Wednesday, February 24, 2010

Compelling argument but ......

I have seen a lot smart people making good arguments but sometimes they have overdrive things ...... started off with solid argument of the cause but ending with low probability of cause will happen or over-exaggeration of the effects. Consider these arguments:-

The argument was China got a problem, it has got a bubble problem, when the bubble burst, it will bring down China, slumping China is not good, because the rest of the world will slump, because China is the source of the world growth.

Very logical, smooth and compelling argument actually but ........

China got a bubble ( true ? may be ? )

The effect of the bubble is something I have got a problem, stock market in China did crash from 6,000 to 2,700 and now back to 3,000. Did China slump? Did the rest of the world slump? (You know the answer)

The speaker assumed that China government is not going to do anything. They already have programs to control how banks should lend and tightening the reserve. Recent comments by their government to continue with the loose policy(after two shots of reserve tightening) makes me think they have got the over-heated situation under control or at least they are confident will keep it under control.

When the media amplifying the Dows are going down and etc will make people to buy in scary story headline like this. Going down, Yes. But has not really tested the previous correction low from the new high in January yet-- on both Dow Jones Transportation and Dow Jones Industrial. Making a new low or a new high? I'm betting it will make a new high soon.

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