Earthquake Recovery Can Change China

Is it Katrina all over again? Or is it bigger? Much bigger? That's what I am thinking about this Chinese earthquake.

Katrina distorted the U.S.'s growth pattern for more than a full year. The raw materials, the effort, the work, the reconstruction affected businesses from small-scale retail to refining and infrastructure.

We don't really know how China works, although a lot of people tell us they do. To me, the Chinese are always a day away from revolution or civil war and the trick of the government is to stay one step ahead of the posse. (Chinese hands will dispute that, but you have to appreciate that it takes a special skill to be wrong for more than a century and still maintain credibility.)

That means massive reconstruction: bricks, lumber, cement, steel and all the trimmings. Massive imports, not controlled by the Chinese and their little negotiation games like they play with iron and steel and coal. Just full-bore buying and something that could take growth for China back to the levels that everyone thought it couldn't absorb without more inflation.

I know that it is simplistic to think that we will get our fair share of orders here, but just like we didn't expect the price of chicken to be moved dramatically by ethanol, there is only so much chicken feed to go around. This could stimulate another round of price increases for building materials like steel (US Steel (X - commentary - Cramer's Take)) and all that goes into it (Cleveland-Cliffs (CLF - commentary - Cramer's Take), Vale (RIO - commentary - Cramer's Take), BHP Billiton (BHP - commentary - Cramer's Take)). Everything from elevators -- United Technologies (UTX - commentary - Cramer's Take) -- to fire prevention to copper wiring, which is why I started buying Freeport (FCX - commentary - Cramer's Take) again yesterday.

The theme gets new life from this earthquake which, when the smoke clears, will be revealed as the largest reconstruction project the world may have ever seen.

The groups seem overextended, as overextended as the financials are crushed.

But it doesn't matter. The raw materials remain in short supply, the ships in short supply, and the situation is combustible like Katrina, and could add more than a percentage to Chinese growth.

Worth playing.

At the time of publication, Cramer was long FCX.

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