China Confident It Can Weather Crisis, Will Cooperate

What kind of China (and Brazil) do you like?

China is an excellent place to invest. Who knew...I seem to be agreeing with Steve a lot these days after months of disagreement.

any particular funds/stocks you'd recommend? i have a small position in mchfx that has been hammered the past 6 months, but am considering increasing my stake over there.. who knows when i'm going to be able to use this downpayment cash..

Right now it's tough because I'm 2x long China so I've taken big hits even though I've only had it for a week, but I have no plans to liquidate because I don't need to.

There is no question that it will lead the recovery once this market mess is fixed, which I think will be sooner rather than later. We have dipped below Dow 8,000 today, who knows where we will close, but that is a drop on the order of 1929 or 1937. This is NOT 1929 or 1937. This is a modern-day run on the stock market.

Beyond what is posted above, the Chinese government has already stated that it will reflate its stock market, and as I said it has a history of doing what it says it will. Now wouldn't be the time to do it because any money they put in would be sucked out quickly. But they have gazillions of foreign currency reserves, their own domestic market of huge proportions, people hoarding cash in their mattresses, a massive growth rate and an infrastructure build-out. They will bring Brazil and Russia along with them, though perhaps not India, because of the huge resources in those two countries.

I didn't foresee this present market rout & I've taken losses and (like everyone) continue to. But I do have cash and if I were you I'd keep cash on hand. When the headlines read "VIX Exceeds 75 for First Time in `Panic' of Global Stocks Rout" you know there's a confidence problem.

"who knows when i'm going to be able to use this downpayment cash."

Me - probably not ever. I see no need to buy real estate when renting will get ever cheaper. Think of all those luxury units that the Europeans aren't going to be buying, that are under construction now as we speak. Plenty of new rentals as I see it.

steve,

Any comments on China ETFs FXI, CHN?

Just wanted to get people's point of view

I own Direxion's double FXI, don't remember the letters right now. It is, in fact, the only thing I own, and it's lost half its value in a week. Of course what hasn't.

I don't know if you've ever been there, but the Chinese are about the most conservative and industrious people in the world in my opinion, and I have no doubt that they will do what they say. They said they were going to deflate their stock-market bubble last year & I didn't pay attention. That hurt. Now I read everything they say they're going to do.

If we end the day up or significantly above the lows - which now seems likely but that could change quickly - it is a very positive sign. We are currently up over 200 points. If it holds, we may try to test the below 8,000 lows again, but that would be a significant positive sign after a week of carnage.

Don't forget that these are the same Chinese that would not announce the contamination of their melamine contaminated milk to their own people because they didn't want to have anything detract from their Olympic glory. So if you think that there will ever be full disclosure of anything, think again. Our economies are inextricably linked. They need us to buy, we need them to produce. We are mutually dependent.

"these are the same Chinese that would not announce the contamination of their melamine contaminated milk to their own people because they didn't want to have anything detract from their Olympic glory."

And these are the same Americans who didn't announce all the garbage assets on their balance sheets, to have anything detract from their hubris and bonuses.

Ergo - give me a break.

FYI: "China May Let Peasants Sell Rights to Farmland"

http://www.nytimes.com/2008/10/11/world/asia/11china.html?_r=1&hp&oref=slogin

If you've never been to a developing country then I suppose you don't understand the pent-up demand for wealth.

why all these posts about china? do you actually think anything you say will affect China markets positively?

is your ego so big that you think all the posts you put up about the downfall of manhattan real estate was the real reason the bubble burst, so you think you can do the same for China?

"is your ego so big that you think all the posts you put up about the downfall of manhattan real estate was the real reason the bubble burst, so you think you can do the same for China?"

Yes. In fact, my ego is so big that I can stop the tides from rising and falling, stop the earth from spinning, and make the moon laugh. All with a mere thought.

Now that that's out of the way, onto the frivolous: China is the one buying up all the US debt that is going to be injected into the banks to recapitalize them. Is that not important?

yes it is important. they will buy all the debt we need to issue in order to support all our bailouts Thanks China.

However, it will not mean that global consumers will buy their products...only when global consumers dig themselves out of the monumental debt hole they are in will they be able to buy chinese products and then the chinese populace will have disposable income and then I will believe in China's supremacy

n a worst-case scenario, markets could fall at most another 20 percent but there is "practically zero" chance of another Great Depression, the International Monetary Fund's chief economist Olivier Blanchard was quoted as saying on Saturday.

"In a worst-case scenario, governments will need a few more weeks to take the correct measures and the markets could fall another 20 percent. Then, we'll turn around," Blanchard was quoted as saying in Italian daily Corriere della Sera.

He said 100 percent of global growth in 2009 was expected to come from emerging economies and added China would find itself in a stronger position as a result.

"The emerging nations will grow 6 percent next year and that will have political implications. One hundred percent of growth in 2009 will come from them," Blanchard was quoted as saying.

"There will be a shift in power. China will emerge from these events in a stronger position."

http://www.cnbc.com/id/27129923

China is more than an export play. They have a billion people.

Steve if you must, trickle your investment dollars slowly over the next two years. I prefer Hong Kong and keep a close eye on that market but I don't see the catalyst to get involved at this time.

About the only bull market I see out there is the USD against just about any major currency.

Serge, I'm keeping what investment I have where it is despite the interim losses, and will move more money in as it becomes available, keep a year's worth of cash on hand just in case, and pare expenses. This way I'm positioned either to make or lose a lot, but still have enough in case everything goes awry, as it has.

