Oil heading back to $90 a barrel, just as the euro weakens...
Any ideas how to pop the Chinese bubble?
All bubbles pop at $100...
I subscribe to the "command economy is ultimately shite" school of thought. Andy Xie has been saying that China is on the edge, that imports are way exceeding exports etc... http://www.ritholtz.com/blog/2010/04/pu ... -a-mirror/
China’s biggest challenge today is how fruits of its economic growth are divided, not how fast the economy is growing. And a key to this dividing game is held by the middle class, which deserves support.
Unfortunately, a middle class squeeze is under way that is a bigger threat to China’s economic development than slower export growth. High property prices have turned into an unfair tax on the middle class while, in numerous cases, powerful people are enriched. A bit more economic growth will not solve this problem. Meanwhile, low interest rates in an inflation era are actually taxing savers to benefit two classes of borrowers – state-owned enterprises and speculators. Thus, low interest rates are mainly a kind of middle class tax.
China's middle-class problems may sound familiar. They, about three years ago, took the Irish solution to a global recession (Ireland in 2001/2, that is) and started a property bubble. It has now grown so wild and so dangerous that it is threatening to bite the arm that feeds it. The 'tich' that Xie goes on to mention are rich only if they cash out, but few will. They'll keep doubling their property bets and the same splat will be heard from the pavements in Shanghai as they pratfall...
If it sounds egotistical to keep saying "Ireland circa 200x", this is not because Ireland is a model or exceptional, it is just the latest in a long line of bubbles that stretch back through time to the Sumerians when Gilgamesh recounts the sinking of Atlantis in a tsunami of bad loans. I expect other individual cities in Asia to have the same problems, as China and Australia wobble. As many of the cities have country-sized populations, this will be bad news for the countries they are in.