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“I have confidence that China will get it right and it will be booming again soon. This dip that we are seeing right now is a great time to focus our thoughts on how we should be doing things better.” -Gina Rinehart

This is a simple quote that every “its global this time” asset allocator would have signed off on less than 18 months ago. Today, I am not sure who is actually allowed to be bullish on China, but the locals are enjoying a +9% year to date move in the Chinese stock market as they head into this week’s Chinese New Year (The Year of the Ox).

Gina Rinehart was quoted above by Andrew Hobbs at Bloomberg this week in an article titled “Australia’s Richest Woman Seeks Chinese Mine Partners”, and her comment was a breath of fresh Australian capitalistic air. Rinehart is only 54 years old, full of energy, and now looking to take advantage of this crisis of confidence that the manic media continues to perpetuate.

There is a big difference between the Liquidity Crisis of October 2008, and the 2009 Illiquidity Crisis that has been born out of the Crisis of Credibility. Most investors have found themselves in the newfound position of not owning the duration of their investments. This, of course, is the problem with managing other people’s money – once in a while they ask to have it back!

Have no fear however, the Darwinian rules that have been at work for hundreds of years will solve all that creatively self destructs. Those capitalists who are liquid long cash will start to rake in the prized pieces of property on the global monopoly board, one by one – everything has a price.

Keith R. McCullough
CEO / Chief Investment Officer