The brooding von Pepe–who discovered something about himself after the Oprah incident–emails me to bring up the issue of China, which he thinks is classic Austrian business cycle material.
I want to be clear that I do not follow China, and I trust their official statistics less than the BLS. But von Pepe sends this information from UBS bank stating that steel and cement are likely oversupplied and that perhaps the government is restricting loans to these industries to try to pop a bubble in progress.
Von Pepe thinks that cement and steel are great fits for the ABCT template. Low interest rates, State-directed construction, build early stage manufacturing with cheap money/credit… He thinks it’s a perfect recipe for a textbook ABCT.
Von Pepe reminds us that Jim Chanos is short China, and also sends me this chart about the shadow and/or investing circularity for China:
Now that I’ve given you a topic, discuss…