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CNBC Excerpts: Jim Chanos, Kynikos Associates President, on CNBC’s “Squawk Box” Today

WHEN: TODAY, WEDNESDAY, September 9, 2015

WHERE: CNBC'S "SQUAWK BOX"

Following are excerpts from the unofficial transcript of a CNBC interview with Jim Chanos, Kynikos Associates President, on CNBC's "Squawk Box" today. Following are links to video of the interview: http://video.cnbc.com/gallery/?video=3000418821, http://video.cnbc.com/gallery/?video=3000418817 and http://video.cnbc.com/gallery/?video=3000418795.

All references must be sourced to CNBC.

CHANOS ON THE CHINESE ECONOMY

THE CHINESE ECONOMY SINCE I WAS ON "SQUAWK" IN FEBRUARY OF 2010 WAS GROWING AT 15% NOMINAL. ITS NOW GROWING AT 5% NOMINAL. ITS 7% REAL, 2% DEFLATION. IT HAS BEEN GOING DOWN IN TERMS OF THE ECONOMY ABOUT 2% A YEAR. I THINK THATS GOING TO CONTINUE. THE MODEL IS BROKEN.

CHANOS ON BORROWING ROOM

INVESTMENT IS STILL ALMOST 50% OF THE ECONOMY. AND THEYRE RUNNING OUT OF ROOM TO BORROW. THATS THE REAL PROBLEM. THE BANKING SYSTEM IS LOANED UP. THEY HAD TO RESORT TO SHADOW BANKING AND NOW CAPITAL IS LEAVING. THATS THE REAL SORT OF NEW STORY.

CHANOS ON CHINA NOT BEING OPEN FOR BUSINESS

THE OTHER BIG STORY IS THE RISE OF. HE IS A DIFFERENT ANIMAL THAN THE PREVIOUS TWO REGIMES WHERE THERE WAS A SIGN THAT CHINA WAS OPEN FOR BUSINESS. CHINAS NOT SO OPEN FOR BUSINESS ANYMORE IF YOURE A WESTERN COMPANY. I THINK THAT IS A BIG BIG CHANGE CHINA IS FAR MORE NATIONALIST ITS MORE MUSCULAR AND ITS A DIFFERENT PLACE THAN IT WAS UNDER PREVIOUS REGIMES. IN CHINA THE POLITICS ARE AS IMPORTANT AS THE ECONOMICS.

CHANOS ON THE SYSTEM UNRAVELING

THE SYSTEM IS STILL IN THE PROCESS OF UNRAVELING IN SLOW MOTION...THE CREDIT EVENT IS STILL TO COME. STOCK MARKET BOOM AND BUST. THE PROPERTY MARKET IS STILL SPUTTERING ALONG. BUT THE KEY IS THAT THE DEBT IS STILL GROWING TWO TO THREE X TIMES THE ECONOMY EVERY YEAR.

CHANOS ON CORRECTIONS

MARKETS SHOCKINGLY EVERY ONCE IN AWHILE DO GO DOWN FOR A FEW MONTHS. THAT HAPPENS. I KNOW THAT PEOPLE THINK ITS THE END OF THE WORLD, BUT IT REALLY ISNT. YOU KNOW, MARKETS FLUCTUATE. WEVE GOTTEN SO USED TO SINCE 2009 THIS CONSTANT SORT OF MOVE TO THE UPPER RIGHT WITHOUT ANY VOLATILITY. THAT WHEN YOU ACTUALLY HAD A CORRECTION, YOU USED TO HAVE ONE EVERY YEAR. PEOPLE JUST THINK METEORS ARE FALLING FROM THE SKY.

CHANOS ON LOW GROWTH IN CHINA

YOU COULD HAVE A LONG, LONG PERIOD OF VERY LOW OR LITTLE GROWTH, LIKE JAPAN, YOU GET THE ZOMBIEFICATION OF THE ECONOMY WHERE NO ONE RECOGNIZES A BAD DEBT. THE STATE STANDS BEHIND EVERYTHING. BUT CONSEQUENTLY NOBODY REALLY MAKES ECONOMIC RETURNS BECAUSE THERES SO MUCH OVER-CAPACITY. SO THERES NO GUARANTEE THAT YOURE GOING TO FINANCIALLY PROSPER FROM THIS PARTICULARLY IF YOURE OUTSIDE OF CHINA.

