A Lingering Hubristic Belief
I suggested a topic on China’s housing bubble. “We’ve seen some big changes come out of the housing bubble. Much of the turmoil in the EU can be attributed to the housing mania. But will it lead to the downfall of the regime in China? Consider this: ‘The breakneck speed of China’s economic development has not only created structural imbalances but also social dislocation. Nearly 300 million rural people (and rising) constitute its floating migrant population working on urban industrial and construction sites. They are not entitled to urban residency because of their rural residency registration. According to the last official estimate, China experienced, in one year, 90,000 cases of social unrest, big and small. The government has stopped compiling and issuing statistics on this. Corruption is now endemic and getting institutionalised, affecting even the higher levels of the bureaucracy and government.’”
“The Bloomberg columnist William Pesek, quoting a report to this effect said: ‘The wealthiest 70 members of China’s legislature added almost $90 billion to their bank accounts last year.’”
A reply, “Rich people in China are targets of extreme envy. Local government officials are not above bringing bogus charges against landowners, and imprisoning entire extended families, in order to simply take over their holdings. It’s one motivation for the rich folks to get out of Dodge, and pay any amount, just to live in a place where the rule of law is observed.”
“In some ways, it’s better being rich in a poorer country–you can buy a better class of servants, for one thing. But ‘we’ (which to a wealthy Chinese person is: the US, Canada, Western Europe, Australia, or New Zealand) have a long-established tradition of property rights and contract law. The idea is to protect the individual property owner from arbitrary and capricious taking of the property by anyone who happens to be richer or more powerful. Such a basic protection simply does not exist in China. Everything you own is up for grabs at all times. Of course, rich people are not stupid; they have their sponsors, their protectors. But they may know all too well how easy it is for the game to change, for a successful predator to become a victim.”
“It’s a very stressful existence. After a while, you can’t sleep at night. You lose what peace of mind your wealth has bought you. At that point, nice quiet neighborhoods in, say, Vancouver, look pretty good. Better than a Chinese prison cell by a long shot.”
To which was said, “Do they still think that’s here? I’ll admit we’ve got it better than them, but I’m not feeling 100% confident that things will stay that way.”
The Taipei Times. “Hong Kong may face renewed risks of a housing-price bubble as interest rates remain low, Hong Kong Monetary Authority chief executive Norman Chan said. ‘On my radar screen, another risk emerged. That’s the risk we encountered back in 2009: the renewed risk of a housing price bubble,’ Chan said. The territory’s low mortgage rates mean ‘real interest rates are hugely negative. Lots of people have come to the conclusion that they buy brick and mortar, tangible assets, and could preserve their purchasing power,’ he said.’
“Interest rates being ‘too low for too long is always associated with a bubble phenomenon,’ Federal Reserve Bank of St Louis President James Bullard said at the same conference in the territory. ‘It’s not just a US policy, but a G7 policy.’ Borrowing costs in Hong Kong usually follow those set by the Fed because the territory’s currency is pegged to the US dollar.”
The Brisbane Times. “China would be demanding less Australian coal because it was already in a ‘hard landing’, JPMorgan Chase chief Asian strategist Adrian Mowat said. ‘If you look at the Chinese data, you should stop debating about a hard landing,’ he told a Singapore conference. ‘Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate any more, it’s a fact.’”
“Chinese Premier Wen Jiabao said this week that home prices were still far from reasonable levels. His comments fuelled concerns the government would maintain restrictions on the property market even if they threatened to slow economic growth. ‘One should be concerned about what’s happening in the China property market,’ Mr Mowat said. ‘People are too complacent.’”
“Yale University professor Stephen Roach, a former non-executive chairman for Morgan Stanley in Asia, said concerns about a hard landing were ‘vastly overblown. I don’t think the banking system will collapse and the property bubble will burst,’ he told a conference in Shanghai. ‘These are all exaggerations.’”
