Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

[LargoWinch]

China and Commodities are overvalued, while Gold is insulated according to Chanos.

Runtime: 9min.

[GRG55]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

China and Commodities are overvalued, while Gold is insulated according to Chanos.

"China is Dubai times 1000, maybe worse"

Ya gotta love it...

[jk]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

chanos is making a fundamentally deflationary case, and is implicitly a dollar bull. since he can't short china directly, but believes that it's a potemkin village economy, he is shorting "the first derivatives" of the economy- commodities like iron, copper, cement producers... he believes the chinese economy will implode, and the commodities and their producers who have been making their money shipping product to china, will implode as well. he didn't mention oil, but the implication of his story is that chinese oil demand will plunge with everything else. the implication is that dollars will get more valuable, at least temporarily. the question is whether gov't stimulus, in the u.s. and first and foremost in china itself, can overcome these forces.

[GRG55]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

chanos is making a fundamentally deflationary case, and is implicitly a dollar bull. since he can't short china directly, but believes that it's a potemkin village economy, he is shorting "the first derivatives" of the economy- commodities like iron, copper, cement producers... he believes the chinese economy will implode, and the commodities and their producers who have been making their money shipping product to china, will implode as well. he didn't mention oil, but the implication of his story is that chinese oil demand will plunge with everything else. the implication is that dollars will get more valuable, at least temporarily. the question is whether gov't stimulus, in the u.s. and first and foremost in china itself, can overcome these forces.

I rephrase the question in my mind as "How long can govt stimulus in the USA and China overcome these forces?"

As one who watched Dubai initially with bemusement and in the latter stages with incredulity, I remain both impressed and wary with just how long such things can last. And through that episode it struck me more than once that descriptions lauding the boom in Dubai spoke in the next breath about China [xx% of all the tower cranes in the world are in Dubai...and the only place that compares is Shanghai with yy% of the cranes, blah, blah].

Now I appreciate that credit and capital flows today pale in comparison with the halcyon days just past, but I remain wary of just how long the China boom might be prolonged before it finally exhausts itself. However, there is no doubt in my mind that we have already entered the period where headwinds are exerting influence and keeping it going will require increasingly aggressive and risky intervention.

[bill]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

keeping it going will require increasingly aggressive and risky intervention.

He's on his way.
http://www.bloomberg.com/apps/news?p...d=atsocHBN.pdw

Dec. 18 (Bloomberg) -- China’s currency regulator, which oversees the world’s largest foreign-exchange reserves, appointed Pacific Investment Management Co. hedge-fund manager Changhong Zhu as its chief investment officer.
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A specialist in derivatives, Zhu managed the Pimco Absolute Return hedge-fund strategies at Pimco.

[jk]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

He's on his way.
http://www.bloomberg.com/apps/news?p...d=atsocHBN.pdw

it's interesting to think about this hire. my guess: as a derivatives specialist, he will be tasked with finding ways out of the dollar without flooding the treasury market with direct sales.

[bill]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

it's interesting to think about this hire. my guess: as a derivatives specialist, he will be tasked with finding ways out of the dollar without flooding the treasury market with direct sales.

How about this hire.
Maybe he will meet with this guy at the IMF and pick up a few SDR’s.
http://business.timesonline.co.uk/to...cle6949412.ece

December 8, 2009
JPMorgan Chase appointed a veteran economist and banker to advise on the expansion of the bank’s international business, including operations in London.
Jacob Frenkel, a former Governor of the Bank of Israel and former research director of the International Monetary Fund (IMF), has joined the bank as chairman of JPMorgan Chase International.

The 66-year-old will represent the JPMorgan Chase at the IMF and the Group of 30, the economic think-tank that he chairs, as well as working on the bank’s relationships with central banks, big financial institutions and sovereign wealth funds.

[LargoWinch]

Re: Jim Chanos on China, Gold, Commodities; Dec. 15(?), 2009 - (9min.)

"China is Dubai times 1000, maybe worse"

Ya gotta love it...

More from Chanos on that quote and China in general:

Jan.25/10 - Runtime: 5min.