"THE ROAD AHEAD"

We had quoted Jim Chanos, a short selling guru, being bearish on China (see my post "THE NEXT BIG BUBBLE ?"). He in fact calls China as 'Dubai times 1,000 or worse' for the credit bubble that he sees as building up in that country. We now have none other than Dr. Doom Marc Faber voicing a similar concern.

Faber believes that China could see an end to its credit bubble, though he has not put a timeline to this prediction. "It is very difficult to pinpoint a day when China will implode, I don't think it will happen right way," he told an international publication. Faber remains positive on India, Japan, and gold.

The man who famously foresaw the global financial meltdown has sounded another warning bell. Nouriel Roubini feels that a sovereign debt crisis will sweep the globe. In fact, in an article in Forbes, he says, "If countries remain biased toward continuing with loose fiscal and monetary policies to support growth, rather than focusing on fiscal consolidation, investors will become increasingly concerned about fiscal sustainability and gradually move out of debt markets they have long considered safe havens". We agree with his basic point that countries must consider withdrawing their stimulus packages sooner rather than later. They were meant to be medicines which would revive ailing economies. Now it is time to pay attention to the side effects of the medicines.