China Stumbles

I have been very skeptical about China's booming economy for the last several years. I do not deny the fact that it was booming.

My contention was this: the rapid growth in China was driven mainly by exports to the Western world, which was is the middle of a massive debt bubble fueled by the government holding interest rates too low for too long. (essentially manipulating the price of money itself)

Therefore, when the housing bubble burst in the U.S., the entire economy would follow and the American consumer would virtually stop spending disposable income. This, in turn, would cause a depression in the Chinese economy.

I know this runs counter to the decoupling theory and the belief that Chinese growth will pull us out of this Great Recession.

Ideas do matter. You cannot build a stable, solid market economy based on
Communist ideals. China will enter a depression, unless we recover very quickly, and I just don't see that happening.

http://www.marketwatch.com/story/shanghai-sell-off-leads-asia-markets-lower-2009-07-29


If you are a brave trader short China and buy EEV. (at your own risk-as always!)