My buddy Blair handed me a China article today that made we wince. Blair is a realist. He is also smart – completely avoiding the ridiculousness of the equity markets. Life is much simpler for him – at least to me :) .
The article was written by Bruce Feirstein of The New York Obeserver and dribbled down to Blair via Richard Russell – his one stock market read other than me.
Bruce notes from his recent travels to Beijing (interesting to me that it rhymes with CHA-CHING) that what struck him most was the Chinese sense of invincibility. He notes that in the English-language news, there is almost no mention of the war in Iraq, the mid term elections or North Korea nukes. He has been to China before and the last time he worried about America’s coming competition for oil.
His intuition is worth consideration.
My initial take is everbody is invincible. Rocky beat Drago! Actually it’s Rocky that is invincible if the new Rocky 64 is any evidence :) .
I am sure Americans felt invincible during the roaring twenties. That did not end well.
What the hell is China’s Kryptonite?
When (if) that Kryptonite surfaces, we are in for a world of pain. It will pass of course, but it will be gynormous.
Someone knows – trust me.
My first two guesses – Goldman Sachs and Hollywood!
PS – In the meantime – oil looks good to me :) .
China’s invincibility is 20% per annum money supply growth over the last six years which is even greater than America during the 1920s. It’s an economy run by corrupt communists where investment decisions are made by the politboro rather than the markets. It’s an export engine driven to the tune of 65-75% by foreign nationals using China as a low cost labor pool. It’s an economy that Stephen Roach calls the most imbalanced he’s ever seen and he is no spring chicken.
It’s magic. Until the music stops. And, it will at some point.
agreed. It will ugliest event in financial history.