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China’s Ghost Cities

Posted By Global Macro Monitor On May 16, 2011 @ 3:22 pm In Think Tank | Comments Disabled

[1]The following video is the first of the great series on China’s ghost cities that Bloomberg [2] is running this week.  Getting China right is key to your P&L and the direction of many markets, including emerging equities [3] and commodities [4].   We’re grappling with who financed these cities, who is holding the paper, and how were they financed.   Recall China’s massive money supply growth and credit expansion [5] which funded the country’s stimulus after the 2007-8 financial collapse.

Our basic assumptions may be wrong, such as time horizon and holding period, and Adam Johnson does a good job covering these, but this is one issue that keeps us up at night and we won’t rest until we’re comfortable with a good working understanding of what is going “over there.”  The renowned hedge fund manager, Jim Chanos [6],  has and we suggest you do the same.

Our good friend Deano Williams reminds us of the cheerleading mantra of the real estate industry , “they ain’t building anymore real estate.”   Well, yes, they are, and we suggest these cheerleaders take a “slow fast boat to China [7]” to see for themselves.

By the way,  Henry Kissinger is out with a new book [1] on China this week. See also NY Times review [8].


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2011/05/china%e2%80%99s-ghost-cities/

URLs in this post:

[1] Image: http://www.amazon.com/exec/obidos/ASIN/1594202710/thebigpictu09-20

[2] Bloomberg: http://www.bloomberg.com/

[3] emerging equities: http://macromon.wordpress.com/2010/11/20/china-rising-the-market-for-exports/

[4] commodities: http://macromon.wordpress.com/2011/03/09/chart-of-the-day-copper-rubber/

[5] massive money supply growth and credit expansion: http://macromon.files.wordpress.com/2011/01/chinamoney-supply-shanghai-gdp.jpg

[6] Jim Chanos: http://video.cnbc.com/gallery/?video=3000019495

[7] slow fast boat to China: http://www.straightdope.com/columns/read/2195/whats-the-origin-of-slow-boat-to-china

[8] NY Times review: http://www.nytimes.com/2011/05/15/books/review/book-review-on-china-by-henry-kissinger.html

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