Grantham

Jeremy Grantham can be a bit of a perma-bear, but there's a point in his most recent letter that rings especialy true to me:

China’s ability to sustain rapid growth and avoid a
serious stumble has become an article of faith that
I was buying into without much skepticism. But
why? No sooner do we fi nish wallowing in the idea
of Soviet incompetence than we start to believe that
Chinese central planners can wonderfully manage
a complicated economy, growing unprecedentedly
fast and transforming overnight from a rural society
to a capital-intensive industrial wonder using half of
some of the world’s resources. Economic logic and
history suggest that their governmental interferences
will be sub-optimal, and that China’s current level
of investment will turn out to be dangerously high,
encouraging waste. They continue to build basic
capacity on automatic pilot even as they encounter
dangerous times for their export-led economy, since
we are all facing the rising probability of a global
slowdown in economic growth and trade. China also
has to deal with rising energy costs in their particularly
energy ineffi cient economy. Surely they will stumble.
And if we are all unlucky, they will stumble right into
the global credit crisis.