McClatchy Newspapers. “When Chinese Premier Wen Jiabao warned at the recent National People’s Congress of ‘chaos in the market’ from China’s sky-high home prices, he put to rest speculation that the government might soon end the tight controls it’s imposed on the country’s real estate market. The cost of homes in major cities has risen tenfold in the past decade and doubled in the past three years as the country’s breakneck growth has generated huge incomes for a fortunate few.”
“Prices climbed so fast that many of the newly rich didn’t even bother to rent out the investment properties they’d bought. They simply held on to them, secure in the knowledge that the properties will be worth more next year.”
The New Republic. “The fall-out from Chinese Premier Wen Jiabao’s urgent calls this month for political reform—which was quickly followed by the ousting of a top regional official, Bo Xilai, from the party leadership—have fanned whispers of a secret succession war within the party’s top ranks. ‘Power is increasingly decentralized to different factions,’ says Victor Shih, a political scientist at Northwestern University. Whereas the top party figure once had supreme authority, attention now ‘must first and foremost’ be paid ‘to the interests of the factional groups,’ Shih told me, for it is the core elite from these groups ‘that ultimately decides policies, promotions, and even the political survival of the President of China.’”
“But whatever their disparate objectives, each faction has gained from China’s furious economic growth, with wealth and political power increasing as a result of money flowing freely through their respective spheres of control. How convenient, then, that they also hold the purse-strings of finance through China’s state-controlled banks—banks whose reserves can be quickly mobilized for extending loans to projects championed by influencers in the party. It stands to reason why these vested interests haven’t been eager for the easy money to stop, and in fact have been cheerfully flexing their political muscles to direct investments into their own jurisdictions.”
“‘As long as you have politically powerful enterprises, as long as you have a banking sector which is dominated by the state and the Chinese Communist Party, there will be very high incentives to over-invest,’ Shih says.”
“Redundant infrastructure, empty luxury apartments, and half-completed commercial projects sit everywhere in China, with more popping up for the benefit of the developers and politicians involved. ‘Pegging its currency to the dollar and keeping interest rates low created perfect conditions for a bubble around 2005 to 2007,’ Edward Chancellor, an authority on financial bubbles and author of Devil Take the Hindmost, told me. ‘Then, massive stimulus in response to the global financial crisis in 2009—the extension of easy credit—really made it possible for the bubble in real estate and infrastructure, especially, to grow.’”
“‘The trouble with bubbles is once they are inflated, you must carry on with inflating them,’ Chancellor says, because ‘if investment stops growing, you get a contraction of credit and falling asset prices.’ To keep things going, it seems that banks are now making loans to each other and effectively expanding the money supply; but this, in turn, drives up the threat of inflation. ‘I suspect that the endgame is the breakdown of the Chinese credit system,’ Chancellor adds.”
“There remains among some—commentators, officials, casual spectators of this unfolding drama—a lingering hubristic belief that imbalances in China’s state-directed economy can always be controlled and corrected through political means. Yet it is clear that the present model of Chinese state-direction is not only what inflated this investment bubble to begin with—it’s also now making it impossible to take the right course of action to fix it. ‘There is no bubble in history in which the government has not been intimately involved,’ Chancellor says. ‘Those who say that China’s state-directed economy is a different case have forgotten that.’”
‘the present model of Chinese state-direction is not only what inflated this investment bubble to begin with—it’s also now making it impossible to take the right course of action to fix it’
After I read this a few times, it occurred to me the same could be said about the US. The Federal govt has kept the bankrupt GSEs open and now they back most of the loans. Throw in HUD, the VA and rural loans and it’s basically a state run operation.
We all know abnormally low interest rates played a big role in this. So what happens? A secretive, unaccountable central banks continues to keep rates abnormally low, for the benefit of, among others, very large corporations with powerful political connections.
Sure, a few small lenders go under, but not the big boys. They are handed billions as a reward for being greedy and insolvent. Almost no one goes to jail. Change to the political system isn’t in the hands of the public. Our system is also making the fixes impossible.
It’s one motivation for the rich folks to get out of Dodge, and pay any amount, just to live in a place where the rule of law is observed.
