Harry Dent, of HS Dent Investments, discusses China and the bubble that has been created as a result of global stimulus. While most investment advisers suggest that China will help lead the world out of this economic crisis, Dent takes a different position on the matter:
Almost all countries orchestrated stimulus plans to fight this crisis. But in relative terms it was China that saw the greatest direct stimulus compared to the size of their economy. China has the greatest bubble in growth and has seen one of the greatest bubbles in stocks in the past decade. They are feeding a bubble in growth that is simply not sustainable with a slowing world economy and their high dependence on exports.
China will see their bubble collapse strongly when the U.S.-led stimulus program fails due to rising defaults and foreclosures later in 2010, at the same time that the world is looking for China to pull it out of this global downturn.
source: HS Dent Forecast ~ December 2009
The Chinese economy has not decoupled from the US economy and neither has the rest of the world. As we’ve said in previous commentaries, when the US catches cold, the rest of the world catches swine flu. Trends Research forecaster Gerald Celente agrees according to his October 2009 remarks This is Going to be Felt Worldwide.
The US consumer was the engine for the global economy. We provided an analogy for what is happening right now in Good times ahead, or is this the beginning of the Greatest Depression:
Visualize a car engine. When there is enough motor oil, the pistons are firing up and down rapidly and the system runs efficiently. When the oil dries up, the engine begins to deteriorate. It’ll go for a little while longer. And it’ll become much more violent and volatile each time it fires. Invariably the engine seizes up and fails.
When the engine finally seizes up the whole car is going to be shot to hell.
The collective US sentiment and latent loyalties would tend to disprove this.
Look at how big a surprise the tax revenue figures were today.
Looks like US citizens and tax payers alike are doin’ it for the gipper
The collettive US sentiment is driven by “Hope & Change”. While you can tell everyone you’re not hungry while eating cardboard, eventually, you lose weight, and later, die of malnutrition. All the while, smiling and feeling full. We’re not on a cardboard diet. We’re on a green tinted paper diet. …and we’re dieing. The politicians, though, want us to think its all great because they want to extract as much blood from us before our heart stops. Good luck! My veins aren’t open for business. You all can act like its gonna be OK, but I intend to continue prepping. If global economic shock doesn’t kill us, inflation will.
Comments…..
I absolutely agree with netranger. People just keep going along like there’s nothing wrong. The various stimulus programs are like a hit on the crack pipe. In order to feel good, you have to keep smoking what the government is selling. The effects will wear off when the money runs out. And it will run out.
    The FED can only suspend reality for so long. Sooner or later, all the bad economic reality will hit us, and the dominos will start to fall. a chain reaction will start, and then the masses will finally know they have been lied to all along. Then the panic starts.
     I will stay with my prep plans, and continue as I am financially able. Time will run out soon enough.
China’s economy is not a bubble. For starters it is the world’s manufacturing center. Secondly, the Chinese have a very high savings rate. Third, I’ve not heard of anything to indicate that their government is anywhere near as indebted as we are. Fourth, I think that any third world country with a competent government, there is a natural tendency to grow. Last, since China seems to have low personal and governmental debts, even if their stimulus did fail somehow, they could take it in stride and probably have another stimulus.
– Kolridge
w e i ?
investor/ dective C H A N (-os, chanos) says
‘what goes up must come down” #1 son ‘ pop
real estate never goes down huh?”