After Touching The Ceiling
Xinhua reports from China. “Economists from China’s leading think tanks have dismissed predictions that a possible property meltdown would trigger a crisis or even a crash in the world’s second largest economy. ‘It can be said that China’s property bubbles are now the biggest risk in its economy, but bearish talk of a collapse of the whole economy smells of ulterior motives,’ Wang Xiaoguang, a researcher at the Chinese Academy of Governance, told Xinhua.”
“Jia Kang, director of the Research Institute for Fiscal Science at China’s Ministry of Finance, warned against the ‘divergence’ in China’s housing market. ‘In big cities like Beijing and Shanghai, the risks of the property market are not so big,’ Jia told Xinhua.”
From Reuters. “Prices of several residential properties on sale in China’s eastern cities of Shanghai and Hangzhou dropped sharply over the weekend, feeding industry speculation of a fresh round of price cuts by developers to boost sales, the Shanghai Morning Post reported on Sunday. The developer of a high-end residential property project on the outskirts of Shanghai on Saturday slashed average prices of a batch of homes on sale by 28 percent to 36,000 yuan ($5,800) per square metre amid sluggish sales, the newspaper reported.”
From East Day. “High-end residential market in Beijing experienced downturn in sales volume and price in the first quarter, fresh evidence of slowdown of the red-hot housing market, said the world’s leading real estate consulting company DTZ. The average high-end housing price in Beijing dropped by 5.45 percent quarter on quarter to 49,287.77 yuan (about 8,014 U.S. dollars) per square meter in the first quarter, according to data from DTZ. The high-end housing transaction volume in Beijing plunged by 23.85 percent quarter on quarter in the first three months.”
Want China Times. “The Hangzhou government announced that real-estate developers have to report to government agencies before making large price adjustments to houses on sale. According to government statistics, 10,112 residential housing units were sold between January and March this year in the city, a 37.8% plunge year-on-year. In the same period, the average selling price for residential units in the downtown area dropped to 15,388 yuan (US$2,467) per square meter, down by 11.3% from a year ago.”
“The number of available houses has reached a record high. As of March this year, 76,004 residential housing units were available for sale, an annual increase of 36.2%. Price competition in some areas of Hangzhou that have an excessive house supply is intense, which has hurt fair competition in the market. A real-estate agent said that in some areas, if one real-estate developer lowers prices, other real-estate developers will follow suit immediately.”
From ECNS. “Stringent bank loans since the end of last year have dealt real estate firms, medium- and small-sized ones in particular, a blow in securing their fund chain, said Hu Baosen, board chairman of Central China Real Estate Ltd. Among the 35 major cities surveyed by Centaline Property Agency Ltd., 25 have seen their banks suspend housing loans.”
“‘China’s property market is adjusting after touching the ceiling, and the extent of adjustment will go beyond the anticipation,’ said Tian Ming, board chairman of Landsea Group. ‘No property enterprises, big or small, are safe,’ Tian said.”
From IFR Asia. “Chinese banks are cutting their exposures to risky borrowers amid fears of increasing default rates in a move that threatens to trigger a wave of bankruptcies across the country. ‘Since the beginning of this year, we have stepped up efforts to stop rolling over loans to risky borrowers in underperforming industries,’ said a banker in the credit-approval department at Industrial and Commercial Bank of China’s Zhejiang branch. ‘We expect more defaults this year and, so, need to tighten credit-risk control.’”
“As banks stop rolling over troubled loans, however, they are forcing hundreds of companies in these industries to shut down, according to Robert Davis, senior portfolio manager of INGIM emerging markets high yield dividend fund, who went on an investment trip to China in March. ‘We heard many smaller companies are failing due to a liquidity crunch and we expect the situation to worsen,’ he said.”
“‘It is increasingly the case of ‘we want to get back loans and stop renewing as much as possible to risky industries,’ said a Hangzhou-based loan banker from Evergrowing Bank, a medium-sized joint-stock commercial bank. ‘A further uptick in bad loan rates could wipe out most of the bank’s profits,’ she said.”
“‘It can be said that China’s property bubbles are now the biggest risk in its economy, but bearish talk of a collapse of the whole economy smells of ulterior motives,’ Wang Xiaoguang, … , told Xinhua.”
Wang’s statement smells like official denial.
A couple of links will post later in bits but off the top of my head:
Total private and public debt in China is around 210% of the GDP. In the United States it is around 350%. The Chinese GDP is growing around 7.5% per year while in the U.S. it is around 2.5%. Yet the MSM tells us that China is close to imminent collapse but the U.S. is doing fine. I guess we are to accept what MSNBC tells us, to paraphrase; lean forward and hold your ankles.
Sorry but I will not. China is moving away from government involvement shutting down money losing, resource depleting and heavily polluting industries. We are increasing government involvement they are decreasing government involvement in the economy. My bet is we collapse before them.
‘accept what MSNBC tells us…Sorry but I will not’
You’ve got some personal struggle going on with this China thing. As for MSNBC, I don’t have TV at home and only see it if I’m traveling, so I don’t know what you are talking about. This post is almost all foreign media.
‘China is moving away from government involvement’
‘Police in China begin carrying guns during routine patrols in places such as Shanghai, Qingdao and so forth. Jiangsu Province will start firearm patrol on May 1 with 16,000 police officers in 13 cities, following a unified deployment of Ministry of Public Security. Critiques believe the CCP is suffering from street phobia to arm the police and treat the public as enemies.’
‘Beginning on April 20, more than 1,000 Shanghai police will conduct 24 hour patrols while carrying guns. When warnings fail, the police have the right to open fire on those who escape arrest, and during emergencies such as group fights, armed robbery, and acts of violence.’
