Comments on: Andy Xie: China Has Become A Giant Ponzi Scheme

By: An outside the box view of US China policy « Wasatch Economics

An outside the box view of US China policy « Wasatch Economics — Fri, 21 Aug 2009 07:04:08 +0000

[...] China now experiencing ‘The Biggest Bubble of Them All‘, Andy Xie recently warned that “Property prices could drop like Japan has experienced in the past two decades, which [...]

By: What to Do Now - CBS MoneyWatch.com

What to Do Now - CBS MoneyWatch.com — Thu, 06 Aug 2009 12:25:56 +0000

[...] recession, could drag it back down with a financial crisis of its own, scarily envisioned by former Morgan Stanley analyst Andy Xie in this post China Has Become a Giant Ponzi Scheme at the blog The Big Picture. (Or in my own more [...]

By: carlwied

carlwied — Wed, 05 Aug 2009 15:46:54 +0000

Wait a minute… Is somebody suggesting that a 100% stock market move in 7 months is somehow not right?

By: The Curmudgeon

The Curmudgeon — Tue, 04 Aug 2009 19:23:32 +0000

The only part of Xie’s analysis that seems a bit speculative is the part about birth rates. No one really knows for sure what drives lowered birth rates, except that they are closely correlated with reduced death rates (increased life expectancies) which are in turn closely correlated with the level of economic development.

Whatever it is that drives them, birth rates across the entire world are declining (in less developed areas by more than half in many cases), and in many places (China, South Korea, Japan, Western Europe, the US, Canada, Russia, Israel)– in fact in all developed countries they are at or below replacement (about 2.1 births per female). This can’t be attributable solely to the formation of property bubbles.

The rest of it I get. It’s quite easy to see how a cheap dollar blows a Chinese property bubble. All this tinkering with the money. This, like the long run, will end badly. At least the Chinese will have plenty of iron ore and copper with which to build more vacant buildings when the crash comes.

By: 10 Links (Tuesday Version) | The Big Picture

10 Links (Tuesday Version) | The Big Picture — Tue, 04 Aug 2009 19:14:23 +0000

[...] • Beijing worries about another market crash (AP) See also, Andy Xie says China Market is a Ponzi Scheme [...]

By: MRegan

MRegan — Tue, 04 Aug 2009 17:32:06 +0000

Hey Ahab-

Re the “No Big Purchases” article- does anyone remember “GoodFellas”? What the flipping tuna!?! Maybe if those GS coprophagists would start feeling conflicted and seek out therapy, we would all finally recognize them as the g–d— mob thieves they really are.

I recommend a look at VALE. Also, is the Loonie a possible shelter for USD decline?

Lastly, what is GS buying? We know what the sell. What thing(s) are they accumulating?

By: Thor

Thor — Tue, 04 Aug 2009 16:50:53 +0000

DH – “The Republicans want the courts and, especially, The Supreme Court. The Democrats want the Fed. What a choice. Socialism Unlimited via ownership of the Fed printing press or social conservative fascism.”

Very very perceptive! Hadn’t thought about politics in this country in quite those terms but I think you hit the nail on the head.

By: cvienne

cvienne — Tue, 04 Aug 2009 16:10:51 +0000

@danm

“At one point, GS will only be able to make money by shorting the market, that’s what they did with real estate.”

Yeah, can’t you see it?

The Treasury needs to fund 2 trillion by 9/30…

So GS buys cheap puts here on the SPX…Tanks the market, buys to cover the cheap dollar, and the long bond, and shorts commodities…

A rush back to the “safety trade”…

When it holds enough Treasuries, to can continue to call even more shots (threatening to SELL if anyone gives them crap about bonuses)…

By: danm

danm — Tue, 04 Aug 2009 15:59:20 +0000

BTW, I worry about you when you and others here plan to short the market.
————————
At one point, GS will only be able to make money by shorting the market, that’s what they did with real estate.

The issue is when.

By: FrancoisT

FrancoisT — Tue, 04 Aug 2009 15:52:22 +0000

@Seattle Chill
“Has the disconnection between the economy and the financial markets ever been so complete? Cities and counties are going broke, office towers are sitting dark, the FDIC is nearly insolvent, one out of every five homeowners is underwater on his mortgage and/or out of a job, and yet I’m supposed to be impressed that Intel had a profitable quarter. Words fail.”

Words were failing me too…until I read this:

http://articles.moneycentral.msn.com/Investing/SuperModels/the-recovery-puzzles-missing-piece.aspx?page=2

“U.S. companies are getting a huge boost from their international operations. Most North Americans don’t pay enough attention to this data, but a quick synopsis from ISI Group analysts from the past week can shed some light.

The improvements, in many cases due to government stimulus, make your eyes bug out: Global vehicle sales are up 21% in the past seven months; steel production is up 15%; China’s electricity production is up 14%; Korean GDP is up 9.7%; Japanese exports are up 20%; and Taiwan export orders are up 45% and industrial production is up 50% in the past five months. It’s not just Asia, either: French consumer spending is up 3.4% in the past four months; Canadian retail sales are up 2.5% in the past five months; the Brazilian unemployment rate has fallen to 7.9% from 8.6%; and the Mexican unemployment rate has fallen to 5.7% from 6.2%.”

and this:
“networking equipment titan Cisco Systems whose chief executive last week said he predicts 12% to 17% growth and sees productivity for the nation overall rising up to 3% annually, which would potentially equate to gross domestic product growth rising to around the normal rate of 4% by 2011.”

One wonders if, this time, the rest of the world could pull the US out of the recession. Could it be what the financial markets anticipate?

Time will tell.