{"id":31175,"date":"2012-07-26T23:35:37","date_gmt":"2012-07-27T03:35:37","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/07\/jim-chanos-says-chinas-bad-debts-dwarf-greece-and-spains\/"},"modified":"2012-07-26T23:35:37","modified_gmt":"2012-07-27T03:35:37","slug":"jim-chanos-says-chinas-bad-debts-dwarf-greece-and-spains","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/07\/26\/jim-chanos-says-chinas-bad-debts-dwarf-greece-and-spains\/","title":{"rendered":"Jim Chanos Says China\u2019s Bad Debts Dwarf Greece and Spain\u2019s"},"content":{"rendered":"

By MoneyMorning.com.au<\/a><\/strong><\/p>\n

Jim Chanos spies trouble ahead for China’s banks.<\/p>\n

Veteran US investor Jim Chanos has a pretty impressive record of spotting \u2013 and profiting from \u2013 investment disasters in the making.<\/p>\n

He is widely credited as the first person to short Enron, the seemingly solid US energy conglomerate that blew up spectacularly in 2002. He was also one of the first to spot the US housing bubble, which he began shorting in 2005.<\/p>\n

And with the economic news coming out of China<\/strong> steadily deteriorating, it seems Chanos may have got another huge call right.<\/p>\n

<\/span><\/p>\n

Chanos has been warning that the Chinese economy was due a crash<\/a> for the last two years. At first, few people listened to him, especially when he admitted that he had never been to the country. But now, with even Chinese leaders admitting that growth will slow<\/a>, Chanos\u2019s view has become a lot more popular.<\/p>\n

In one particularly infamous quote, Chanos said China looked like \u2018Dubai times 1,000 \u2013 or worse,\u2019 referring to the country\u2019s real estate boom. Now that his take on that sector seems to be coming good, he\u2019s delivered another pithy quote on the banking sector.<\/p>\n

One of China\u2019s main problems is \u2018bad credit and credit extension that makes Greece and Spain<\/a> look like child\u2019s play\u2019, Chanos said in recent interview with Opaleque TV. Too much money has been lent for construction projects in particular that will never make big enough returns to repay the original debt.<\/p>\n

Chanos isn\u2019t just negative about China\u2019s macro-economic prospects. He is even more scathing about its companies. \u2018When you get to the micro of individual companies, they look even worse. The accounting is horrible, they all seem to have negative cash-flow, non-collectable receivables\u2026 they all seem to not earn their cost of capital.\u2019<\/p>\n

But while this may not be good for China’s economy<\/a>, it throws up lots of good investment opportunities for him, he says. Kynikos Associates \u2013 a hedge fund Chanos founded in 1985 \u2013 has short positions on several China-related stocks, which means he will profit if their value falls.<\/p>\n

After starting out shorting \u2018property companies, developers, cement companies, steel companies, as well as the original iron ore minors in Australia<\/a> and Brazil\u2019, he has added the Chinese banks<\/a> too, because they are \u2018the nexus for\u2026 all of this credit-driven investment.\u2019<\/p>\n

James McKeigue<\/strong><\/p>\n

Contributing Editor, Money Morning <\/strong><\/p>\n

Publisher\u2019s Note:<\/em> This article originally appeared in MoneyWeek (UK)<\/a><\/em><\/p>\n

From the Archives…<\/strong><\/em><\/p>\n

No Mr. President, Entrepreneurs Did Build That…<\/a>
\n20-07-2012 – Kris Sayce <\/p>\n

How an Interest Rate Rise Could Trigger a ‘Punch Bowl’ Rally<\/a>
\n19-07-2012 – Kris Sayce <\/p>\n

When the Going Gets Tough, Entrepreneurs Innovate<\/a>
\n18-07-2012 – Kris Sayce <\/p>\n

Is This Man the Ultimate Contrarian Indicator for Mining Shares?<\/a>
\n17-07-2012 – Dr. Alex Cowie <\/p>\n

How Gold Stocks Could Become Your Gilded Lifeboat<\/a>
\n16-07-2012 – Dr. Alex Cowie<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nJim Chanos Says China\u2019s Bad Debts Dwarf Greece and Spain\u2019s <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Jim Chanos spies trouble ahead for China’s banks. Veteran US investor Jim Chanos has a pretty impressive record of spotting \u2013 and profiting from \u2013 investment disasters in the making. He is widely credited as the first person to short Enron, the seemingly solid US energy conglomerate that blew up spectacularly in 2002. … <\/p>\n

Continue reading “Jim Chanos Says China\u2019s Bad Debts Dwarf Greece and Spain\u2019s”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-31175","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/31175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=31175"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/31175\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=31175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=31175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=31175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}