Noted economist predicts China economy will collapse!
TOKYO, Japan - February 24, 2010 - Harvard economics professor Ken Rogoff is throwing some serious bear punches again.
He argues that for China not to crash would be an extremely unusual historical precedent:
“You’re not going to go a decade without having a bump in the business cycle,” said Rogoff, former chief economist at the International Monetary Fund, in an interview in Tokyo yesterday. “We would learn just how important China is when that happens. It would cause a (Depression) everywhere surrounding” the country, including Japan and South Korea, and be “horrible” for Latin American commodity exporters, he said.
“Their response to the latest financial crisis clearly raised the risk that they have a debt-fueled bubble in the economy,” said Rogoff, who in 2008 predicted the failure of big Amerikan banks.
While Rogoff said he isn’t sure what will cause China’s bubble to pop, he said land is “the best bet” as it is “the most common source” of crises. Real estate values in Shanghai and Beijing have “taken a departure from reality,” said the economist, co-author of This Time is Different, a 2009 book that charts the history of financial calamities in 66 countries.
He argues that for China not to crash would be an extremely unusual historical precedent:
“You’re not going to go a decade without having a bump in the business cycle,” said Rogoff, former chief economist at the International Monetary Fund, in an interview in Tokyo yesterday. “We would learn just how important China is when that happens. It would cause a (Depression) everywhere surrounding” the country, including Japan and South Korea, and be “horrible” for Latin American commodity exporters, he said.
“Their response to the latest financial crisis clearly raised the risk that they have a debt-fueled bubble in the economy,” said Rogoff, who in 2008 predicted the failure of big Amerikan banks.
While Rogoff said he isn’t sure what will cause China’s bubble to pop, he said land is “the best bet” as it is “the most common source” of crises. Real estate values in Shanghai and Beijing have “taken a departure from reality,” said the economist, co-author of This Time is Different, a 2009 book that charts the history of financial calamities in 66 countries.
