China Goes Down?
China's Real Estate Bubble Bursts – Good or Bad? The latest outlook from the Organization for Economic Co-operation and Development (OECD) says China's real estate market fluctuations are a major threat to its growth next year. China's growth will fall from 9.3% in 2011 to 8.5% in 2012. Along with the decline of the average price for real estate in large and mid-sized cities, some experts believe China's real estate bubble is bursting. ChinaForbiddenNews – Forbidden China
Dominant Social Theme: China's got some problems. But a soft landing is virtually guaranteed. They're a powerhouse, after all, destined to lead the world.
Free-Market Analysis: Given the turmoil in Europe, the mainstream media remains quiet about China to a large extent. We think if the average Joe were asked about China, he might explain that it's the country that is going to lead the way in 21st century. That's what he's heard. That's what he's learned.
But being power-elite meme-watchers, we think this is a kind of elitist gambit. Without the USSR to provide an anti-thesis to the West's thesis, the elite's larger dialogue has been struggling lately.
The great Arab-Christian war (so long in the making) hasn't produced enough tensions and neither Russia nor China has been able to excite fears the way the former Soviet Union did.
The power elite that apparently wants to run the world needs "synthesis" to move the Earth's billions in the appropriate direction. If there is no tension, there is no way to manipulate people. So they are kinda stuck.
And that's why they've shut up about China – which remains on its way out, in our view. The mainstream media is not supposed to mention this, apparently ... or only to talk about a soft landing. But there ain't going to be a soft landing, not in our view.
How can you have a "soft landing" in a country of 1.3 billon people when the economy has been growing supposedly at 12 percent a year for 25 years? China's big cities have occupancy rates of 80, 75 or even 65 percent these days, especially if one looks at commercial projects.
And then there's the build quality. Not only has China built whole empty cities, the ChiComs have apparently built them badly. Airport roofs blow off in strong winds. Trains collide. Highways collapse. Mold creeps over empty downtowns.
Are we exaggerating? Here's the text accompanying the video below, entitled, "China's Real Estate Bubble Bursts – Good or Bad?" Yes, that's just the point! China's real estate bubble has ALREADY burst. It broke in the first half of the year and statistics are now becoming available.
Of course, we don't believe Chinese statistics anyway. But we do believe there was/is a bubble. And if it's popped, watch out!
We once labeled this the "most important story in the world." We still believe it is. China is the third leg of the world's economic stool. The American leg is cracked. The European leg has all but disintegrated. What happens when the Chinese leg shatters? Can you say "world depression"? Here's an article we wrote recently on the matter (just one of dozens):
And here is some of the text that accompanies the video below ...
Chinese Vice Premier, Li Keqiang, in charge of the real estate regulation, said on Nov. 25th that China's real estate market is at a critical stage. Even with a decline in real estate transactions, the government is continuing to cool down the housing market.
According to a New York Times report, 1/6 of luxury houses in Shanghai, 1/4 in Beijing and 1/3 in Shenzhen are empty. The ratio of empty houses in China has surpassed the international warning standards. The New York Times questions whether China's real estate bubble has burst.
... Xie Guozhong says China's bad economic situation in recent years has been down to real estate issues. When China's real estate enterprises close down over the next few months, if the government would save the enterprises, this would impact China negatively in the long run, once again, confirming that China's money-making model is stealing money away from the government and the banks. The current economic model offers China no way out.
Posted by destraht on 12/04/11 04:25 AM
As far as I' concerned the Chinese government are the biggest c--k blockers on the planet. As a result of their one child policies there are significantly more men than women and a man needs to buy an apartment to marry a women - which has been placed far out of reach through bubble economics.
Reply from The Daily Bell
This feedback was edited to remove racist stereotyping.
Posted by seen2much on 12/02/11 05:32 PM
I was recently shocked and saddened by something recently related to what you posted:
I picked up a Lewis Machine Tool LMT308MWS rifle, it is by far one of the best rifles I've ever used, and I've used nearly everything out there in about every role (The hazards of a misspent youth..). So, to make the most of my new rifle, I got the best sights, a Trijicon ACOG, Troy Industries iron backup sights and foregrip, Surefire tactical light, Magpul Dynamics P-mags and sling.. As I was putting it all together I noticed something I had not seen in a very long time.. Each and every part had MADE IN THE USA stamped and stenciled on every component.
