I basically agree with the article, except the part about China, where I totally disagree.

What we've seen over the last 25 years is the sequential implosion of massive credit bubbles - first Japan, then the USA, now Europe, so why not China? Why should they be any different?

Everything I see leads me to believe that China is next. They are massively overbuilt and overpriced in real estate, they're efffectively driving global commodity prices, for which they, along with everyone else, must pay up, plus they're rapidly losing their two most important markets, USA and Europe, which are turning increasingly protective.

Despite what you see on the coast, the majority of Chinese are just scraping by. There's no marginal yuan to get a consumer society going (all that gets squirreled away in savings) and their only competitive advantage, low wages, guarantees that there won't be.

I'd say the lack of yuan convertability is the only thing keeping it all together. The minute people can get their money out of there, it's gone. I point to Vancouver as evidence, the very house I live in, in fact. No way is it worth 1.2M, but it IS to a Chinese who's worried about losing it all.

I think people are completely missing the message of Vancouver, which is that no Chinese of means has any faith in the story. They know it's a fraud - hell, many of them helped perpetrated it. So, who are you going to believe? A bunch of western stock brokers trying to sell you a story (they are aways doing that - it's their job) or the infinitely wiser Chinese money cats who are getting the hell out of dodge?

ebear