Calpers decision to invest in China is the worst as China is ready to plunge into multidecade depression
Sam Adelton
Sep. 26, 2006

California Public Employees Retirement System, the largest US public pension fund will invest in Chinese companies to participate in emerging markets.

As we mentioned yesterday, cyclically China is ready to pluge into a deep depression. It can hurt the Calpers return on investment. Many institutuinal investor lose money by joining the bandwagon at the tail end on bopom just before the bust.

More than 40% of Chinese economy is based on manufacturing and totally depended on US consumers. The housing bust in US will hurt Chinese manufacturers most. Wage inflation and commodity infaltion has made China the worst place to invest for now. The real bad manifestation of the emerging depression in India and China will be evident in early 2007.

China has tried to contain the eventual fall out by providing easy liquidity while holding inflation down through "sterilization techniques.'' But the corrupion and ineficiencies within the system is ready bust the economy.

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