China’s Ghost Cities

The following video is the first of the great series on China’s ghost cities that Bloomberg is running this week.  Getting China right is key to your P&L and the direction of many markets, including emerging equities and commodities.   We’re grappling with who financed these cities, who is holding the paper, and how were they financed.   Recall China’s massive money supply growth and credit expansion which funded the country’s stimulus after the 2007-8 financial collapse.

Our basic assumptions may be wrong, such as time horizon and holding period, and Adam Johnson does a good job covering these, but this is one issue that keeps us up at night and we won’t rest until we’re comfortable with a good working understanding of what is going “over there.”  The renowned hedge fund manager, Jim Chanos,  has and we suggest you do the same.

Our good friend Deano Williams reminds us of the cheerleading mantra of the real estate industry , “they ain’t building anymore real estate.”   Well, yes, they are, and we suggest these cheerleaders take a “slow fast boat to China” to see for themselves.

By the way,  Henry Kissinger is out with a new book on China this week. See also NY Times review.

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