So the Ayn Rand paradise, where Atlas isn’t encumbered by “regulations” and where John Galt doesn’t have to worry about the welfare of his fellow men, isn’t the paradise it’s supposed to be? They actually want to live in the horrible, over regulated west where income inequality isn’t quite so pronounced, where Lucky Duckies get food stamps? I thought the “productive ones” were supposed to sail away into their Libertarian paradise and not come seeking asylum on our shores!
‘I thought the ‘productive ones’ were supposed to sail away into their Libertarian paradise’
Considering that you are talking about communist China, that post is a whole corn field full of straw men.
You mean post communist China. They are communist in name only. By definition all means of production are owned by the state in a communist society. That is not the case the the so called PRC.
Aren’t we told that one of the reason so many industries are offshoring to China has been the lack of regulation (environmental regulation in particular)? Sounds pretty Libertarian to me. Of course there is the nasty totalitarian aspect to their governance, but as others have pointed out here, has there ever been a Libertarian society in modern times where there was also democracy?
And the irony still stands in that Chinese millionaires, who benefited from the post communist liberalization, want to flee to socialist countries like Canada. Just pointing this out as our own domestic John Galts love to threaten to leave if they don’t get what they want.
Where would they go? Canada? The EU?
‘the reason so many industries are offshoring to China has been the lack of regulation’
It’s low operating costs, mostly from low wages, I would think. Anyway, if the US has certain environmental laws, for example, but allows imports from countries that pollute heavily, then the US doesn’t really have those environmental laws, does it?
‘Of course there is the nasty totalitarian aspect to their governance’
As you say, doesn’t sound very libertarian to me. And what govt nasty totalitarian power does the Chinese govt have that the US govt doesn’t? Torture? Imprisonment with out due process? What do you think the Dept of Homeland Security would do if people here rioted like in Greece? Our govt couldn’t even put up with people in tents.
‘as our own domestic John Galts love to threaten to leave’
I don’t understand the fixation on Rand fiction novels. We’ve got a lot to address here, and I don’t see what this has to do with anything.
What do you think the Dept of Homeland Security would do if people here rioted like in Greece? Our govt couldn’t even put up with people in tents.
Why is it so few people think about these facts? They don’t want to? They’re to deep in their own ideological delusion they can’t think themselves out of?
My point is that I don’t think we’ll ever riot here. The US of GovCorp simply maintains control through different measures. The braindead citizens of US of GovCorp are too stupid and deluded to understand their reality is driven by state run media and control of financial assets that make other totalitarian regimes look amateurish. The dictator whose name starts with an H has NOTHING on us. Decades of fine tuning using Edward Bernay’s methods has created a dumbed down, docile citizenry where real revolution is replaced by cheap counterfeits like “gun rights” and bull$hit rah rah buzzwords like “freedom”, flag waiving and two corrupt political parties creating the illusion of a free state.
US of GovCorp will unleash it’s true evil nature on US citizenry when and if the dollar dominance is lost. This is the age of US Imperialism.
‘We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.” - US Whitehouse aide, 2002
I don’t understand the fixation on Rand fiction novels. We’ve got a lot to address here, and I don’t see what this has to do with anything.
I think the fact that the guy who’s probably most responsible for the housing bubble- Greenspan- was her lifelong friend, lover, and collaborator, and who claims to have been very influenced by her work, makes Rand’s philosophy (which is found in her fiction books) right at the center of this mess.
Her belief that the rich can do no wrong, and all who seek to regulate them are just circling hyenas or parasites, is a large part of what got us here today, thanks to its influence on the Greenspans of the world.
“What do you think the Dept of Homeland Security would do if people here rioted like in Greece? Our govt couldn’t even put up with people in tents.”
Damn, that’s something I hadn’t thought of. Unsettling.
“Anyway, if the US has certain environmental laws, for example, but allows imports from countries that pollute heavily, then the US doesn’t really have those environmental laws, does it?”
Exactly. And, US corporations have a big hand in polluting other areas of the planet. The Niger Delta comes to mind.
