In a Charlie Rose interview to air later, Jim Chanos repeats his warning about all hell breaking loose once the China bubble bursts and puts a timeline on the event - late 2010 or 2011. "Supply will equal demand at some point. It always does, and then there is this precarious tipping point when suddenly you can't sell a project and then it's just as if everyone from the port side of the cruise ship goes to the starboard side of the cruise ship all at once. You get a tipping point, you get this light-bulb moment - "I've got to get out while I can." And the buyers dry out. It's as old as market itself." Chanos also voices his opinion on the CNY, and ever the contrarian, he, just like Edwards and Zero Hedge, implies that the CNY is actually overvalued, contrary to what the NYT's paywall may want you to believe: "Chinese exports aren't the problem here. And what if it turns out that by having to nationalize lots and lots of real estate bad debts, the RNB is devalued." All spot on, however we disagree with Chanos' conclusion that this is something that nobody is expecting: note here and here.
Some other snippets about the interview from Bloomberg:
The world’s third-biggest economy may need to keep up the
pace of property investment because up to 60 percent of its
gross domestic product relies on construction, said Chanos. The
bubble may begin to “run its course” in late-2010 or 2011.
Chinese state and local governments are among the most
leveraged to property-related borrowings and the nation will
“ultimately” have to nationalize a lot of the bad loans that
will arise from the end of the bubble, Chanos said.
China’s foreign currency reserves will be “one asset”
that can be used to fund a cleanup of the banking system, he
said. The country has accumulated a record $2.4 trillion of
reserves, and $889 billion of U.S. government debt, partly a
consequence of its exchange-rate policy.
Chanos was one of the first investors to foresee the 2001
collapse of Houston-based energy company Enron Corp. The
investor said he is short-selling Chinese developers as well as
companies supplying building-related materials to the country,
without identifying any stocks.
We will provide the full Chanos-Rose interview in its entirety once it is available.