Thursday, February 2, 2012

Short China: Its commodities bubble is set to pop............AN ABSOLUTE MUST READ!

Short China: Its commodities bubble is set to pop

Throughout history, tone-deaf politicians believe their own press releases, ignore obvious warning signs, fail to plan. 

Commodities guru Jim Rogers wrote: "Bull in China, Investing Profitably in the World's Greatest Market." A former partner of hedge genius billionaire George Soros, he blamed the Fed for igniting two catastrophic financial bubbles back in 2007. So he shorted Fannie Mae, banks and home builders, abandoned America just before the 2008 meltdown, and moved to China.

But should you follow his lead? Forget America? Invest in China, the "World's Greatest Market?" Maybe follow Rogers earlier advice in "Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market?"

After all, China is the hottest economy on Earth. And commodities are so red-hot China is "buying up the world" to lock up commodities essential to feed China's skyrocketing growth to 2050 and beyond. But gamble on China? Risk your retirement nest egg? Compete against China for global commodities?

Don't. This is a no-win scenario: for China, the USA, the world and you.

OK, so you're mad at Wall Street for losing over $10 trillion of America's retirement assets in the dot-com crash and subprime meltdown. And you know they'll do it again. But buy China? No. When China collapses (and it will) you better not have your retirement invested over there. They'll nationalize it, devalue it, wipe you out.

China's super-ego bubble will collapse, like Rome, all great nations

Yes, China's hot economy will crash and burn in the coming years. It is the "World's Greatest Market" today. But they are also the "World's Greatest Egomaniacs." They will self-destruct. Why? Simple math, psychology, history: Bubbles always pop.

In "Zero-Sum Future," Gideon Rachman sees a global paradigm shift, says the New York Times. A "win-win" optimism that dominated the world from 1991 to 2008, where "everyone benefited from growing wealth," has been "replaced by a zero-sum game in which one nation's benefit comes at another's expense."

Get it? China wins. America loses. Except this new game is rigged. Both are linked as "Chinamerica." But in a delicate balance with all nations: One collapses, all collapse.

China's economy looks fabulous today: Not only will it be bigger than America's in the next decade, by 2040 China's GDP will reach $123 trillion, estimates Nobel economist Robert Fogel in Foreign Policy. In fact, China will be three times bigger than the entire GDP of the world back in 2000, going from a "poor country" back then to "super rich" nation with a $85,000 per-capita income. By 2040 China will have 40% of global GDP, compared with America's 14%.

Quite a reversal: Back in 2000 America's GDP was 22% of the world's, China just 11%.

Still, gambling with Jim Rogers on China (and against America) is a bad bet. Here's why: Both history and psychology warn of a global collapse coming, not just in China, although they are leading the way with raging growth.

Remember: "one of the disturbing facts of history is that so many civilizations collapse," warns environmental anthropologist, Jared Diamond, author of "Collapse: How Societies Choose to Fail or Succeed." "Civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power."

China's population growth igniting huge commodities bubble

Population is the ticking time-bomb, accelerant, tipping point, the trigger. The United Nations predicts that by 2050 world population will reach 10 billion from 7 billion today. 

But many experts warn that the planet's resources cannot feed 10 billion people.

While America adds 120 million by 2050 for a 400 million total, China will add 320 million for a 1.4 billion total. And India will add 600 million to top at around 1.5 billion. 

Meanwhile, experts warn that a global population over 8 billion is inviting collapse.

So China can't wait. America can't wait. The world cannot wait that long to start planning for a civilization-ending catastrophe. But sadly, they will wait, till it's too late. An ancient historical pattern is repeating. Rome collapsed fast. Why? Throughout history, tone-deaf politicians believe their own press releases, ignore obvious warning signs, fail to plan.

Remember Fortune magazine's report on a 2003 Pentagon study that predicted "climate could change radically and fast," creating "the mother of all national security issues." Population unrest would result in "massive droughts, turning farmland into dust bowls and forests to ashes." And "by 2020 there is little doubt that something drastic is happening" with warfare defining human life."

China's 'buying up the world … shopping spree'

Which bring us back to China and a Time magazine warning: "Be Very Afraid of The China. Its economy grew on real estate mania and easy money — does this sound familiar." Worse, China's arrogant leaders are now convinced that America has fatally sabotaged itself the past decade, handing China the role as the world's superpower.

In fact, China is closer to collapse than America. USA Today warns of America's "Latest Export to China: The American Dream." They are infected with our "virus." And the new "Chinese Dream" is turning into a nightmare of capitalist greed.

Financial historian Niall Ferguson warns that while China is "gloating on our misfortunes" they are ignoring their domestic problems, pollution, real estate costs, market speculation, wages, employment, overpopulation, and more. 

China's "headed for a collapse of its own."

China's recent high-speed train crash is a metaphor of an out-of-control ideology. Their exploding population is depleting more and more commodity resources, prompting BusinessWeek to ask: "Is China Inc. intent on buying the world? It sure looks that way," calling the trend "China's Shopping Spree."

China is obsessed, blindly planning ahead to feed, clothe and house 300 million more people, fast. Imagine the social disruption of building 100 new cities the size of Chicago … in one generation. With no plans to slow down their exploding population and economy, China's current growth rate is guaranteed to trigger a global collapse.

China's leaders, blinded by a global empire-building obsession

In late 2010 The Economist ran a similar cover story: "Buying Up The World: The Coming Wave of Chinese Takeovers." Yes, China's already buying huge commodity-resource rights on every continent. BusinessWeek described one such acquisition this way: "The deal is simple: Australia gets money, China gets Australia." Yes, an entire continent. Warning, selfishly hoarding the world's commodities will backfire. RESOURCE WARS ARE COMING!

Ironically, China's buying surplus reserve dollars they got funding our wars and credit-card debt. Example: in one two-month "Shopping Spree" a "car maker Beijing Automotive and appliance giant Haier have invested or shown interest in investing in oil fields in Iraq, GM's Opel car business in Germany, an upscale appliance maker in New Zealand, and a Japanese department store."

Then China's "Sinopec paid more than $7 billion for a Swiss oil company," and also made a "rumored bid for a Spanish-owned Argentine oil producer that would be twice that." China is now more capitalistic than Wall Street's too-greedy-to-fail banks.

Short China, hedge fund guru warns investors

But the questions linger: Should you buy stock in China Inc.? Buy into China's raging commodity business?

Hedge manager Jim Chanos has been reading the tea leaves for a long time and sees too heavy a government footprint in their economy: crony capitalism, state-owned companies favorites, massive municipal debt, overbuilding of luxury condos, stadiums, poor construction, environmental pollution, lax regulations, subsidized prices, bad accounting, currency manipulation, and more.

Chanos has been warning investors to ignore the hype. He tells BusinessWeek investors to "Short China," this bubble is collapsing.

China's leaders 'driving a fast new sports car off a cliff'

Diamond says we need leaders with "the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions."

Unfortunately, history warns us that leaders are too often self-interested, short-term thinkers, lacking courage and interest in the future. They rarely plan far enough ahead. Eventually they're caught off-guard, and their worlds collapse, often fast. They respond best during crises, but invariably with too little, too late, as another civilization dies.

Niall Ferguson put it this way: What if history is "at times almost stationary but also capable of accelerating suddenly, like a sports car? What if collapse does not arrive over a number of centuries but comes suddenly, like a thief in the night?"

But does it matter if China collapses before America? No. Either one will take down the other, igniting a global collapse. But our bets are China's first, those obsessed power-hungry ego-maniacs have convinced us they're the loudest ticking time-bomb.

So Short China.

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