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Jim Chanos Compares China's Stock Market To Pig On LSD, Fears "Lost Chinese Decade"

Tyler Durden's picture




 

Over the past three months, there’s been no shortage of attempts to explain the wild gyrations in China’s equity markets by way of analogy and/or colorful metaphors and the same goes for efforts to analyze the country’s decelerating economy.

Take Horseman Global for instance, who, in a moment of nostalgia for classic 80s cinema, said the following earlier this month: 

For bears, much like the alien in Predator, the Chinese government has continually used special abilities that were previously unknown. In my experience, in the mind of the international investment community, small devaluations tend to encourage even more capital outflow, which in turn leads to even larger devaluations. Or to borrow a line from Predator, "If it bleeds, we can kill it".

Now obviously, topping that is no small feat, but Jim Chanos took a stab at it during a panel discussion on China in New York on Tuesday. 

“It’s like a pig on LSD. You don’t know which way it’s going to run,” Chanos said of China’s stock market, which of course is susceptible to huge intraday swings depending on what mood the PBoC’s plunge protection team happens to be in. 

But on a more serious note, Chanos doesn’t think Chinese equities are the way to go when betting against the country as it attempts to mark a difficult transition from an investment-led economy to a model based on consumption and services and as Beijing grapples with debt legacy stemming from efforts to boost growth in the wake of the financial crisis. Here’s more from Bloomberg:

China is on a path similar to the one that preceded Japan’s lost decade in the 1990s as the country’s debt level grows twice as fast as its economy, according to Jim Chanos, the hedge fund manager who predicted the 2001 collapse of Enron Corp.

 

“We have an economy addicted to credit,” Chanos, founder of Kynikos Associates LP, said during a panel discussion on China in New York Tuesday. While the country doesn’t appear to be facing an “imminent collapse,” it is on a trajectory similar to the one Japan was on before its asset-price collapse in 1991 “but on steroids,” he said.

 

Chinese annual loan growth has slowed to about 15 percent from more than 30 percent in 2009, that’s still double the pace of expansion in gross domestic product. Total household and corporate debt surged to 207 percent of GDP in June, up from 125 percent at the end of 2008 when China embarked on a borrowing binge to stimulate the economy, according to data compiled by Bloomberg.

 

Japan’s total debt swelled to 176 percent of GDP in 1990 from 127 percent in 1980, according to JPMorgan Chase & Co. The burst of the housing and stock market bubble since then led to anemic economic growth in the following years, a period commonly referred to as a lost decade.

 

“It takes time to sort out” the debt overhang, said Chanos. The investor has forecast since at least February 2010 that the country’s property market will slump, saying that China is Dubai times a thousand and on a “treadmill to hell” because of its reliance on real estate for growth.

 

Even though Chanos is bearish on the outlook for China, he said he isn’t shorting the country’s stocks because the equity market isn’t a reliable gauge of economic activity. Instead, the slowdown will claim victims in global commodity and mining companies, especially liquefied natural gas producers in Asia, he said. Chanos said earlier this month that he’s betting against Cheniere Energy Inc., a U.S. natural-gas exporter.

Of course, as we've noted on numerous occasions when discussing China's massive debt load (and we're talking about so-called "augmented" debt here which takes into account off-balance sheet LGVF financing as well as corporate debt), deleveraging is complicated by Beijing's efforts to keep economic growth from decelerating further.

Here's a look at the problem via the IMF:

Efforts to effectively deleverage and re-leverage all at once have led to the adoption of a kind of schizophrenic approach to managing markets and the economy as China desperately tries to convince the world that somehow it can manage multiple competing goals if only Beijing can find the right mix of policies. As recent developments in both FX and equity markets have made abundantly clear, this simply isn't possible and Beijing is rapidly losing credibility. We close with what Chanos said last month with regard to China's mulitple spinning plates:

"People are beginning to realize the Chinese government is not omnipotent and omniscient. In fact, like many of us, sometimes they don't have a clue."

