And Now Presenting: Amazing Satellite Images Of The Ghost Cities Of China … The hottest market in the hottest economy in the world is Chinese real estate. The big question is how vulnerable is this market to a crash. One red flag is the vast number of vacant homes spread through China, by some estimates up to 64 million vacant homes. We've tracked down satellite photos of these unnerving places, based on a report from Forensic Asia Limited. They call it a clear sign of a bubble. – BusinessInsider

Dominant Social Theme: Nothing to see here. Just investments.

Free-Market Analysis: Even at the height of the mortgage boom in America, US builders were not erecting empty cities, were they? Did we miss something? In China, apparently they are. In our quest to present what's going on, we've documented some uncanny occurrences over the past two years, including the vacant city of Ordos in Mongolia. But what BusinessInsider has provided us, courtesy of Forensic Asia Limited is a series of satellite images that prove that Ordos is not a unique event.

China is actually littered with what Business Insider calls ghost cities, and the satellite pictures provided would seem to prove it. It's a pretty amazing presentation, showing how the power of the Internet, when married to space technology, can come up with important results. Here are some photo captions from the article:

• Here's China's biggest ghost city: Zhengzhou New District Like Ordos, Zhengzhou New District has glamorous public buildings — EMPTY

• See that orange area to the north-east of the Xinyang? It's a giant new development, which doesn't even have a name yet. No cars [here] except for approximately 100 clustered around the government headquarters

• The ghost city of Dantu has been mostly empty for over a decade. In most neighborhoods of Dantu, there are no cars, no signs of life

• The mostly empty city of Bayannao'er, which boasts a beautiful town hall and World Bank sponsored water reclamation building

• Now here's Kangbashi, a new city with capacity for 300,000 — that houses 30,000

• Finally, here's a giant new campus for Yunnan University, which was built to accommodate 2.3 million students. It has 11,000 enrolled.

The crazy photos march past, each one more surprising than the next. Whole swaths or empty developments, unrolling for what appears to be miles. Desolate city centers. Empty modern art museums. The largest mall in the world has now sat empty for nearly a decade now. Ordos has been vacant for years as well. Other "ghost cities" with little or no habitation. The argument is that these developments will fill up.

Chinese speculators are buying apartments – perhaps sight unseen – that exist in empty cities, are unfurnished and perhaps not even hooked to utilities; and we would think this sort of news would be on the cover of every business magazine in existence. It's a darn important story. Here are some headlines we can think of: China Bust Will Topple Western Economies Into Even Deeper Depression; What Happens to the Wretched World When China Founders?

OK, let's try to make our point a different way. Here's a fictional conversation between a reporter at a major, mainstream publication and his editor:

Reporter: I've been trolling through the Internet. I've noticed there are nearly 65 million unoccupied homes in China.

Editor: 65 million houses. Whoa! That would house nearly one-fifth of the Chinese population.

Reporter: Whole cities are empty. Not just the one that got some coverage.

Editor: Yeah, I read about it. Ordos? Pretty funny. You mean there's more?

Reporter: They're building 20 new cities a year! Seems like Chinese inflation is out of control. What happens when the Chinese begin to tighten?

Editor: They already are. They'll try for a soft landing.

Reporter: Food prices have gone vertical. Europe's having a rough time with austerity. American unemployment is 20 percent. If China goes down, we're talking about a huge setback for the rest of the world.

Editor: Hm-mm. Kind of a double dip recession if you ask me.

Reporter: So I should get on it, boss?

Editor: (Long pause, thinking hard.) Nah, it's the holiday season. We're not so interested in the international stuff. Weren't you scheduled to cover the Macy's Parade?

OK, fictional license and all that to strengthen the argument. But every day we read how the Euro-crisis is coming under control; how the Germans have summoned up the invincible, iron will to do what is necessary to salvage the both the euro and EU via bailouts. In America, we've just been subject to a spate of articles about how CEOs are optimistic going into the new year and the stock market itself is reflecting that optimism. Where's the balance? What about a few articles on the increasing downside to the Chinese Miracle? One begins to feel … promoted.

