Market top!

That's what I'm saying about China after reading this quote from Liu Yiqian (above), a Chinese billionaire who made the winning bid at auction for a Modigliani portrait with an offer of $170.4 million:

“The message to the West is clear: We have bought their buildings, we have bought their companies, and now we are going to buy their art.”

Now where have I heard that sort of thing before?

Oh, yeah, Japan in the 1980s. From a review of Richard Katz's Japan: The System That Soured (my emphasis): 

To some in the U.S., particularly the so-called revisionists, Japan's supposed superiority loomed as a dark threat. In Asia, Japan was said to be positioning itself as the "brain" and "headquarters country" of the world's fastest-growing economic region. In the U.S., "Japan" -- never this or that Japanese company, but "Japan" -- was using its cheap money to buy up America's property, its companies, its movie studios, and even its government officials.  

Warnings were sounded that "the Japanese" were using their money to buy up America's best high-tech companies. If Japan weren't "contained," it would soon become unstoppable. "The fear was palpable," recalls a State Department official. He remembers examining one proposed Japanese buyout of an American firm when he served on the inter-agency Committee on Foreign Investment in the U.S. (CIFIUS). The committee was originally set up to prevent adversaries from surreptitiously investing in defense contractors. In the late 1980s, it turned its attention to Japanese investment in U.S. high-tech firms. In this particular case, the man from State suggested that the Japanese investment was innocuous and should not be barred. Suddenly, he heard the epithet "traitor" being hurled at him from across the table by his Commerce Department counterpart. 

So great was the illusion and the hysteria that even one of America's most highly regarded economists, Lawrence Summers, was taken in. In December of 1989, he wrote:

Today, Japan is the world's second largest economy. ... Furthermore, an Asian economic bloc with Japan at its apex ... is clearly in the making. This all raises the possibility that the majority of American people who now feel that JAPAN IS A GREATER THREAT TO THE U.S. THAN THE SOVIET UNION are right [emphasis added].

That comment stands as a monument to bad timing. Only a month later, Japan's roof caved in. It began with a crash of the stock market and real estate that wiped out hundreds of billions of dollars of wealth overnight. Soon, the collapse spread to the rest of the economy. The nation that had defined growth suddenly seemed incapable of growing. This was no ordinary recession. This was a downshifting of the whole economic trajectory compounded by a financial crisis. For three years, from the beginning of 1992 to the beginning of 1995, Japan barely grew at all. As of early 1998 -- eight years after the stock market crash -- the economy has yet to recover. 

Still not sure the Chinese "bubble" is about to burst? The article also said Mr. Liu would be using his American Express card to pay for the Modigliani.