China will be the third great bubble blowout in a bit over ten years, following the .com and leverage bubbles. The world, of course, will go back into yet another great recession (YAGR).
What a way to start a millenium!
When will China’s bubble blow? I’m guessing within the next 12 months, but since I usually guess early a more likely answer is 18 months from now.
That much is obvious. What I want to know is how the Lords of Finance are placing their bets. I assume the big money will be in currency shifts.
When China’s bubble collapses the remninbi will drop compared to the US dollar. So I’m assuming those with money will bet using a convoluted and indirect equivalent of buying the right to exchange renminbi for dollars in 2012 at today’s exchange rates. Since it’s widely assumed that the renminbi will rise over the next few years those contracts may discounted.
So here’s the assignment for an ambitious journalist. Figure out how the bet will be made, then look for evidence that billions of dollars are already on the sidelines.
I suspect Soros has something on the line …
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