Dubai was a property bubble. Plain and simple. Go to Dubai and see what happened. It was... what I call it the 'Edifice complex' - it's just, we can grow by putting up lots and lots of buildings and trying to attract people to come here, stay here, and put up offices here and sooner or later, you put up too many.
James ChanosThe interesting thing about the China story, getting back to the macro and micro, and as dire as I think the macro story is - due to bad credit and credit extension that makes Greece and Spain and the U.S. look like child's play - when you get to the micro of individual companies, they look even worse.
James ChanosChinais a world class if not the world class property bubble, primarily high-rise buildings, offices and condos.
James ChanosIf you're a short-seller, that's a cacophony of negative reinforcement. You're basically told that you're wrong in every way imaginable every day. It takes a certain type of individual to drown that noise and negative reinforcement out and to remind oneself that their work is accurate and what they're hearing is not.
James ChanosIn China, remember, the the banks are arms of state policy. They loan because the local party official or regional party official tells them we need a new stadium. They are instruments of state policy.
James ChanosI used to think that good short-sellers could be trained like long-focused value investors because it should be the same skill set; youโre tearing into the numbers, youโre valuing the businesses, youโre assigning a consolidated value, and hopefully youโre seeing something the market doesnโt see.But now Iโve learned that thereโs a big difference between a long-focused value investor and a good short-seller. That difference is psychological and I think it falls into the realm of behavioral finance.
James Chanos