Strap yourselves in: China’s going down

Now here’s an attention-grabbing headline: Econophysicist Predicts Date of Chinese Stock Market Collapse. From the arXiv blog:

The boom and bust nature of economics is one of the most puzzling aspects of the modern world. In the last year or so, many people have learnt to their cost that when bubbles burst, businesses, jobs and livelihoods can go with them.

So an obvious question arises: can we spot bubbles when they occur and predict when they are about to burst? One group of theorists say they can and have used their techniques to make an extraordinary prediction.

The paper is here, and the abstract says it all:

Amid the current financial crisis, there has been one equity index beating all others: the Shanghai Composite. Our analysis of this main Chinese equity index shows clear signatures of a bubble build up and we go on to predict its most likely crash date: July 17-27, 2009 (20%/80% quantile confidence interval).

Even if they’re wrong, it’s a guaranteed attention grabber. I predict this will be all over the frickin’ web by tomorrow.

Update: too late; Zero Hedge beat me to it.

I note with some dismay, though, that ZH has gone off the deep end. They’ve started printing articles from the loopy conspiracy theorists at the Gold Anti-Trust Action Committee (previously on JRE) – and as far as I can tell, they’re completely serious. Is my irony detector broken?

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