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Thursday, December 17, 2009

Is a bubble brewing in China?

Schonberger: Are you at all concerned about a bubble brewing in China, given your investment there?

Schiff: Yes, I am concerned about that. They are creating too much money in China, and that is problematic. It will create bubbles in assets there. [However,] I think that the bubbles could inflate for a long time, given the real productivity and competitiveness of the Chinese economy and the savings that they have. This bubble could expand for five or 10 more years.

At some point, if we get real crazy valuations in Chinese assets, then I'll have to move out of that market. Right now, if you look at most Chinese companies based on dividend yields, P/E ratios, you don't have those kinds of crazy valuations yet.

--from "A Tough Year Ahead for the U.S. Economy?", an interview with Peter Schiff by Jennifer Schonberger.

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