CHANOS ON BEING NEGATIVE ON LNG

WE'VE BEEN PRETTY NEGATIVE FOR THE PAST SIX MONTHS ON THIS LNG SPACE. WE THINK ITS A LOOMING DISASTER. THE PROBLEM IS THAT EVERYBODY FIGURED THIS OUT MUCH LIKE IRON ORE FIVE YEARS AGO AT THE SAME TIME. AND SO, EVERYBODY IS CONVINCED BUILDING THESE HUGE LNG PLANTS THAT ARE IMMENSELY EXPENSIVE THAT COSTS TENS OF BILLIONS OF DOLLARS EACH, MANY OF THEM IN AUSTRALIA AND IN THE PACIFIC RIM, THE PROBLEM IS THAT LNG DEMAND ISN'T GROWING ANYMORE.

CHANOS ON LNG BEING UNIQUE

LNG HAS BEEN SEEN AS A UNIQUE ANIMAL BECAUSE ITS GOING TO BE U.S. BASED. THEY'RE OPENING THEIR SABINE PASS LATER THIS YEAR AND IT WAS A WAY IN WHICH CHEAPER GAS, U.S. GAS COULD BE USED AS A FEED STOCK. AND LNG WENT OUT AND GOT LONG-TERM CONTRACTS, 20-YEAR CONTRACTS FROM A NUMBER OF BUYERS. AND SO IT WAS SEEN AS A VERY SAFE PLAY, THIS LNG BOOM. THE PROBLEM IS IT ONLY COVERS ABOUT 80% OF THEIR OUTPUT ULTIMATELY.

CHANOS ON LNG BEING OUT OF WHACK

THE GOVERNMENT OF QATAR, WHICH IS THE LARGEST PLAYER IN THE LNG MARKET HAS BEGUN TO PROACTIVELY, FROM A SUPPLIER POINT OF VIEW, IS WILLING TO RENEGOTIATE LONG-TERM TAKE OR PAY CONTRACTS WITH ITS CUSTOMERS. SO THE WHOLE IDEA THAT TAKE OR PAY IS SACROSANCT IN A DECLINING COMMODITY ENVIRONMENT I THINK IS GOING TO BE UNDER A LOT OF PRESSURE. HAVING SAID ALL THAT, WITH THE STOCK AT 30 TIMES 2020 EARNINGS WITH THE UPSIDE COMING FROM A GLUTTED MARKET, WE THINK THE RISK REWARD ON THIS GIVEN WHERE OTHER LNG PLAYS ARE IN AUSTRALIA AND ELSEWHERE IS JUST COMPLETELY OUT OF WHACK.

CHANOS ON SOLAR CITY

THE SOLAR CITY CEO GOT QUITE UPSET THAT I CALLED HIS COMPANY IN EFFECT A SUBPRIME COMPANY. AND HE CAME BACK OUT LATER THAT DAY ON CNBC AND SAID NO OUR FICO SCORES ARE THIS AND THAT. SOME OF THEIR SECURITIZATIONS DO HAVE SUBPRIME CREDITS, BUT MY POINT WAS THAT HE'S A FINANCING COMPANY AND HE ADMITTED THAT. AND PEOPLE THINK OF SOLAR CITY AS A HIGH-TECH COMPANY. NO, IT'S AKIN TO PEOPLE GOING DOOR TO DOOR SELLING YOU ALUMINUM SIDING.

CHANOS ON APPLE

IT'S A HIGHLY OWNED STOCK. IT'S A SO-CALLED HEDGE FUND HOTEL. I GUESS I'VE CHECKED INTO THE HOTEL, TOO. BUT LIKE ANYTHING, EXPECTATIONS LIKE WITH ANY STOCK CAN GET AHEAD OF THINGS AND PEOPLE SOLD OFF. THEY'RE ALSO PROBABLY USING A SOURCE OF LIQUIDITY AS THEY'VE BROUGHT THEIR BALANCE SHEETS DOWN.

CHANOS ON HEWLETT-PACKARD

CHANOS: HEWLETT-PACKARD IS BASICALLY A BACKWARDS LOOKING COMPANY.

ANDREW ROSS SORKIN: EVEN WITH THE BREAKOFFS?

CHANOS: THE BREAKOFF IS FINANCIAL ENGINEERING. ITS MORE OF THE SAME. IT IS MORE OF THE SAME NONSENSE. YOU KNOW, TELL ME NEW PRODUCTS THAT HEWLETT'S GOT THAT PEOPLE ARE EXCITED ABOUT. CYBER SECURITY? NO. 3D PRINTING THEY WERE SUPPOSED TO DO? NO. I MEAN, ALL THESE THINGS THAT KEEP GETTING LAUNCHED UP IN SILICON VALLEY, HEWLETT-PACKARD MISSES.

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