“Anyway, if the US has certain environmental laws, for example, but allows imports from countries that pollute heavily, then the US doesn’t really have those environmental laws, does it?”
There apparently is some kind of common law marriage between America’s NIMBY environmentalists and the politicians who support environmental policies which give American businesses a disadvantage on the international playing field.
“My point is that I don’t think we’ll ever riot here.”
The veneer of civilization is thin, and the potential for civil unrest always lurks just below the surface.
After dark, mobs form, smash windows, loot
Matthai Kuruvila, Kevin Fagan, Carolyn Jones,Jaxon Van Derbeken, Chronicle Staff Writers
Friday, July 9, 2010
Lacy Atkins / The Chronicle
Oakland police arrest people as they run through the streets of Oakland on Thursday, July 8, 2010.
(07-08) 23:33 PDT OAKLAND — There was outrage, there was looting and there were skirmishes between police and protesters, but that wasn’t the whole story of how Oakland reacted to the Johannes Mehserle verdict.
The trouble Thursday boiled down to a racially diverse mob of about 200 people, many bent on destruction no matter what, confronting police after the day’s predominantly peaceful demonstrations ended.
Sporadic conflicts were quelled quickly early in the evening, but by late night at least 50 people - and maybe as many as 100 - had been arrested as small groups smashed windows, looted businesses and set trash bins on fire.
The violence was contained for much of the early evening within a one-block area near City Hall by an army of police officers in riot gear, but around 10 p.m. a knot of rioters broke loose and headed north on Broadway toward 22nd Street with police in pursuit.
They smashed windows of shops including the trendy Ozumo restaurant, and one building was spray painted with the words, “Say no to work. Say yes to looting.”
A boutique called Spoiled was spared. It had a sign outside and pictures of Oscar Grant with the words, “Do not destroy. Black owned. Black owned.”
…
“What do you think the Dept of Homeland Security would do if people here rioted like in Greece? Our govt couldn’t even put up with people in tents.”
About 95% of the American population would accept their fates and continue to be the sheeples that they are. It’s that other 5% (Over 10 mil. people) that would refuse to submit to being bullied by the DHS. IMHO,the DHS would be scared to death of that 5%.
+1 Ben!
They actually want to live in the horrible, over regulated west where income inequality isn’t quite so pronounced,
The rich want a land of no regulation in which to make their money. But they want to live in a ’socialist’ country, where there are regulations, because,of course, it’s far more pleasant and safe to live, raise a family, and enjoy their wealth there.
As near as I can tell, the Koch bros mostly live in NYCity, far from the effects of the environmental deregulation they champion, but right at the epicenter of the lefty liberalism they profess to hate.
I think some live in Florida, in Palm Beach, yeah?
Ben, if you’ve already posted this video link on China’s ghost malls, cities, and apartment buildings, sorry for the duplicate. If not, it’s great entertainment, in a sad way. The reporter got kicked out of the mall while doing the story and had to sneak back in. In one city you see new empty condo towers bought by investors and next to the towers, shanty towns where multiple families live in one room with no hopes of even a one-bedroom apartment.
http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities
One of the reasons this interests me so much is the often overlooked fact that the housing bubble is global. A financial mania taking place almost simultaneously in so many places, in countries with supposedly different systems and cultures never happened before. How did this happen? And what can we learn about the nature of this mania from this fact?
From the NR piece:
‘If you read things like statements by the premier [Wen Jiabao], he is giving lower forecasts for growth—7.5 percent this year, which is lower than the 8 or 9 percent of previous years. But at the same time, the People’s Bank of China is putting in measures to loosen controls and increase credit,’ says Yasheng Huang of MIT’s Sloan School of Management. ‘There is a big difference between what is being said and the actual policies being instituted.’