 

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Wed, 09/23/2015 - 07:56 | 6583068 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Ms Piggy is back!

Wed, 09/23/2015 - 08:00 | 6583073 TeamDepends
TeamDepends's picture

Um, you mean that one, the one that's floating?

Wed, 09/23/2015 - 08:02 | 6583077 Looney
Looney's picture

A Pig on LSD? David Cameron would surely like to fuck THAT piggy!  ;-)

Looney

http://www.theguardian.com/politics/2015/sep/21/conservative-sources-deny-david-cameron-pigs-head-allegations

Wed, 09/23/2015 - 08:05 | 6583089 VinceFostersGhost
VinceFostersGhost's picture

 

 

 

Lucy in the Sky....with Diamonds.

Wed, 09/23/2015 - 08:09 | 6583101 Motasaurus
Motasaurus's picture

Gotta read through the nuspeak. 

Fear = Hope.

The thing that Western Economists really fear is that China will just ignore the stawks and continue to use their billion people in a productive, expansionist, Russia-helping manner. 

Wed, 09/23/2015 - 09:36 | 6583311 jeff montanye
jeff montanye's picture

this is directed to looney and his scurrilous slander of david cameron.  

first, though it has been said many times that david himself is a big-time drug user, it has never been stated that he used drugs to facilitate his sexual relationships with barnyard animals.  

second, it is widely known that it is irrelevant because the prime minister doesn't have sex with the living anyhow; he is a confirmed necrophiliac, restricting his bestiality to the dead.

and, finally, third, it is just wrong to indicate that his excellency is even interested in fucking pigs; all signs point to a clintonesque interest in having the excellent cock sucked exclusively.

p.s. this in no way implies that monica lewinsky (or any of the countless others) was/is either dead or a pig, nor that these chief executives' fixation on fellatio indicates latent homosexuality.

Wed, 09/23/2015 - 09:46 | 6583416 SirBarksAlot
SirBarksAlot's picture

Was he on that website list?  What was it?  Ashley Madison?

Wed, 09/23/2015 - 08:09 | 6583100 shovelhead
shovelhead's picture

That's DISGUSTING!

 

A live pig, on the other hand, seems far more reasonable.

I'm not sure how LSD would change things for the pig.

Wed, 09/23/2015 - 08:25 | 6583144 NoVa
NoVa's picture

that dude Chanos is a sick puppy.  How else would he know a pig on LSD?  unless he has actually done such a thing.

 

Wed, 09/23/2015 - 08:01 | 6583079 doggis
doggis's picture

MS. PIGGY NEVER "LEFT"......

Wed, 09/23/2015 - 09:41 | 6583395 Silver Bug
Silver Bug's picture

I think that's a fair comparison, but honestly, this is true about most economies around the world, they are bloated, inflated and sick.

 

http://ericsprott.blogspot.ca/

Wed, 09/23/2015 - 08:01 | 6583074 RushRoolz
RushRoolz's picture

Another day, another picture of Janet Yellen on ZH

Wed, 09/23/2015 - 08:01 | 6583075 BandGap
BandGap's picture

Pigs on acid. Yeah. How about people on acid?

Good to see the EU and US markets are up.

Wed, 09/23/2015 - 08:03 | 6583085 Chuck Knoblauch
Chuck Knoblauch's picture

MOAR Chinese fear porn.

Wed, 09/23/2015 - 08:04 | 6583086 Quinvarius
Quinvarius's picture

Says the genius who was shorting it before it ran to 5000, and is still 50% underwater in those shorts.  Jim, the economy and stock market are two differnt things. 

Wed, 09/23/2015 - 08:18 | 6583120 Oldwood
Oldwood's picture

It should be obvious that no one knows what happens next. never has. But this is the premise of all bets...not knowing but thinking you know more or better than others. The "markets" are the pinnacle of hubris and fraud. What could possibly go wrong?

