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China ‘Greatest Bubble In History’

18 Mar

From BusinessWeek:

China is in the midst of “the greatest bubble in history,” said James Rickards, former general counsel of hedge fund Long-Term Capital Management LP.

The Chinese central bank’s balance sheet resembles that of a hedge fund buying dollars and short-selling the yuan, said Rickards, now the senior managing director for market intelligence at McLean, Virginia-based consulting firm Omnis Inc.

“As I see it, it is the greatest bubble in history with the most massive misallocation of wealth,” Rickards said at the Asset Allocation Summit Asia 2010 organized by Terrapinn Pte in Hong Kong yesterday. China “is a bubble waiting to burst.”

Rickards joins hedge fund manager Jim Chanos, Gloom, Boom & Doom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s economy.

And yet, RBA Governor Glenn Stevens, Treasury Secretary Ken Henry, and their many cheerleaders in the Australian media still believe that we are all set for another China-fueled mining boom, this time to 2050.

They failed to predict the GFC (see the many links in this blog for background).  That epic failure has cost Australians literally hundreds of billions of dollars in lost retirement savings and investments in 2007-2009.

So why should we trust their judgement now?

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