Posted on 08/22/2022 9:18:24 AM PDT by EBH
Never fear - electric cars will save the day.
Perfect excuse to invade Taiwan, collapse the West and go to war with Russia and Iran as their allies.
Red China’s real estate crisis mated with their wicked drought will either chill them out/back them off, or as some think - the best way out of a national crisis is a war.
Serpenteza had the opinion that the chicom control over information and the economy was so rigid and complete that they could circumvent a total collapse and stage it so that it didn’t totally destroy the commie “economy” as they label it.
This week buy potatoes, tomatoes, and beer!
(my brew just went up 15% to $11.49/6 can)
Sum ting wong
This is a good summary.
Even in China’s financial/banking system, which is effectively 100% state-owned and state/party-directed at some level, debt-bubbles must eventually pop.
I think its a wonderful thing.
Once again we see, NO central planner, politician, or human system is ever greater than what God has outlined for humanity.
Gee, I guess we’d better bail them out, huh?
China, hell!
We’re already in a recession here in the USA. But don’t watch the News to find out about it... They ain’t talking about it. Biden/democrat Protection Team...
Open a pub.
Name it: Crisis Brewing
Brian Deese, our defacto president and Blackrock will prop up China.
That well known aphorism of “Those who do not know history ...” applies here as China could just have looked across to Japan to see the 30 years of woe from their ‘asset bubble” popping in 1990.
From a flat & ruined country in 1945, Japan, freed from military spending, and a vital link for US defense in the face of the Soviet Union and Mao’s Red China, went on an economic tear that made its GDP in the top 5 of the world. By the late 1980s, real estate in Tokyo was so expensive that a 10 square foot parcel near the Imperial Palace was sold for $600,000.
However, that ‘Japanese Economic Miracle’ was unsustainable, resting upon an impossible sub 1% interest rate to feed the speculative fever! When the Japanese Central Bank stepped on the brakes by raising those interest rates, the 1990s became Japan’s “Lost Decade” which still weighs on Japan’s economy 30 years later.
The problem in China (Peoples Republic of China) is far murkier as so much is government owned or controlled. At the same time, it is not just the people who have been speculative, so has the Government. In their military, their foreign spending (Belt and Road) and their stock market propping. They are like the child, uncertain of their balance, who cannot stop running lest they crash.
Yes a dictatorship can get away with a lot as they own the guns BUT while the economic laws of finance are not as abrupt as Newton’s, they are there and painful!
and then there’s the drought
The thing to remember is that real estate in China is bought with cash, in advance. The loans are to the developers, who had been running hundreds of Ponzi schemes with the money, using new money to complete the building of other people’s buildings. When the new money dried up, the Ponzi had to stop.
The Chinese government is talking about forcing the owners of the development companies to sell all their personal assets and finish the buildings. And only some of the developers kept enough in assets in China to pay, as most sent as much as possible to Canada and these States to buy North American real estate. The Canadian response was to stop new Chinese money buying real estate, by massive taxes all ALL ex-pats wanting to invest in Canadian real estate. The Chinese families will keep the North American properties and lose their family patriarchs.
The Chinese government will end up owning a percentage of the unfinished properties, and hire new managers to complete the construction. The buyers, mostly Chinese rich and connected, will suffer some losses. Real estate in China does not use financial leverage, except for the developers.
“Even in China’s financial/banking system, which is effectively 100% state-owned and state/party-directed at some level, debt-bubbles must eventually pop.”
That is true—the problem is that they have gotten so large they can take a lot of other economies down with them.
“the economic laws of finance are not as abrupt as Newton’s, they are there and painful!”
The rules are very simple—the bigger the bubble blows the more disastrous the popping of the bubble.
“Open a pub.
Name it: Crisis Brewing”
Very clever name, lol. A good play of words.
China has nothing to fear for their real estate sector.
Traitor Joe will sell them enough American real estate around our sensitive military bases while Congress nods approvingly.
Kind of hard to fight a war when you are flat broke and the population are rebelling...
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