‘The leadership transition to take place makes 2012 an especially important year for deciding China’s political—and, by extension, economic—fortunes. Seven of the nine members of the Politburo Standing Committee will be replaced by new appointees…The two men who will take the top positions—Xi Jinping and Li Keqiang, the future President and Premier, respectively—will no doubt each be obliged to pacify their respective allies and opponents. If history is any guide, it may be that such an imperative will be fulfilled by encouraging ever more accelerated economic growth, despite all the signs that the dangerously imbalanced economy is already in distress.’
‘When you change power, from one generation of leaders to another, you want to do it in a way that puts the country on the high GDP growth pathway; so it doesn’t look good if GDP is slowing down,’ Huang says.’
For being a bunch of “commies” they sure talk like “growth at any cost” capitalists.
Capitalism is the profit motive. It’s really only governments that are focused on growth. Here in the US, the dominate economic policy of govt is Keynesianism, which goes so far as to suggest we can dig holes and fill them back in to achieve these goals. I would counter that there is nothing capitalistic about that.
There isn’t any such thing as a capitalistic govt. Who ever heard of a govt that made a profit?
We’ve had our “Libertarian” phase.
1865-1910
The Robber Barons and their minions loved it. They even paid for their own police forces. And if the odd J6P/citizen got out of line, just send a few of your personal cowboy-booted thugs out to rearrange their thinking.
Everybody else was either trying to scratch out a bare existence, or chasing various “Gold Rushes”, usually to come up empty, if they weren’t killed by the elements, or the local Native Americans.
1945-1970 was our peak. Greatest achievements (Moon landings), most educated and strongest Middle Class, greatest technological accomplishments, best cars, best music and movies, you name it. It’s all been downhill since. Everything since then is just a refinement/more efficient development of 1970 technology.
‘It’s all been downhill since’
So what “phase” is this called?
I prefer to approach current problems without referring to ancient history. What do you call the Chinese corporations that have to ask their employees to not commit suicide? What do you call the people that let these products into this country? Or buy their stuff? Libertarian? All I hear from most people is some version of mutual economic destruction via globalism. Tell me, what party or candidate is even putting the World Trade Organization on the table?
Oh yeah, and we’ve got to keep house prices up. Even the Chicoms aren’t trying that so much.
Here in the US, the dominate economic policy of govt is Keynesianism, which goes so far as to suggest we can dig holes and fill them back in to achieve these goals
Where are these holes being dug and filled?
Bailing out the financial system at all costs-which is what we’ve done this crisis- is monetarism, which is what Bernanke and Greenspan are both followers of.
Keynes was all about stimulus for the little guy, and economic policies that favor the little guy. Could you please give some examples of this occurring now? Because I sure don’t see it.
Where are these holes being dug and filled?
Paving over good roads.
Iraq.
Fannie and Freddie.
The whole solar industry.
TSA.
TARP.
ZIRP.
99 weeks unemployment (pretend you’re digging a hole).
Tax rebates for replacing your windows.
Moon bases (oops, not so likely).
Paving over good roads.
Propaganda.
Iraq.
I assume you mean Afghanistan, since we’re pretty much out of Iraq. But yes, as I’ve pointed out before, some will accept stimulus in no other form than war. (Mostly conservatives, see WW2.)
Fannie and Freddie.
Monetarist bailout of the financial system- as you’ve often said yourself.
The whole solar industry.
Well, you’re the expert who has assured us that man will never fly- er, I mean, solar power will never work effectively. We’ll see. Either way, despite it being a personal bugbear with you, it’s a tiny investment.
TSA.
This is makework? Or simple American overreaction? Again, tiny as far as stimulus goes.
TARP.
ZIRP.
Monetarist bailouts of the financial system.
99 weeks unemployment (pretend you’re digging a hole).
The first example you’ve given of true Keynesian stimulus. We’d be in a far deeper hole without the extended UE.
Tax rebates for replacing your windows.
Snore. Silly fools, encouraging energy conservation. Maybe Mitt will replace all the windows in the White House with drafty single-panes, a la Reagan.
—‘It’s all been downhill since’
So what “phase” is this called?——
Decline.
“Who ever heard of a govt that made a profit?”
