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 Strategies & Market Trends : The Residential Real Estate Crash Index

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To: posthumousone who wrote (255903)6/22/2010 4:02:10 PM
From: mindmeld of 306800
 
Hi all,

this is a partial repost from another thread. The below is from an article written in late April, but it is shockingly prescient and very scary...I've highlighted the parts that clicked together for me like the final pieces of the puzzle.

zerohedge.com 

The Last Dance

Either China’s leadership is very smart or is very stupid (I know what ours is). I do not have a great feel for this since I have no connections there but I am pretty sure it is one or the other. Conventional wisdom at the moment tells us two things with regard to China. 1) They need us as much as we need them. 2) They are creating monster bubbles that are dangerous and have no idea what they are doing. With point #1 I completely disagree. On point #2 I had tended to agree with that and in fact may have even played a small role in making that notion part of conventional wisdom with my prior writings. More and more I am doubting #2. The alternate scenario goes like this. They refuse to allow the yuan to strengthen because they know that once they do that it will mark the real end of the dollar era. So instead they are spending like crazy on infrastructure ahead of them allowing the dollar to plunge. Then the strong yuan will be employed to purchase all the commodities they need to utilize their infrastructure and the OECD gets priced out. To those that talk about yuan devaluation, you need to be specific. Devaluation versus what? Versus commodities generally along with other currencies? I can buy that argument very easily. Versus the dollar, highly doubtful. Why? The latest data says China owns $877.5 billion in U.S. treasuries. All they have to do is start dumping and the dollar is finished as the Fed will be forced to print so many dollars it will make Mugabe blush. People need to wake up.

Last year I wrote about how the leaders in America were essentially fiddling as Rome burned. This fiddling has become an all out dance party and many investors have been dragged onto the floor one more time due to money printing, an inherent desire to be optimistic, a plethora of propaganda and rising asset prices. However, this is the last dance folks. Our corporate and political leaders have destroyed us. Chuck Prince would be proud.
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