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China Crash 2012/2013 Overcapacity and bubbles - Part One

Tom Winnifrith
Tuesday 11 September 2012

There can be no doubt now that China is undergoing a “hard landing.” But that hard landing will soon turn into a crash. Although this is not the consensus view of analysts, the experts have called the slowdown badly wrong so far and are still wrong. No amount of fiscal and monetary stimulus to the domestic economy can dodge the pending crash. That is because the crash will be driven by chronic overcapacity (driven by capital misallocation) in the production of commodity goods for export; structural weakness in the domestic banking system and the existence of vast speculative bubbles, which must at some stage burst. Hence, stimulating domestic consumption will change nothing.

on SeekingAlpha | Comments

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About Tom Winnifrith
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Tom Winnifrith is the editor of TomWinnifrith.com. When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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