I guess the answer depends on whether the Federal Reserve is part of the government or not.
Economy
U.S. Federal Reserve Earned $77 Billion Profit in 2011
By Sam Gustin | March 21, 2012
Federal Reserve Chairman Ben Bernanke.
The Federal Reserve turned a profit of $77.4 billion last year, driven by a dramatic increase in its balance sheet due to its policy of buying up securities to help stimulate economic growth. The central bank’s profits came from interest on the $2.9 trillion worth of assets now on its books, much of it Treasuries and mortgage-backed securities purchased during the financial crisis and its aftermath.
…
“The Federal Reserve turned a profit of $77.4 billion last year, driven by a dramatic increase in its balance sheet due to its policy of buying up securities to help stimulate economic growth.”
Perhaps it helps if you are the monopoly owner of the fiat printing press technology and your charter enables you to operate like a giant hedge fund.
What’s up Doc?
A financial mania taking place almost simultaneously in so many places, in countries with supposedly different systems and cultures never happened before. How did this happen?
Well? Anyone?
The whole world loves Hollywood. Give us your Blue Jeans, your Mustangs and the credit expanison that goes with it.
“It’s said there are around 64 million empty apartments in China.”
Hey, that’s nothing- keep on building!
‘Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate any more, it’s a fact.’
How can these be “down” if the Chinese economy is growing at a rate of 7.5%?
I’m not sure about the actual physical production, but it is expected for the construction stocks to be down if growth was expected to be higher than 7.5% and now is down to 7.5%.
For the physical production stuff? Maybe they were geared up for the higher growth and had to pull back a bit. I don’t know if they are working on a “just in time” delivery model.
…. what Polly said.
Well, sad to say, not so much anymore in the good ol’ US of A.
The idea is to protect the individual property owner from arbitrary and capricious taking of the property by anyone who happens to be richer or more powerful.
Well, sad to say, not so much anymore in the good ol’ US of A.
Okay, so the rich and powerful of China, who got that way largely by stealing public property, are now afraid that the public may take the property back. Poetic justice in the works.
Makes sense to me. Steal where that is legal. Move to where it is not so that you can keep it.
I am no better. I made money off of the great credit expansion. Now I don’t want to give it back.
“Do they still think that’s here? I’ll admit we’ve got it better than them, but I’m not feeling 100% confident that things will stay that way.”
Just wait until the 1% start playing The Hunger Games.
May the odds be ever in your favor.
How to define liberty?
How to define libertarian?
Pretty glad I’m not Chinese.
Did FNMA/FMAC give too much “liberty” to mortgage brokers to pander dysfunctional loans to unqualified buyers?
Did realtors lie to the public when they said housing is an investment and housing prices never go down?
Housing clearly is an investment; like all other investments, the prices some times go down.
Did realtors lie to the public when they said housing is an investment and housing prices never go down ??
Since when is a realtor the Holy Grail for advise ?? My goodness, you only need o be 18 years old, have a High School GED and take a few classes to get a license…If you bought a house because Suzanne told you to then you deserve what you got…
This housing crisis that we find ourselves in lays in the lap of Greenspan & wall street…Without the easy money , Suzanne’s pitch is not in play….
Another one avoided the question.
Liberty is when you are not forced by a third person to give up some of your value when you exchange that value with a scond person.
Libertarian is one who does not initiate force, the threat of force or fraud against another person.
“Prices climbed so fast that many of the newly rich didn’t even bother to rent out the investment properties they’d bought. They simply held on to them, secure in the knowledge that the properties will be worth more next year.”
It strikes me as incredible how the same real estate investing foolishness can play out in nearly identical fashion across multiple international settings, despite the availability of the internet to share information (like this thread) about how badly the bubble’s collapse turned out elsewhere.
Does it strike you as incredible that this same foolishness is still alive and well in the USA in spite of the housing bubble implosion?
Goes without mentioning it.
secure in the knowledge that the properties will be worth more next year ??
