CRABS & RIM Jobs
We don’t
think it is a coincidence that the flaws in Canada’s banking system are being
exposed at the same time China’s appetite for natural resources is being
suppressed by a glass ceiling on capital misallocation. In fact, while traveling through China last
year, we learned that many of Chinese refer to one particularly popular
Canadian city as “Hongcouver” – hence, our strong interest in Canada and in
meeting new friends up north. Today, the world’s “healthiest” economies are
closely tied to the insatiable Chinese demand for resources. This is the part of the world that is
supposed to be healthy. These are the
countries the rest of us are counting on for growth. Yet, as noted in a recent report outlining
the short thesis for iron ore, “The transmission mechanism that will take this
disease that started quietly in the summer of 2011 and spread it globally are
CRABS. The CRABS are the commodity rich
countries that are riding China’s spending spree. They are Canada, Russia, Australia, Brazil
and South Africa.” This is absolutely
perfect. We think the CRABS will
ultimately be a much bigger problem than the PIGS. If for no other reason, we understand that
CRABS are highly contagious.