Sixty-five million homes are vacant in China and the estimate is that the country is still erecting 20 new cities a year. Now even if these are small cities, that's still a lot of real estate. The idea of course is that China wants to urbanize about 400 million impoverished farmers who still haven't benefited from China's march to modernization. That's the reason for this frenetic pace. With a billion people urbanized, China would be in a better position to build a full-on American-style economy. (People in apartments needs to buy TVs and microwaves and little knickknacks to make the walls pleasant.)

Yes, in fact it has occurred to the elves lately (they were brainstorming one afternoon after lunch) that what is actually going on in China is a desperate attempt to build a consumer society before they run out of countries to export to. Seen from this perspective, the Chinese Communist Party is not acting out of ideological goodness but from a sense of self-preservation. Urbanized populations are easier to control; they are more malleable and consumerist.

In order to urbanize, the Chinese leadership has inflated rapidly. The Chinese central bank has obviously been printing money 24-hours a day. And foreign currency continues to flood in as well. The Chicoms have supercharged the economy in order to herd the remaining Chinese into these new, suburban environments before the economy becomes unmanageable and price inflation spreads beyond food and real estate to every other part of the economy.

Four-hundred million Chinese – a population the size of the United States – are what have the Chicoms worried. It is also a safe bet that many of these Chinese are not "Han." The Han are the leading Chinese ethnicity and got to the goodies first. Therefore, add elements of racial tension to the mix. And add inflation too, and its consequences. The Chicoms are starting to pull out the stops and just announced a significant tightening.

The Chinese can also let the yuan float fully against the dollar, raising the value of yuan. The argument is that the yuan will go from strength to strength instead of depreciating. But this, again, presents a fundamental misunderstanding of what inflation is. Inflation, defined classically, is a MONETARY phenomenon. The inflation that China is experiencing is from printing too many yuan. Raising the price of the yuan against the dollar will do nothing to diminish the amount of yuan circulating. It likely will not have much of an affect on price inflation either.

When China crashes – as we believe it must – Asian economies will go down with it. Japan is struggling now but will be in a much worse position if China sinks into depression. And the Asian Tigers (as they were once known) will have plenty of problems as well. But that will pale in comparison to the problems that Europe and America will face when China finally lapses economically. (We freely admit we cannot provide a timeline.)

Ultimately, these central-banking-based consumerist economies are non-starters. Keeping these kinds of economies going is like running an elaborate juggling act with the knowledge that sooner or later all the balls will be dropped – that such a result is an inevitability. We return therefore to the uncomfortable insight that the Western power elite is well aware of the eventual fate of nation states that practice central banking (most of the world these days) – and that this may be one reason for the moratorium on Chinese economic speculation.

What's going on then in our view is merely a delaying tactic. We have noted a sense of urgency and even desperation emanating from the West's leadership class. We would have to believe, then, that they are not quite ready to move ahead with the implementation of global governance, or even a one-world currency. This is the reason for the deadly silence about the faltering Chinese economy and the attempts to salvage the euro and re-inflate the American business sector. More time is needed; yet perhaps time is running out. And of course, as we regularly point out, the truth-telling of the Internet is complicating the task tremendously.

The Chicoms have done their people no favors by adopting the Western consumerist model. We cannot see how it ends well, in fact. Sooner or later, China must slip into "recession." What then do a billion Chinese do? Stare at the walls of their expensive condominiums, decorated with tasteful knickknacks as they lose their jobs and they watch the purchasing power of their savings erode. THESE Chinese? We kinda doubt it.

We have suggested in the past that the Chicom government is living on borrowed time. The Great Leap Forward – and subsequent starvation – was strike one. The Cultural Revolution was, perhaps, strike two. Modernization, in the Western tradition, complete with hyper-industrial central banking, may prove to be the third.