Or next month…IMO, you really can’t get a better example of this mind-set then the amount of tract housing that was being built & secured with minimal deposits with no intention of renting or occupying the house…
I have mentioned this before, but The Chinese money is even flowing into India’s big cities. Indian co-worker went home to new Deli for a visit with family. Says that the Chinese investors have bought up a large portion of the inner city haousing, pushing prices up to the equivilant of $250K. This is so far beyond the affordability of people making $5 an hour or less, that the locals are forced out of town while the housing sits empty.
His relatives that work into the city now do a combination of long commutes, and literally sleeping at work several nights a week. While they used to live within walking distance of ther jobs, they now either buy very small cars and sit for hours in traffic or spend hours and hours waiting on over used, old and inneficient public transportation.
What will happen to the flow of Chinese money into real estate investments in India, Canada and the U.S. when the music stops playing?
Saturday, March 24th 2012 - 08:35 UTC
Chinese manufacturing slumps for fifth month; Euro zone shows signs of recession
Chinese manufacturing slumped for a fifth month in March and the Euro zone economy is showing new signs of wilting, according to surveys revealed this week that pointed to weakening global demand.
Manufacturing recovery following the Lunar New Year in China has been timid Manufacturing recovery following the Lunar New Year in China has been timid
Only the US is showing signs of momentum among the world’s top economies, underlined by data showing jobless claims fell to a fresh four-year low last week.
That was reinforced by a report from the New York-based Conference Board showing its leading economic index climbed 0.7% during February. It was a fifth straight monthly rise, the best string of gains since the US economy was coming out of recession in 2009.
The batch of purchasing managers indexes suggested China and Europe will not contribute to a global upturn any time soon. Factory activity in China shrank for a fifth straight month in March, hit by declining order books, disappointing exports and new hiring hitting a two-year low.
…
“Yale University professor Stephen Roach, a former non-executive chairman for Morgan Stanley in Asia, said concerns about a hard landing were ‘vastly overblown. I don’t think the banking system will collapse and the property bubble will burst,’ he told a conference in Shanghai. ‘These are all exaggerations.’”
His tune sure changed a lot when he joined the Ivy League Ivory Tower.
I agree, that is unbelievable.
I personally find it disappointing, though unsurprising. Think about where the funding for his research program originates…
We may not have 64 million vacant units in this country, but proportionality with population might yield an equivalent figure of 17-18 and we might be halfway there, but I don’t know where that 64 million figure came from. Are there any reasonably accurate figures for #s of vacant housing units in this country? By the time the mania reached its “fever break” moment in this country there were certainly many condos and detached homes built and sold to people who hadn’t the least intention of living in them or renting them out, Vegas, Phoenix, and Florida come to mind, and in greater DC there are mostly empty towers still.
Someone told me a joke once where rumors spread in a certain town that a local company was bringing in 20 new high level executives who all would need a fancy home, so all 10 local developers each went right out and built 20 “executive homes”.
In San Diego, rumors of housing shortages notwithstanding, one sees many dark windows in the new high rise condo towers…
“I don’t know where that 64 million figure came from.”
I do.
China’s ghost towns: New satellite pictures show massive skyscraper cities which are STILL completely empty
By Daily Mail Reporter
UPDATED: 18:19 EST, 18 June 2011
As sprawling housing developments and skyscrapers in one of the world’s most populous countries, these tower blocks and recently-built neighbourhoods should be busy and swarming with people.
But on closer inspection these stunning pictures show elaborate public buildings and open spaces which are left completely empty.
The most recent pictures of unused housing emerged as China announced plans to build 20 cities a year for the next 20 years.
Soulless cities: Despite being unable to find buyers for the hundreds of millions of new homes, China plans to build 20 cities a year for the next 20 years
Property to let: Rows of neat, newly-built houses like these in Jiangsu are becoming more common in China
Desolate: These skyscraper in Chenggong, where there are already 100,00 new homes, should be bustling with life but are instead empty
And despite pictures last year showing some of the reported 64 million empty homes, Chinese authorities have since erected masses more buildings.
