china

Forget the house price crash. That’ll be child’s play compared to the big crash that’s on the cards.

I’m talking about China.

As you may know, I’d been pretty bullish on the China story for several years, going back to my days as editor of the Australian version of The Daily Reckoning.

But that view started to change late last year.

I’ll be honest, your editor didn’t turn from a raging bull to a grizzly bear overnight. The change has been gradual.

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“There is Oil in the Middle East,
…There are Rare Earths in China.” Deng Xiaoping

There is a big upset in the Rare Earths market right now, and with good reason.

China has steadily positioned itself as the world’s biggest producer of rare earths in recent years. Even though it is sitting roughly a third of the world’s deposits, it is now controlling 95% of global supply. It has squeezed other producers out of the market by undercutting their prices, and now has a monopoly on the market.

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A barely known Chinese rating’s agency is crying out for a more ‘realistic and fairer’ international credit risk system.

Right now, the international risk system is dominated by three main companies: Moody’s, Standard & Poors and Fitch.

All three of these companies, didn’t see the global financial crisis coming, or the European debt crisis coming. And it’s precisely these events that Dagong International is using to its advantage.

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We only have a brief Money Morning for you today as we’re rushing to get the Australian Wealth Gameplan weekly update out to members by this afternoon.

But there is something I wanted to mention today…

It’s been a while since we caught up with any of our old broker pals – probably because we’re a bit of a pariah these days.

But when we do meet up over the $13 all-you-can-eat buffet at the RACV Club in the next couple of weeks we’ll try and eke out of them what kind of message is going around Australia’s broking rooms.

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