Hey Gang, Just a few thoughts about the curriculum in the 2011 exam about the BRICs. The literature assumes that China is still going to be pumping along about about 8% and will probably overtake the US by 2050, but I am in the contrarian camp that believes that China is heading for a bubble burst similar to Japan about 20 years ago. Here is what my model is based on -An export based model (to nations which are experiencing economic crisis and are starting to debate tarrifs against China) -A internal consumption market that is still weak - A looming Real Estate bubble which is becoming huge - GDP growth based on residential and commercial buildings which are mostly empty - Massive cheap loans by the government to keep the economy up to speed - A GDP per capita which is still tiny (about $4,500 per person) - Social unrest should an economic slowdown take place (since there are still about a billion “have nots”) 20 years ago everyone thought Japan was going to rule the world, but then had 2 lost decades (and that was before this disaster with the earthquake). People have been on the China bandwagon for a long time but there is a growing chorus of people who believe that the China model is unsustainable. What are your thoughts?
Sure, BRICS section = 100% Goldman Sachs view. Their views NEVER include any possible BIGGER crisis and they are bullish on basically everything…no tail risk in the models, no regime changes and thats exactly what you are referring to. I’m with you, but for another reason: cheap energy era is over, which will slow growth fundamentally and in the first place for enery intensive developing countries.