Swiss hedge fund manager Felix Zulauf believes everyone is overestimating China’s growth rates while underestimating its problems.Speaking at an investor conference sponsored by the CFA Institute in Prague, Zulauf said China is actually growing at a 3 per cent rate. This is according to the CFA Institute’s Thomas Collimore.
This compares to the 7.4 per cent rate reported by the Chinese government earlier this morning.
Zulauf said that while China’s new leadership may implement a “timid stimulus”, it won’t have much effect, and that a “credit boom in reverse” seems imminent.
This will also devastate Australia and Latin America, Zulauf added. Like any aftermath of an “excessive” boom, China will end up going bust.
As for Europe, Collimore quotes Zulauf as saying the Eurozone will end up being the shortest currency union in history. Austerity measures have only produced an imminent crisis, and that the markets may “suddenly wake up and react powerfully to some seemingly minor event.”
- President Obama “has no plan” for resolving the fiscal cliff, while Paul Ryan’s plan is “implausible.” As a result, U.S. debt will balloon to $25 trillion within four years.
- Equity markets may thrive for the next 24 months, but a seven-year equity cycle will turn around 2015 and crush anyone with a three- to four-year horizon.
- Central banks sold gold at the low point, so they should not be trusted to manage inflation.
The only hope, he said, was a supply-side focus on increasing productivity and lowering economic barriers could help in principle.
But governments are already “heading in the other direction,” he said.
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