Good morning,
I think your numbers 3-5 are the likely answers. I’m re-reading “Aftershock” by Wiedemer, Wiedemer, and Spitzer. It was an NYT bestseller and acclaimed by the Wall Street Journal. They write that China is most likely the linchpin for global financial meltdown. If their economy goes over the cliff (there are some that think it already has; me among them) they can not export cheap goods, and will not need what we have (in the way of commodities and energy).
They write, “(Jim) Chanos noticed several years ago that property development in China was reaching unsustainable proportions. If the average Chinese couple makes a combined $8,000 or so a year, how can they afford condominiums that can easily cost up to $150,000? It didn’t add up. Most of this growth was driven by bad loans pushed by the government. In fact, Chanos found that many new apartment buildings stay empty and are flipped from speculator to speculator on the greater fool theory.”
We have seen this movie before - and it doesn’t end well!
I’m not generally a gloom and doom guy, but there are signs pointing to the USA going into free fall. I wish it weren’t so. Blame it on Shemitah, or the impending collapse (helped by China) of the dollar, and current debt of $18+ Trillion.
In sum, Petraeus speaks of things much greater than his current knowledge.
Gwjack
I have followed Chanos for some years and regard him to be a pretty smart fella. On the other hand, many an investor has gone broke being right at the wrong time.
The problem with China is it is so opaque and so corrupt that one cannot begin to measure the degree of corruption and therefore one cannot even begin to assess the dangers. It is clear that China has mountainous internal problems and it does not appear that China has the flexibility to adopt the right solutions. It's opaqueness alone makes flexibility impossible and it's totalitarian rigidity makes hope for its nimbleness equally unlikely.
If the world's second-largest economy goes down catastrophically we are all in deep trouble, Obama has made us absolutely vulnerable to any tremor.
Good comments.
