May 27, 2007

Bubbles Greenspan predicts China stock market crash. So does HP. So does gravity.

Just read this post from HP a few days ago about what's going on in China, the land of 1 billion shoe shine guys.



Get ready. It's tough predicting when bubbles will end, and they go on longer than you ever thought possible. But end they do. Oh yes, end they do.

Greenspan Says China Stocks May Undergo `Dramatic Contraction'

May 23 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said he was concerned Chinese stocks might undergo a ``dramatic contraction'' after its main stock index jumped more than 90 percent this year.


The benchmark CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose to a record 3938.95 today. The index more than doubled last year as investors bet corporate profits would be boosted by the world's fastest-growing major economy.


``It is clearly unsustainable,'' Greenspan told a conference in Madrid today by satellite. ``There is going to be a dramatic contraction at some point.''

16 comments:

Debbie said...

Great blog. Can I please ask a stupid question...? Can you tell me what the ramifications are when China's stock bubble bursts? I know how much the US is intertwined with China, how much debt they hold. When their market contracts, how could that affect the US? Thanks.

Anonymous said...

So, how do I short this puppy?

How are we going to make money off of this?

Anon,

Mark in San Diego said...

Hmmmmm. . .the last time I remember Greenspan's quote - "irrational exuberance" the Nasdaq crashed form 5000 to 1100. . .look out below. . .guess I will hold my utility stocks, people still need lights and heat/ac. . .Keith - glad you found the internet place - Wine/Food, etc. in Zurich - just remember, here in Calif, the $6.50 glass of wine really costs 23% more (8% tax and 15% tip) or $8. . .in Europe the 10 Francs include tax and tip, then deduct 18% (CHF is at .82 to the US Dollar). . .so not all that bad. . .agree, however the dollar is toast - I was in Europe the first year of the Euro, when it was 84 cents to the dollar - now about 1.35!!!

Anonymous said...

its got a lot more to go. Soon A&E will be airing their new show: "Flip This Chinaman"!

Anonymous said...

I wonder what Bernanke thinks of Greenspan making all these 'statements'.

Anonymous said...

Yet again the big comments come overseas, this time in Madrid. Why aren't these comments made in the USA?

here we go....weeeeeee!!!!! said...

The Michigan Government may be shutting down this week, due to the lack of 2007 operational funds ($700 US million ) and still need to locate another $2 billion for it's 2008 budget.

Because China (and Mexico) now have MANY former Michigan, USA -based manufacturing jobs and factories, Michigan now needs $2.7 billion to continue it's operations - yet it cant be be found!

Yet, Bush, Cheney and the rest of the greedy oil and war regime, had no problem in stealing ANOTHER $100 billion in US taxpayer funds to send to their illegal Iraqi profiteering war based upon their tragic "hyped-terrorisum bullshit MSM network of lies."

Michigan is doomed folks - not from China, Mexico nor Iraq - but rather from greedy and corrupt US government officials (in hand with corrupt corporate executives and MSM) that have lost their original good faith checks and balances. The end is near and the US criminal monkey gang cannot be stopped. Truly a sad ending is VERY near.

K.W. - Southern Ca. said...

Well said!
The problem stems from *within* our boarders, but to make matters worse, we're loosing allies overseas as well.

You can also extend what you have
said to much of the rest of this
country - here in Southern California, matters have gone from bad to worse for many.

For-sale signs are *everywhere*, and I mean everywhere - from the affluant to not so affluant neighborhoods.

Anyone who thinks this is just "an adjustment" to the market, is fooling themselves.

here we go....weeeeeee!!!!! said...
The Michigan Government may be shutting down this week, due to the lack of 2007 operational funds ($700 US million ) and still need to locate another $2 billion for it's 2008 budget.

Because China (and Mexico) now have MANY former Michigan, USA -based manufacturing jobs and factories, Michigan now needs $2.7 billion to continue it's operations - yet it cant be be found!

Yet, Bush, Cheney and the rest of the greedy oil and war regime, had no problem in stealing ANOTHER $100 billion in US taxpayer funds to send to their illegal Iraqi profiteering war based upon their tragic "hyped-terrorisum bullshit MSM network of lies."

Michigan is doomed folks - not from China, Mexico nor Iraq - but rather from greedy and corrupt US government officials (in hand with corrupt corporate executives and MSM) that have lost their original good faith checks and balances. The end is near and the US criminal monkey gang cannot be stopped. Truly a sad ending is VERY near

Anonymous said...

Greenspan said this on Thursday and the Chinese market went up the next day. Nobody cares what that old fool says anymore.

a.creampuff said...

debbie - China tweaking her interest rate zaps the sawbuck; the "virtuous cycle" of China buying U.S. T-bills to prop up our consumption of their relatively cheap goods turns on its head and goes into negative feedback. All China needs is another consumer-nation, as well as another source of oil, and it seems they've laid the groundwork (only prudent with our loose wheel administration).
I'm painting this with a broad brush, and there are other scenarios. You can find with a little Googling - see also HP's blog roll, even some MSM have discussed this better than I can.

a.creampuff said...

Oh, and Here We Go...
Wow. Right on.

Anonymous said...

If the Chinese market crashes, the government will have to use that $1.2 trillion cash hoard to prop up the stock market or else all hell will break loose. That means the USD will be dumped back on the world market. The Chinese government keeps raising interest rates but to no avail. That 9% interest rate is nothing compared to 100% tax free annual capital gains. That crash they had in February occurred after they mentioned taxing capital gains. They are in a Bernanke conundrum

Anonymous said...

Talk talk talk. Crash crash crash. OK fiancial wizards, if you're so sure about this, you've all shorted every Asian index right?

CashFLo said...

"OK fiancial wizards, if you're so sure about this.."

Yes and no. It's more like "here is what is likely to happen" to the best of our knowledge based on facts we have and similar past circumstances. Yes, everything sure looks to be headed for trouble. But 100% certainty? The ones who were so sure of things got us into this mess.

Anonymous said...

``It is clearly unsustainable,'' Greenspan told a conference in Madrid today by satellite. ``There is going to be a dramatic contraction at some point.''
======
Be very very careful when you see a Bubbles Greenspan remark like this.

"They" could be trying to get lots of people to short into this market, only to turn on the interventionist machines and confiscate the wealth of the poor saps who shorted.

There's nothing like a big, fat, juicy short squeeze in the morning to make a market shark feel alive.

Anonymous said...

Well, what if the Chinese stock market is not in a bubble, and the conditions in China are like 1983 when the US stock market launched to new all time highs and never looked back? What if?

Everybody thinks China is a bubble. Wouldn't contrarian thinking be that China is about to embark on one of the greatest bull markets of all time?