Gillem Tulloch, an analyst for Forensic Asia Limited, described one of the areas in Chenggong, as a ‘forest of skyscrapers’.
When asked what has happened in the past six months since the ghost cities were built, he said: ‘China built more of them.
‘China consumes more steel, iron ore and cement per capita than any industrial nation in history.
Unused: Another vacant development in Jiangsu contains well over 100 new properties
Plenty of room spare: Experts have said some of the developments are like a ‘forest of skyscrapers’
‘It’s all going to railways that will never make money, roads that no one drives on and cities that no one lives in.
‘It’s like walking into a forest of skyscrapers, but they’re all empty.’
Chinese government think tank have warned that the country’s real estate bubble is getting worse, with property prices in major cities overvalued by as much as 70 per cent.
Tulloch said that apartments in Chenggong, a fishing village near Hong Kong, were selling for up to $80,000.
Many of the developments like this one in Ordos, China, have swathes of newly-created public space completely unused by anyone
Zhengzhou
Zhengzhou New District residential towers: Soaring property prices in China and high levels of investment has fuelled the construction of up several new cities. Experts fear a subsequent property crash could damage the global economy
Property bubble: Zhengzhou New District features vast public buildings that have never been used
He added: ‘People there were joking that no one in Denaya could afford to live there. If these apartments sell at all, it is to speculators.’
Of the 35 major cities surveyed last year, property prices in eleven including Beijing and Shanghai were between 30 and 50 per cent above their market value, the China Daily said, citing the Chinese Academy of Social Sciences.
Prices in Fuzhou, capital of the southeastern province of Fujian, had the worst property bubble with average house prices more than 70 per cent higher than their market value, according to the survey conducted in September.
The average price in the 35 cities surveyed was nearly 30 per cent above the market value, the report said.
Some comfortably-housed members of the 1% club think the best solution for America’s overhang of vacant homes is to destroy many of them.
I have a better idea: Why not have Uncle Sam auction them off to the highest bidder like any other valuable resource stock (e.g. mineral rights). That way, the actual market value can be determined, and we will not have to waste the cumulative value of years worth of residential investment.
Any homes that don’t sell at a price above $0 could be destroyed.
How do you build Pottersville if the 99%’s can simply buy living accommodations at a fair market value?
I think the point is that at least some 1% club members would rather have more people living under bridges than allow U.S. home prices to reach affordable levels.
Maximizing taxpayer value by auctioning vacant houses to the highest bidder would clearly be a better solution than destroying them, especially if the auction prices were made public so that future buyers could have an idea about where current market values lie.
Don’t allow members of the 1% club to destroy these valuable publicly-owned assets, which could be used to mitigate America’s perpetual shortage of affordable housing. Only a moron or an imbecile would think destroying something of intrinsic worth would be preferable to making it available to somebody willing to pay for it.
What To Do With Vacant Houses
The government owns more than 250,000 empty homes.
It should destroy many of them, not rent them out.By Justin B. Hollander|Posted Tuesday, March 20, 2012, at 11:31 AM ET
A house in disrepair.
What should the government do with all the vacant houses left over from foreclosures?
Photograph by David McNew/Getty Images.
On March 23, Future Tense—a partnership of Slate, the New America Foundation, and Arizona State University that explores emerging technologies, policy, and society—will hold a live event in Washington, D.C., on the concept of resilience. Academics, policymakers, and other experts will discuss resilience in the environment, business, national security, even the Constitution. Slate’s Matt Yglesias and Emily Bazelon will be there, too. To learn more and to RSVP, click here.
The economy is getting better, right? Not exactly. The ongoing repercussions of the foreclosure crisis continue to haunt cities and towns across the country. At last count, 9.9 million homes have been foreclosed upon since 2008, contributing to a total of more than 10 million vacant homes in the United States. Among those, more than 210,000 are owned by Uncle Sam, stemming from owner defaults on their mortgages.
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I know I shouldn’t be surprised how people seem to forget history. Those who forget are doomed to repeat.
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