Wed, 09/23/2015 - 08:14 | 6583088 wizteknet
wizteknet's picture

So homies how much money they lost for the past 2 days? 1-2 trillion? atleast. recon

Wed, 09/23/2015 - 08:11 | 6583094 JustObserving
JustObserving's picture

Chanos is short the Chinese market. Perhaps, he is talking his book.

But the US market is fairly valued?

All stock markets are being manipulated higher including the Chinese and US markets.

Wed, 09/23/2015 - 08:13 | 6583109 Oldwood
Oldwood's picture

But the US market is faily valued?

What the fuck is this "value" about? There is NO value beyond what deluded gamblers think other deluded gamblers will pay...pay in valueless trading script of central bank origination.

Value, my ass

Wed, 09/23/2015 - 08:45 | 6583190 CheapBastard
CheapBastard's picture

Not only has the new leader cracked down on corruption, but has tightened the gubmint grip on their internet so more then 80% of the web sites are blocked and whatever does somehow get thru is promptly removed by thousands of hired trolls.

 

Control of information and freedom may be their bigger problem then their stawk market.

Wed, 09/23/2015 - 08:08 | 6583099 Oldwood
Oldwood's picture

everything is FINE

BTFD

keep hope ALIVE

Wed, 09/23/2015 - 08:21 | 6583125 VinceFostersGhost
VinceFostersGhost's picture

 

 

The brown acid is not poisonous.....it's just really bad acid.

 

Sit tight....we'll send you some granola.

 

BTW.....welcome to Woodstock.

Wed, 09/23/2015 - 08:43 | 6583180 medium giraffe
medium giraffe's picture

"everything is FINE"

damn straight.  and get some lipstick on that pig asap ffs.

Wed, 09/23/2015 - 08:10 | 6583104 xrxs
xrxs's picture

How many of those Japanese loans paid for ghost cities?

Wed, 09/23/2015 - 08:11 | 6583105 venturen
venturen's picture

name me a stock market that hasn't been scammed? We are looking at decades of pain

Wed, 09/23/2015 - 08:13 | 6583108 ElectroGravitic
ElectroGravitic's picture

The Algos for the deep pockets will drive the market up and down to extract wealth from your account, and deposit said stolen wealth into the accounts of their owners.

Wed, 09/23/2015 - 08:15 | 6583113 GFORCE
GFORCE's picture

We're all heading for a lost decade. China will emerge the strongest though.

Wed, 09/23/2015 - 08:20 | 6583129 Oldwood
Oldwood's picture

Whoever can kill the most will emerge the strongest.

Wed, 09/23/2015 - 09:36 | 6583366 SirBarksAlot
SirBarksAlot's picture

Hail Caesar!

 

Wed, 09/23/2015 - 08:43 | 6583185 Wahooo
Wahooo's picture

Always ask:"What are we building?"

Wed, 09/23/2015 - 08:20 | 6583128 Usurious
Usurious's picture

got this link from ZH comment a few weeks ago..........sure makes sense..........

''Even as they toppled the United States from the top of the tree the Zionists who control all Western nations are bringing millions of criminal, hopelessly uneducated and downright enemies of America across the now open southern borders and the borders of Europe to complete the destruction. This as the greatest white and Asian minds born abroad begin to emigrate not to the former land of the brave, but to grow the economy of the world’s new leading superpower China.''

https://endzog.wordpress.com/2013/08/07/financial-collapse-post-western-...

Wed, 09/23/2015 - 08:23 | 6583138 Oldwood
Oldwood's picture

How many of these ME "immigrants" are the Chinese taking in? Chinese are balls deep in that area yet act like they are not involved.

Wed, 09/23/2015 - 08:51 | 6583201 Usurious
Usurious's picture

the tribe will destroy china after they have 'properly fleeced it'......prolly take about 100 yrs..............there's lots of labor to be stolen in china........and the tribe wrote the book on parasitism........

