On BRIC Investments ...
Chanos warned that the worst in slowing emerging markets, particularly China, hasn't arrived yet.
"I don't think things are that stable. I think it's worse, and I think it's going to get worse. Depending on your estimate, 35 to 50 percent of China's GDP is construction, and that's a very important thing to remember, and if we are still building things that we don't need in China, like factories, are you really adding wealth to the country? Like any capital project has a rate of return associated with it, and in China, I'm afraid, a lot of projects, as well as in south Asia and the Middle East, do not have economic returns associated with them, yet, during their construction, they contribute to growth.
"Remember our telecom boom, when people were building out things, left, right and center? Then the building stopped. It was the Wile E. Coyote moment. All of a sudden, we looked down, and there was no there there."
On Housing ...
Chanos said recent moves by the government might bring relief. But he worries about the long term.
"One of the problems we now see in hindsight regarding stimulating housing and what that might do for the economy is that when we had housing appreciation over the past five years, people went out and spent it, so it didn't become part of the stock of savings, it bolstered consumption, and so, a housing boom that fed on a consumption boom was sort of what got us here in the first place, and going back to try to kick-start that worries me longer-term. Over the short term, it might be exactly the tonic we need."