Friday, December 24, 2010

5 Reasons China Will Crash in 2011

5 Reasons China Will Crash in 2011

1. The Great Chinese Credit Bubble
Sure the banks will bail everyone out, but if Mark Hart is right, they Chinese debt to GDP is between 107 and 200%. They may not have as much on hand to cover the massive bad bets.

2. The Great Chinese Labor Force
Over the next five years China will add labor force members equal to all those in the U.S. and Europe, a big deflationary force. (This assumes they can keep the giant yuan game going, however . . .)

3. The Great Chinese Commodity Gobbler
Too much of a good thing driving imports up while the Chinese export capacity is "staggeringly" over capacity.

4. The Great Chinese Currency Reserve
The Chinese have trapped themselves between inflation or devaluing their foreign denominated bonds by letting the yuan appreciate.

5. The Great Chinese Nation-State
This prediction seems a bit weak. Other nations are still quite timid about criticizing China let alone actually taking significant action, trade or otherwise.

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