Timing the Chinese Bubble, Part III

Notes:

• The US consumers make up about 30% of world GNP.
• The Chinese consumers are about 10% of the US's.
• Therefore, a 1% drop in the US will need to be compensated by a 10% rise in China. Is that possible? Well, probably.
• But if the US drops by 3%, the Chinese will need a 30% of increase to balance out. That will be tough.
• Not to forget about this 'vacuum' effect. When the music is playing and the government keeps spending, everybody makes easy money.
• The biggest spending programmes in China right now are: the Olympics and the Three Gorges Dam. When are they going to be completed? Well, within 2008.
• Just not too long ago, you heard people saying that China is a bubble. You heard from the media and economists that the growth and the stock market are not sustainable.
• These days people seem to have stopped associating the word bubble with China.
• Not only that. There are now theories that China could decouple from the US.
• If it looks like a bubble, walks like a bubble, and quacks like a bubble, it's a bubble!
• The most dangerous phase is when nearly everybody buys into the thinking that it can only go up!
• Remember: the herds never got it right; they are to be slaughtered!

Related posts:

• Timing the Chinese Bubble, Part II
• Timing the Chinese Bubble, Part I