They're down to condo-flippers and subprime lenders in China. And remember, the news that you get out of China is delayed probably 6 to 9 months. So, the reality is the most successful emerging market in history was the United States of America, it grew 9% compounded annually for a hundred years between 1800 and 1900 with 15 recessions, 4 depressions and a civil war at halftime.
The Chinese haven't cleaned their system since the late '90s. They're in the process of hitting the "overbuilding wall", the urge to be prideful and make it look like they're still growing and what's happening is they're setting up a terrible market in everything from emerging markets to commodities, debt attached to countries like Australia and Canada. There are so many trades crowded into this phenomena, and we've traveled all around the country in the last year and a half, whether it's financial advisers, registered investment advisers or institutions, they're all crowded into this trade together and the reason they're performing poorly is there's just no one left to go in.
~Bill Smead, CEO & CIO, Smead Capital Management, CNBC's "Squawk on the Street", May 16, 2011