year. I think they will be the trigger this time as well..

the trigger for the property bubble to pop in china is... the chinese governement.

theyve have raised interest rates twice in recent months to curb inflation and property speculation. in major cities, theyve increased taxes on property, and get this, the minimum downpayment on the purchase of second homes is rising from 50% to now 60% of the value of the home.

the state council have said :

“It’s impossible for housing prices to fall overnight because of the property tax, but it will help to curb speculation in the housing market,”

so in terms of the chinese property bubble "popping" it is the goverment that is forcibly making it pop.

Edited by mfp123

Share this post


Link to post
Share on other sites

Chinese govt stats he says. Basically he is reading the fixed investment stats which are 70% in the FT video, then in the CNBC video saying the 70% is construction. He is assuming they are the same thing.

(...)

Exactly.

"Construction = 70% of GDP"... :rolleyes: C'mon... That was very stupid indeed.

Share this post


Link to post
Share on other sites

Exactly.

"Construction = 70% of GDP"... :rolleyes: C'mon... That was very stupid indeed.

If they can make that investment work (which will be more likely if it can squash property stupidity) then they will be happiy earning even more foreign income and selling more goods to the still bubble level cost economies of the west.

I'm almost rooting for them becuase they are not run by a bunch of self-important, short termist retards.

Edited by OnlyMe

Share this post


Link to post
Share on other sites

If they can make that investment work (which will be more likely if it can squash property stupidity) then they will be happiy earning even more foreign income and selling more goods to the still bubble level cost economies of the west.

I'm almost rooting for them becuase they are not run by a bunch of self-important, short termist retards.

You misunderstood me. I meant it was stupid to think that 70% referred to total GDP, instead of total investment.

I think investment in housing stock is very useful (see my sig.), and one of our main failures in these past decades.

Share this post


Link to post
Share on other sites

Thanks. FT videos never play for me so here's Chanos with a recent CNBC interview.

http://www.cnbc.com/id/15840232/?video=1788587758&play=1

Chinese construction was 70% of GDP in 2010

At the peak it was 16% in the US/UK

Still want to emigrate to Australia?

The scary thing is that housing was only 6% in the UK/US, i.e. about 40% of the 16% mentioned and we know that a lot of that was misallocation of resources (luxury apartments etc.)

The proportion is much higher in China (apparently). :ph34r:

The AUD is in for a rude awakening at some stage. Having said that, in the long run I'd rather be in Oz than the UK, but I certainly wouldn't be buying AUD at the moment.

Share this post


Link to post
Share on other sites

Good question, bashers are quick to believe what they want to believe. If you do a cursory search for the breakdown of China's GDP, you get figures of nothing of the sort Chanos is spewing out. e.g.

China

agriculture: 9.6%

industry: 46.8%

services: 43.6% (2010 est.)

https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html

How do we get 70% from those figures above? I wouldn't be betting the farm on Chanos' trade

Best,

L

No, but, assuming that he isn't spreading disinformation on purpose, he has more riding on this than the rest of us. He and his team will certainly have looked deeper than what we can google.

In the end it is just another opinion, but coming from someoone witha good track record and skin in the game.

Share this post


Link to post
Share on other sites

The Chinese property bubble transcends throughout the whole of China, I can tell you this as a fact as I've been all over. The fuel of the bubble is the materialistic culture which dominates outside of the cultured international cities where you can find some real human beings as opposed to money worshippers with no personality which basically describes 90% of Chinese people.. sorry China.

Owning dozens of properties is great for businessmen because they can buy a place in various cities, then have mistresses living in each city while they live with their wife in their hometown. These mistresses will guess they are not the only ones, but there's a long distance between each city so it's not like they will bump into eachother.

Another good trick is to just buy up 20-30 apartments in your home city, then invite your mistress to go view all of them to show off your wealth.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.