I got curious and started looking around at the competition and nature of the weapons industry.. I remember back in the day that IMI (Israeli Military Industries) and Heckler & Koch were pretty much the end all be all of the operators choice. Now, guys like LMT and other American companies are the producers of the best weapons operators around the globe have on their wish lists..
With sadness I realized we are indeed number one and proud to be American made in at least one market: The small arms industry.
Apparently being at war this long has its benefits..
Posted by taxesbyanyothername on 12/01/11 11:21 PM
I wrote about this in feedback to an editorial Anthony Wile posted on Oct. 29th. Most in the West think that China has plenty of money, what they have is other countries' debt, countries that can't pay their debt. Instead of a mountain of cash, what they have is a mountain of very badly designed toilet paper.
Posted by Bluebird on 12/01/11 08:04 PM
The Daily Bell has been predicting this for some time now and I don't doubt your analysis. But there is more to this than meets the eye. MSM was running some stories a while back with some bad feelings between US and China. Then OWS wanted a Black Friday boycott. I thought at the time that it would only bring more sorrows if that were successful. The Powers have basically killed industry in the US. Jobs are a problem but they wanted to boycott the places who actually employ many citizens? I have ranted for years about not being able to find anything made in the USA in retail stores. It ALL comes from China. But this Christmas season, the push is on to buy only USA made products. First, it is too little too late. There is not enough made here for that to help the economy. But it will affect jobs in retail. I will be watching how this unfolds.
Posted by GWBramhall on 12/01/11 03:47 PM
Not mentioned here, but just as impactful, is the Chinese policy
of one child per family. This has been in effect for some time
now and is dooming them to an ever older and less dianamic society.
This was pointed out in Marc Steyn's book "America Alone" in which
he highlighted China, and practically all of Europe, but pointed out
with extreme accuracy the current plight of Greece that, nearly
10 years ago, had a fertility rate of just over 1. For those not
privy to what that means, at that rate, if susstained, their population
would half in a single generation. It would age it just as fast (assuming the young folk don't tire of having to support the old and flee to younger, more prosperous environs. This would only speed up the race to become
another failed state.
Posted by Bonus Gift on 12/01/11 11:52 AM
Even though only one data point, it is at least an actual data point given the massaged and outright fraudulent government statistics, the People's Bank of China reserve requirements decrease the other day is telling (also given that it was done simultaneously with Western CB moves; and after several years of supposedly going up). They seemed to have been afraid of the bubble, but they seem to be scared silly of popping that bubble. For reference, it is almost beyond my comprehension the extent of their reliance on real estate and the degree of the bubble. For comparative purposes (and only roughly speaking off the top of my head) compare and be amazed:
1) The U.S. real estate bubble which at the time could have rightly been billed as 'the greatest real estate bubble of all human history' popped at around 4x to 5x (i.e., median house price to median income). The Chinese bubble was over 50x in some rather large places like Hong Kong and Peking/Beijing/or whatever red PC name you care to share (anyway, well over the U.S. or just about any other insanely overpriced local, let alone one with about 1/5 of humanity residing there). In terms of average price to disposable income, it has been recently over 200x in some areas of red China. In short, the red real estate bubble is more extreme, bigger, and bader than the American/Fed derived one by a long shot.
2) The U.S. had a population at bursting of around 300 million vs. China with around 1.3 billion (i.e., yes, I did the math, roughly 4 to 5 times the number to worry about).
3) At its height, residential and commercial development, construction and related industries represented roughly 1/4 of the U.S. economy vs. about 6/10ths of China's.
The last part is critical (i.e., #3); and one more time, over half the economy is building stuff hardly anyone can afford to live in but most people feel fine gambling on a greater fool. Think about it and repeat after me, in the U.S. people 'buy stuff they don't need with money they don't have', while in red China they speculate on property they cannot afford with no intent to live there (and in many cases with money they borrowed from communists). We sure aren't in Kansas are we?
I really think the DB has nailed this meme. Hearing the crickets chirp when China was continuously built up as the next Japan (i.e., prior to the Japanese real estate and stock bubble bursting in the late 90s) tells you most of what you need to know. In short, nothing to see here so move along and be happy with your overlords; and oh, welcome to the third economic leg of the stool being pulled out from underneath you. In short, long live the depression your betters have provided you. I keep thinking I could get fries with that, but then I think better of the whole thing.