• "Chinese Economy's Fall Will Be As Shocking As The Chinese Bull Case Bubble"

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ByLoSellHi

‘Bubble of Belief’ in China Economy Seen Bursting: Chart of Day
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http://www.bloomberg.com/apps/news?pid=20601109&sid=aN5ok_FbkeQw

By David Wilson

June 17 (Bloomberg) -- Rallies in commodity prices and mining-company shares stem from a “bubble of belief” in China’s economy that is likely to burst, according to Albert Edwards, a strategist at Societe Generale.

“I believe we will look back on the Chinese economic miracle as the sickest joke yet played on investors,” Edwards wrote yesterday in a report. To support his argument, he cited falling earnings at the country’s industrial companies.

The CHART OF THE DAY shows year-over-year percentage changes in profits, as compiled by China’s National Bureau of Statistics. The chart combines monthly data from 2005 and 2006 with a quarterly index, started in 2007, that tracks companies in 22 provinces. This quarter’s report is set for June 26.

Commodity prices climbed 21 percent this year through yesterday, according to the UBS Bloomberg Constant Maturity Commodity Index. Mining stocks paced a 23 percent gain in the MSCI World Materials Index, the year’s top performer among 10 industry groups in the MSCI World Index.

While the Chinese economy expanded 6.1 percent in the first quarter from a year earlier, Edwards wrote that he was skeptical about its ability to sustain that level of growth during a global recession.

“The bullish group-think on China is just as vulnerable to massive disappointment as any other extreme example of bubble- nonsense I have seen over the last two decades,” his report said. “The fall to earth will be equally as shocking.”

(To save a copy of the chart, click here.)

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
Last Updated: June 17, 2009 10:18 EDT
 
Forget China....

Have a look at the US:

http://www.cnbc.com/id/31191092/

Good luck if you live in any of these states.

I have a few clients who have manufacturing plants in China. Their project growth is solid for 2010, individually. The over all China Growth I was told will be under 6% which will beat the US 0% -1% growth.

The recovery is only going to effect those who "Survive". As unemployment will reach well above 10%, companies are not hiring. My Clients are all on a freez but they have seen things turn around in the last month or two. Granted these are Private Manufactures for the most part...but they are also looking to lay off more, even with the turnaround.

Every Client I speak to, who is in the layoff mode for the 3rd time in 6 months say the same thing. The Politicans have caused so much worry on how far they will be go to Nationalize this Country, they expect inflation to go through the roof in 2010 and they also expect oil to be well above 100 per barrel by end of this year into next.

Thank you OBAMA and the US GOV..., you guys are making me a wealthy man x 10 .......
 
white trash talk.

so many willing hardworking hands in this world. The cheapest and most efficient are chinese. like it or not.
add the need of china to wake up militarily....
 
 
China has the right recipe for good GDP growth: lots of capital, natural and human resources. As long as they mantain the order and the people marching, they will keep getting more powerfull, specially relative to the US and Europe.
 
The chinese should grow a pair, if they are going down the least they could do to preserve some of their dignity on the world stage would be to take the US/UK down with them.

Don't forget the anglo opium wars and now the fixed anglo-american financial system, China did have the largest economy in the world pre-opium wars.
 
And lack of human rights! Easy to order people around.


China's secret to getting out of the slump was a huge stimulus spending and encouraging banks to lend. They are using their own money finally instead of relying on foreign financing.
 
Quote from Renegen:

And lack of human rights! Easy to order people around.


China's secret to getting out of the slump was a huge stimulus spending and encouraging banks to lend. They are using their own money finally instead of relying on foreign financing.
More...

The philosopher Georg Hegel likened China to an ant colony run by mandarin bureaucrats.
 
Sold off my FXI last week. China does not know how to consume what they produce. They are happy to produce, work hard, save and buy some IOY (US Treasuries with those savings). They would be better off by consuming what they produce rather than keep shipping to US.

China and Indian equity markets are in for a rude awakening. Russia is neutral. Brazil is a hold for me.



Quote from ByLoSellHi:

‘Bubble of Belief’ in China Economy Seen Bursting: Chart of Day
Share | Email | Print | A A A

http://www.bloomberg.com/apps/news?pid=20601109&sid=aN5ok_FbkeQw

By David Wilson

June 17 (Bloomberg) -- Rallies in commodity prices and mining-company shares stem from a “bubble of belief” in China’s economy that is likely to burst, according to Albert Edwards, a strategist at Societe Generale.

“I believe we will look back on the Chinese economic miracle as the sickest joke yet played on investors,” Edwards wrote yesterday in a report. To support his argument, he cited falling earnings at the country’s industrial companies.

The CHART OF THE DAY shows year-over-year percentage changes in profits, as compiled by China’s National Bureau of Statistics. The chart combines monthly data from 2005 and 2006 with a quarterly index, started in 2007, that tracks companies in 22 provinces. This quarter’s report is set for June 26.

Commodity prices climbed 21 percent this year through yesterday, according to the UBS Bloomberg Constant Maturity Commodity Index. Mining stocks paced a 23 percent gain in the MSCI World Materials Index, the year’s top performer among 10 industry groups in the MSCI World Index.

While the Chinese economy expanded 6.1 percent in the first quarter from a year earlier, Edwards wrote that he was skeptical about its ability to sustain that level of growth during a global recession.

“The bullish group-think on China is just as vulnerable to massive disappointment as any other extreme example of bubble- nonsense I have seen over the last two decades,” his report said. “The fall to earth will be equally as shocking.”

(To save a copy of the chart, click here.)

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
Last Updated: June 17, 2009 10:18 EDT
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