JAMES CHANOS: The Long and Short of It
James Chanos -- http://en.wikipedia.org/wiki/James_Chanos -- reminds us of the potential bubbles investors in Asian production face when they depend on income from customers who are hurting and there is no masterplan to re-configure debt to be reduced to equity for as long as necessary.
When financial bubbles burst, because debt remains unpaid, deflation punishes the whole economy for as long as it can. Nothing good comes of this. But it will happen to investors in Asian high rise construction first, and to the rest of the world in due course.
The USA may be first to create a deflation-proof financial system because it has the most to lose if it does not. Whatever the USA will do to tame the power of debt and replace its missing billions of workers with billions of robots (large and tiny), Asia will try to do too -- maybe try to do first.
The long and short of it remains uncertain. Those who will short Asian assets expecting China and India to be unable to organize Asian consumption to replace Western business will bet on what looks much like a sure thing. But, if it is certain that Asia needs the West to pioneer debt-free money, why has America refrained from creating a debt-free paradise up to now?
This question cannot be answered. But James Chanos, hedge-fund manager of unparalleled brain and nerve, says go short for now and go long on the USA if it can get it together when it has to.
Of course, you may have to go short a second time, if America cannot match Asian people with the robots it will need.
I like the way James Chanos thinks and writes. The President needs his advice. We have too many people from Wall Street in Washington who are not of a contrarian view. Chanos is -- but is he lucky? When a contrarian is correct, convention is overturned. And the result can defy all logic and be doubly disappointing.