The mainland is in the midst of “the greatest bubble in history”, a former general counsel of hedge fund Long-Term Capital Management (LTCM) says.
The balance sheet of the People’s Bank of China resembles that of a hedge fund buying dollars and short-selling the yuan, said James Rickards, the senior managing director for market intelligence at consulting firm Omnis.
“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 in Hong Kong. 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 an overheating and potential crash in China’s economy.
Leveraged speculation in the stock market, wasteful allocation of resources by state-owned enterprises, off-balance-sheet debt through regional governments and the country’s human rights record were concerns, said Rickards, who worked for LTCM between 1994 and 1999. He helped negotiate a US$3.6 billion rescue after the hedge fund lost US$4 billion in a few weeks in 1998.
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‘Greatest bubble’ in the making
Bloomberg
18 March 2010
The mainland is in the midst of “the greatest bubble in history”, a former general counsel of hedge fund Long-Term Capital Management (LTCM) says.
The balance sheet of the People’s Bank of China resembles that of a hedge fund buying dollars and short-selling the yuan, said James Rickards, the senior managing director for market intelligence at consulting firm Omnis.
“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 in Hong Kong. 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 an overheating and potential crash in China’s economy.
Leveraged speculation in the stock market, wasteful allocation of resources by state-owned enterprises, off-balance-sheet debt through regional governments and the country’s human rights record were concerns, said Rickards, who worked for LTCM between 1994 and 1999. He helped negotiate a US$3.6 billion rescue after the hedge fund lost US$4 billion in a few weeks in 1998.
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