Former Morgan Stanley (NYSE:MS) star Andy Xie says he thinks China isready to crash.“I think it’s going to be bust very soon,” Reuters reports Xie saying,laying the blame on the usual suspects: excess liquidity, rising inflationand rich valuations.“People will be surprised. When the end comes, it’s going to be prettybad,” Xie said.Well, we won’t be surprised. What surprises us is that the crash is takingso long to get here.How DO you say ‘bubble’ in Mandarin?Last night, we dreamt that the Dow was crashing. We woke up and wonderedif it had been a dream...or a prophecy. We’ll have to wait and see, butfor now we keep our Crash Alert flag flying here at the Daily Reckoningheadquarters, just in case. Dreams foretold Caesar’s death on the Ides ofMarch...maybe they’ll foretell the Dow’s demise.Meanwhile, more evidence that China is readying as a crash cometh - in aletter from a Chinese reader, sent to colleague Porter Stansberry:“All the people I know in China now gamble in stock. On one of China’s TVstations yesterday, was the report that out of the 16 million people inShanghai, close to 11 million now put money into the stock market. Almosteveryone - you name it: taxi driver, security guard, mini fruit-shopowner, high school student, retiree. But in the long run, a lot of thiswill end in tears, no matter how quickly China’s GDP grows. There issimply no decent research to educate Chinese people on how investing isdifferent from speculating out there.”What do we care what happens in China?Well, the Chinese central bank has a cash hoard of U.S. dollars mountingup towards $1 trillion. What will happen to all this money when thecountry goes into an economic crisis? If the Chinese chose to, they couldsend the U.S. dollar into free-fall, force American interest rates upsharply...and drive the U.S. economy into a slump. More than 80% of theU.S. budget deficit is financed by foreigners...and much of it by theChinese.Or maybe China will use its money to buy weapons. That would beinteresting, wouldn’t it?Or, they could try to corner the market on the key strategic supplies ofmodern economies - such as oil, uranium and granite countertops.Yes, dear reader, it is free cash flow that makes the world go‘round...and China’s got it - because China makes things that people wantto buy.Meanwhile, back in our beloved homeland, mommas send their children to thevery best schools so they can get jobs in finance! Ah...that’s where themoney is...not in making THINGS but in making MONEY itself.Harold Macmillan once described Britain’s post-war service economy as onein which “we take in each other’s wash [laundry].” But in the 21st centuryU.S. economy, people don’t even get their hands wet. They take in eachother’s money; one manages his neighbor’s money...another lends hisneighbor money for a house...and another takes his neighbor’s company,‘restructures’ it, and sells it back to him.The United States, for example, used to be the world’s largeststeel-maker. No more. Where the United States used to make steel, now itgambles. Literally.Here, another message from Porter Stansberry:“‘I’m not making this up. Beth Steel’s flagship iron works in Bethlehem PA- where the steel in the Golden Gate Bridge was made - has been purchasedby Las Vegas Sands Corporation and will be turned into a casino. “...I’ve never been more willing to buy gold.” The AP Story:“A sprawling 130-year-old steel plant that armored hundreds of U.S.warships and provided the raw material for the Golden Gate Bridge, MadisonSquare Garden and many other famous landmarks will become a hive ofactivity over the next few days as workers start preparing some of itsbuildings for demolition. “More than a decade after its towering blast furnaces went cold, BethlehemSteel’s flagship plant is being transformed into a $600 million casinocomplex run by Las Vegas Sands Corp., owner of the Venetian Resort HotelCasino in Las Vegas.“...State gaming regulators awarded Sands a slots license in December. Thecompany plans to open a casino with 3,000 slot machines by the end of2008, a 300-room hotel and 50,000-square-foot convention center threemonths after that, and a casino addition with another 2,000 slot machinesin summer 2009.“‘It will be one of the most unique economic development projects in thecountry, and people will come far and wide to see it,” [Mayor JohnCallahan] said. “It will be a national model for the redevelopment of anindustrial site.’”The whole U.S. economy has become rather gloriously mad, in the sense thatnone of it really makes any economic sense. Glorious in the sense thatDeng Tsiao-ping must have had in mind when he said: “To get rich isglorious”; for the illusion of wealth has never been easier, faster orcloser to hand. Just step on into the casino!Central banks all over the planet are serving helpings of money likeMcDonald’s cheeseburgers...over $2 trillion served in the last five years.Maybe they should put that up in lights. All a smart investor has to do isto get in line.In the late ‘90s, the way to make money was to start a dotcom and take itpublic. Investors would give you millions. Then...take the loot andspeculate in property. Better yet, start a property fund. Who didn’t wantto be in property in 2000-2006? And after that, it was a good idea to sell the property fund beforelenders started asking questions, and move into private equity. Borrow alot of money to buy a company. Then, have the company borrow a lot ofmoney so it can pay you big fees, because you are such a genius. Then,sell the company to the ‘mom and pop’ investors in the public market. But after that, get out of town - because each get-rich-quick era isfollowed by a posse with revenge on its mind.After the tech bubble blew they strung up Bernie Ebbers and FrankQuattrone. Now that the bubble in subprime has blown up, they’re chasingNew Century (OTC:NEWC) and other lenders. It won’t be too long before thebubble in private equity goes up too. And, not too far behind will be amob clamoring for some kind of rough justice. Already, we read in today’s paper that French presidential candidate,Nicholas Sarkozy, is threatening ‘predator’ hedge funds with a tax ontheir speculative investments. It probably won’t be long before hisAnglo-Saxon confreres pick up the rope.