May 20, 2013

Muddy Waters Research "China is a massive asset bubble"

From a recent article on Muddy Waters' dire view on China (source: The Telegraph). Beware Canada, Australia, Japan and anyone else exporting to China, warns Carson Block of Muddy Waters:

“Our view is that China is a massive asset bubble. This puts resource-based emerging market economies and Australia, Canada and New Zealand at direct risk. A China unwind will have significant knock-on effects in other developed markets too, likely implicating liquidity and asset prices. The severity of the effects in the rest of the developed world of course partly depend on the timing of the unwind.”

Block delivers the TKO with this diddy:

“The problems of China’s lenders are greater than those of the Western banks on the eve of the financial crisis, but because they are state-owned, the government will most likely print money and prop them up. This will of course have dire consequences for China’s economy though.”

Financial Crisis 2.0?