Freedom Folks

Tuesday, February 28, 2006

Remember The .Com Bubble?

I am no economic genius. I don't make that claim, what I do claim though is that I am blessed with good old fashioned common sense which has kept me away from poor investments on more than one occasion.

During the .com bubble I kept asking people allegedly smarter than me "but what are they selling?" They would give me a piteous glance and then talk to me as though I were retarded. Well, some won big and some lost big on that deal, but I argue it was bad for business and even worse for our country.

We hear a lot of the same talk about China, may I remind those go-go investor's that at the end of the day China is a Communist country?

Want to see the next to good to be true deal?

Source: Foreign Policy

The Dark Side of China’s Rise
China’s economic boom has dazzled investors and captivated the world. But beyond the new high-rises and churning factories lie rampant corruption, vast waste, and an elite with little interest in making things better. Forget political reform. China’s future will be decay, not democracy.

And why shouldn’t they believe the hype? The record of China’s growth over the past two decades has proved pessimists wrong and optimists not optimistic enough. But before we all start learning Chinese and marveling at the accomplishments of the Chinese Communist Party, we might want to pause for a moment. Upon close examination, China’s record loses some of its luster. China’s economic performance since 1979, for example, is actually less impressive than that of its East Asian neighbors, such as Japan, South Korea, and Taiwan, during comparable periods of growth. Its banking system, which costs Beijing about 30 percent of annual GDP in bailouts, is saddled with nonperforming loans and is probably the most fragile in Asia. The comparison with India is especially striking. In six major industrial sectors (ranging from autos to telecom), from 1999 to 2003, Indian companies delivered rates of return on investment that were 80 to 200 percent higher than their Chinese counterparts. The often breathless conventional wisdom on China’s economic reform overlooks major flaws that render many predictions about China’s trajectory misleading, if not downright hazardous.
I can almost sense the pitying looks.

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