Wed, 09/23/2015 - 08:51 | 6583203 Zwelgje
Zwelgje's picture

China is not bombing the crap out of the ME.

Wed, 09/23/2015 - 08:23 | 6583141 Argenta
Argenta's picture

Interesting analogy, lol.  An entirely new take on the idea of crispy bacon.

-Argenta

Wed, 09/23/2015 - 08:25 | 6583145 buzzsaw99
buzzsaw99's picture

wouldn't a pig on lsd be more likely to lie around the sty all day saying "oh wow" a lot?

Wed, 09/23/2015 - 09:31 | 6583345 kralizec
kralizec's picture

Or it would freak out and start hurting itself.

Hmmm...maybe not a bad analogy after all...

Wed, 09/23/2015 - 08:29 | 6583151 Chupacabra-322
Chupacabra-322's picture

Pig on LSD. Exactly describes, what Hillary Clinton looks like.

Wed, 09/23/2015 - 08:35 | 6583168 _ConanTheLibert...
_ConanTheLibertarian_'s picture

and explains her fugly daughter

Wed, 09/23/2015 - 09:32 | 6583348 kralizec
kralizec's picture

Double burn!  My eyes!  Gaaahhhhh!!!!  Why did you guys go there?!  You baaaaasssstaaards!!!!

Wed, 09/23/2015 - 08:38 | 6583169 El Hosel
El Hosel's picture

Deliverance.....That pig sure has a pretty mouth     http://search.aol.com/aol/image?q=deliverance

Wed, 09/23/2015 - 08:55 | 6583210 wizteknet
wizteknet's picture

lol

Wed, 09/23/2015 - 09:02 | 6583222 Benedict Farse
Benedict Farse's picture

Pigs and LSD - sounds like and average night out for David Cameron.

Wed, 09/23/2015 - 09:16 | 6583284 q99x2
q99x2's picture

The Pig ate all my acid.

Wed, 09/23/2015 - 09:21 | 6583304 InnVestuhrr
InnVestuhrr's picture

What economy is NOT addicted to debt ?

Wed, 09/23/2015 - 09:34 | 6583356 Billy Shears
Billy Shears's picture

Still waiting for Clowns on Acid to weigh-in on this one.

Wed, 09/23/2015 - 09:43 | 6583404 SirBarksAlot
SirBarksAlot's picture

If I'm thinking of buying Chinese stock as an investment and they change the law to say that I'm not allowed to sell the stock, then my interest in purchasing stock evaporates.

Wed, 09/23/2015 - 09:48 | 6583426 DirkDiggler11
DirkDiggler11's picture

Everyone knows that a pig on acid would just aimlessly walk around in circles, thinking through and fully examining which path to take, when to take it, how many boxes of Cracker Jacks to take on the trip etc. The better the acid, the longer the pig will contemplate each movement. Give the pig some good 4-Way Blotter, and the pig will circle for quite a while. Give the pig some liquid LSD on a sugar cube, that Pig will be tripping for days.

Now, a pig on PCP, you had better get the fuck out of the way. That Dust brings out the buck wild crazy shit in anything, animals included. Think Tequilla X 1,000. Yea, it's that bad.

Wed, 09/23/2015 - 10:05 | 6583505 Consuelo
Consuelo's picture

Jeezus...   When did getting high become so complicated...? 

Wed, 09/23/2015 - 10:22 | 6583602 TheEndIsNear
TheEndIsNear's picture

I liked the Blue Microdot lysergic acid diethylamid myself. Those were the days. 

Wed, 09/23/2015 - 10:34 | 6583650 dcohen
dcohen's picture

UK PM David Cameron: Did someone say pig, where!??

Wed, 09/23/2015 - 10:46 | 6583700 Prophet of Rage
Prophet of Rage's picture

If China's stock market is a pig on LSD then the U.S. Stock market has to be a 2000 pound bull on LSD. In a crowded street. Shooting a machine gun.

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