I think we will be seeing specifics of a plan announced tomorrow - at least Europe is announcing, and I don't think they can announce without us and vice versa.

Cramer says that it's going to be worse than 1929, which means that it's probably about to get better. The man changes his mind every day.

I'm tired of hearing this 1929 business. The next year or two are certainly going to be a challenge as the the private & public sectors continue to deleverage & consumers contract spending to build savings & reduce debt.

On the positive, commodity prices are in a free fall (most importantly, oil, gasoline & agriculture) which are a huge tax cut to the US economy. I've been investing here and there in direct beneficiaries of lower commodities but so far, they are getting slammed along with everything else. :( In addition, the stronger dollar will reduce our trade imbalance and place further downward pressure on any remaining inflation concerns.

Steve, I don't pay much attention to any of these economic rescue plans except for the market reaction. So far, our fearless leaders have managed to crush world markets. The day these "leaders" stop meddling in their respective economies, I might just get a tad more bullish.

stevejhx: they may have a billion people but only 5% of their population make enough money to participate in any discretionary spending. They have to increase that and in order to do that they have to export stuff.

sorry Steve but you are 100% wrong...the US actually comes out ahead in this one. They are the least sucky of many suck economies...just ask the chinese they agree, they keep buying all of our treasuries just like the rest of the world

who the f*&% is Olivier Blanchard? did he predict the global deflation that is happening now that Nouriel Roubini, Gary Schilling and Mr. Grant have been predicting for the past two years? if not, I dont give a damn what he has to say and neither should you.

by the way SPONGEBOB SQUAREPANTS is also predicting a big growth spurt in China. I think thats where we manufacture all his lovely products

"they may have a billion people but only 5% of their population make enough money to participate in any discretionary spending. They have to increase that and in order to do that they have to export stuff."

Read today's New York Times - they are about to change that this weekend through land reform. Olivier Blanchard is an economist with the IMF. I don't care what Roubini says - he's predicting a downturn as bad as the Great Depression. It's simply not going to happen.

Gary Shilling predicted the downturn in real estate - correctly. He is unsure about that current direction of the economy. I don't know who Mr. Grant is, unless he owned part of Grant's Department Store.

Grants interest rate observer - the name of a newsletter you should read.

Roubini is not predicting a depression ...stop saying untruths...Shilling did more than predict a real estate downturn he also correctly predicted global deflation and the rout in financial stocks and consumer discretionary income...show some respect, I do not have time to go through all you said that wrong.

You conveniently did not answer the main questions did this clown Blanchard predict anything that has actually occurred in the past year.

I am beginning to see all the faults pointed out by the manhattan bulls.

like the US...China can pump tons of liquidity and lower interest rates to 0%...that won't make them spend.

Once again Steve I am shocked at your arguments...they sound just like the crap the real estate bulls have been harping on.

You say China will enact monetary policies to make their people spend money and also argue that the same strategy by the US government will not save the real estate market. You can't have it both ways Steve.

Steve doesn't even know Grant's Interest Rate Observer, how educated about financial markets can he be not to know that name?

it looks as though the Mitsubishi guys are just going to buy Morgan Stanley whole. If the deal does not go down the markets will go so low it will be shocking

"Roubini is not predicting a depression"

He actually just did.

"show some respect"

I absolutely do respect everything he says that I am aware of.

"did this clown Blanchard predict anything that has actually occurred in the past year"

That would be irrelevant to whether or not he's correct in the future. "Past performance," which is the fallacy of all of your arguments.

"You say China will enact monetary policies to make their people spend money"

No I didn't. I said that they were instituting land reform to unlock the wealth of the peasants. Individually not much, but collectively a significant amount.

steve: Roubini did not predict a depression...cut it out...he oulined what the govt needs to do to avoid one... by the way there is a chance that one may happen...if he does predict it WILL happen I am likely to believe since he has been right on about everything else

No it isn't irrelevant what Blanchard's past predictions for the last year are and you know it isn't...if he was predicting that growth would continue unabated he is a clown that no one should listen to

its still govt action...you can't have it both ways...

stop cutting out parts of my statement and just answering what you want to answer...you must be a lawyer: )

Stevejhx, as dreadful as this economic tailspin has bin, people didn't die from the deceit!

"If you've never been to a developing country then I suppose you don't understand the pent-up demand for wealth."

Stevejhx, I live there! I don't pretend to know everything, but I do understand a lot more than you are giving me credit for.

China to Maintain `Fast and Stable' Economic Growth, Yi Says

http://www.bloomberg.com/apps/news?pid=20601080&sid=alojc9YF8hGU&refer=asia

Hong Kong May Use Foreign Reserves to Prevent Financial Crisis

http://www.bloomberg.com/apps/news?pid=20601080&sid=alfYZgGWdOqM&refer=asia

"I do understand a lot more than you are giving me credit for"

I didn't mean to slight you - don't take it personally.

However, my point is that the world is going to start to look toward China for economic leadership after this fiasco, and the Chinese are doing exactly what they need to do. China was the first to fall in this cycle which has cost, in the short-term, 50% or more of many people's wealth. That is why it's the only place I want my investment dollars to be in for a while. I do expect the US markets to rebound strongly and recover most of what was lost these past few weeks, but I don't expect huge growth for awhile because we have a lot of debt to pay off, and we have to restructure our economy toward one of saving, not spending.

"stop cutting out parts of my statement and just answering what you want to answer...you must be a lawyer."

Thankfully no, but I do work for them.