Sunday, January 10, 2010

China and Ticketing/Police Pardox...

The Asian markets continue their winning streak based on strong reported data on imports and exports.

"Chinese exports climbed 17.7 percent from a year earlier, the first increase in 14 months, and imports jumped 55.9 percent, the customs bureau said yesterday." The data benefits from easy comparisons relative to last year, but it's still pretty impressive. The real questions that I have are:

1: How much of this growth is stimulus related?

2: Can we really trust any data released by the Chinese gov't? Allow me to explain.

I spend a good amount of time dissecting US government data and there is always a decent amount of spin, misrepresentation and outright bad data in our statistics. I'd love to be able did down into some of the Chinese data releases....

Well, one of my contemporaries that nailed the Enron story - I was on the same page with him re: Enron, but I just didn't see it going to zero so he's a billionaire and I am not - is taking aim at China and I'm listening this time around.

James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true.
James Chanos made his
hedge fund fortune predicting problems at companies and shorting their stock.

Now Mr. Chanos is betting against China, and is promoting his view that the China miracle has blinded
investors to the risks in that economy.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.

“Bubbles are best identified by credit excesses, not valuation excesses,” he said in a recent appearance on CNBC. “And there’s no bigger credit excess than in China.” He is planning a speech later this month at the University of Oxford to drive home his point.

As America’s pre-eminent short-seller — he bets big money that companies’ strategies will fail — Mr. Chanos’s narrative runs counter to the prevailing wisdom on China. Most economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.

Mr. Chanos, 51, whose hedge fund, Kynikos Associates, based in New York, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal.

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I hope that I don't come across as anti-government in some of my rants. The government - at all levels - provides necessary social safety nets and provides countless valuable services that make living in the US an honor and a privilege. However, I am anti-stupidity and stupidity tends to reveal itself in certain places repeatedly (government, banks, night clubs in Orlando...).

This move in California typifies the sort of move that makes my skin crawl.

"Since San Francisco flooded the streets with additional parking control officers in the last two years, the number of parking citations has been on the decline.

The MTA has attributed the 16 percent drop in citations to cash-strapped drivers becoming more wary of parking regulations, a decrease in street-sweeping operations and fewer motorists out on the road because of the weakened economy."

I see many similar moves in NYS. The number of State Police patrolling NNY has skyrocketed in the past decade, but I get the sense that people have become aware of the ticket risk and do not wish to be an ATM w/wheels for the state, so my own observations seem to indicate that people have lowered their average speed which will produce fewer tickets.

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As predicted a week ago, gas prices hit the $3.00/gallon for regular unleaded today. I know people seem to shrug at $3.00 gas, but consider that a year ago the national average for a gallon of gas was $1.79!! Considering we use almost 400 million gallons a day in the US that's an extra $12 billion/mth of discretionary income that is going to be eaten up by higher gas prices.

Also, keep this in mind when we get GREAT retail sales data next month. The higher sales will be almost exclusively driven by gas prices.

Cheers!


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