Chinese credit crisis would also severely impact Cat's bottom line.
Caterpillar (CAT): Although the majority of CAT's earnings are from outside China, CAT has invested heavily in China and has seen a massive slowdown on its business there. Cat currently has 23 manufacturing facilities in China and IS building 4 more. On CAT's Q4 conference call an analyst from JPM estimated from channel checks that CAT has 1 year of year of inventory on the ground in China at today's demand levels. A fall in commodity prices and associated mining industries from a Chinese credit crisis would also severely impact Cat's bottom line. Although CAT had a strong 2012 in its resource industry segment (ex-Siwei write down), it is predicting for 2013 a $2 billion decline in sales and revenue and that "more than all of the decline in sales and revenues is expected to be in our Resource Industries segment."
I don't see anything wrong with this goofy, it's all old news! I told you this back in April. Everything hinges on a emerging market turn around. In the long run it doesn't really matter it going to happen sooner or later the business is just cyclical and that's the way it is.