‘Tang Jingling, lawyer: “Many situations reflect the insecurity that comes from the authorities’ abuse of rights. Take the city management of Cangnan as an example, the staff beat the street vendor, the angered locals hit back and hurt the city management staff. This incident showed that the insecurity was caused mainly by the rotten officials and the abuse of power, not necessarily from the so called criminals.”
‘Police in Beijing held “anti-terrorism” exercises on Friday on the eve of the 25th anniversary of the publication of a hard-line editorial in a ruling Chinese Communist Party newspaper that triggered the Tiananmen Square pro-democracy movement crackdown.’
‘China sees thousands of “mass incidents” annually, yet the exercise was the first of its kind by police in the Chinese capital, the Legal Evening News website reported.’
‘Beijing-based rights activist Wang Debang agreed that the government was making a show of force on Friday. “This shows us that social conflict has become the norm in China today,” Wang said. “For an exercise like this to be openly publicized on the Internet … means they are trying to prevent a situation like this from happening.”
‘For decades, members of the Chinese public with grievances against local governments have been traveling to Beijing in the time-honored tradition of appealing to the country’s highest authorities. The practice will be banned after May 1 in most cases.’
“When court officials have to take orders from local government officials, how can we get our justice?” said Gu Guoping, a Shanghai resident who has been petitioning what he believes to be unfair seizure of his home for more than 10 years. “Ordinary people do not petition at will. They have no choice but to seek higher authority when they have exhausted local venues.”
‘Following the feudal tradition of an “imperial appeal,” petitioners frustrated with local governments travel to the capital, hoping they could get the ear of the highest authority and a shot at justice.’
‘When their grievances are still ignored, many camp out in Beijing in what has become known as petitioners’ villages, threatening the social stability and undermining the rule of the Communist Party, which considers the petitioners as an embarrassing reminder of shortcomings in its ability to govern.’
“You’ve got some personal struggle going on with this China thing. As for MSNBC, I don’t have TV at home and only see it if I’m traveling, so I don’t know what you are talking about.”
That comment left me scratching my head as well. Perhaps Xinhua is an MSNBC subsidiary?
‘Critiques believe the CCP is suffering from street phobia to arm the police and treat the public as enemies.’
Sounds like the Occupy Tiananmen Square movement is getting nipped in the bud before it even gets underway.
The Chinese GDP is growing around 7.5% per year while in the U.S. it is around 2.5%.
Yeah, but look how quickly Chinese debt has grown. And do you really trust China’s official debt numbers? I certainly don’t. I suspect that they are far worse than reported. For Pete’s sake, this is a country that is riddled with brand new ghost cities.
There are a lot of unpleasant things between fake miracle growth and collapse.
The thing about a massive credit bubble is that stopped growth itself makes all sorts of things breakdown.
You won’t believe msnbc, but you’ll believe a GDP number from the chinese government?
I’m guessing the gap between official GDP and underlying Chinese economic reality will eventually collapse like the air collision that causes a thunderclap, but that is admittedly just an educated guess.
“The developer of a high-end residential property project on the outskirts of Shanghai on Saturday slashed average prices of a batch of homes on sale by 28 percent to 36,000 yuan ($5,800) per square metre amid sluggish sales, the newspaper reported.”
It kind of sounds like a race to the exits is underway.
“The average high-end housing price in Beijing dropped by 5.45 percent quarter on quarter to 49,287.77 yuan (about 8,014 U.S. dollars) per square meter….”
$8,014 / 10.76 SF/Meter = $744/SF
HA is not going to be happy with the Chinese developers until they get to his HA index of $55/SF or $587/SM.
$744/SF / $55/SF HA index = 1,354% too high.
China still has a long way to fall! Or, perhaps, they could just increase the hourly wage by 1,354% from $.30/hour to $4.06/hour (just kidding, I don’t know the level of Chinese wages.)
Still running away from my offer to you for some very lucrative work in Sacramento eh?
Why?
I am not running from anything. I just choose to ignore. I already have lucrative work here, much more than you could ever offer me.
You claim you’re in the construction business. What’s the problem J.Fraud?
“HA is not going to be happy with the Chinese developers until they get to his HA index of $55/SF or $587/SM.”
It shouldn’t take long at recently-reported rates of price decline.
But then again, if the correction is arrested, as in Japan, it could take decades for their prices to bottom out.
Whac, do think the correction was arrested or the recovery never occurred? Are Japanese assets still overvalued….or has the recovery stalled due to other factors?
Arrested correction. Just like is currently occurring in China.
And in the U.S.
“I don’t know the level of Chinese wages.”
Foxconn workers make about $400/month, but it gets complex because they work a lot of overtime, and at that low salary they pay little in taxes (those moochers).
http://economix.blogs.nytimes.com/2012/02/24/the-ieconomy-how-much-do-foxconn-workers-make/?_php=true&_type=blogs&_r=0
Even if your worker in Beijing made 10 times a Foxconn worker, and we used the 3x income rule of thumb, the Beijing worker can afford a 200 sq ft apartment.
Even if your worker in Beijing made 10 times a Foxconn worker, and we used the 3x income rule of thumb, the Beijing worker can afford a 200 sq ft apartment.
I suspect that you need to be either a tech professional or a member of the managerial class to make that kind of money.
Or a speculator.
Maybe Carl would know more.
The article and comments are pretty good. Foxconn workers are also provided room and board, so they can save most of their salary. They “volunteer” for overtime hours. The turnover rate is about two years. After that they are worn out, but they have a pile of cash that they can take back home.
I’m a bit skeptical. If they are all happy assembling rainbows and saving up their puppies, whence the suicide nets?
Maybe Carl would know more.
Sorry, having a hard time keeping up over the weekend and spilling into Monday. We tried to ask some of the people we worked with down there about these sorts of things, but we didn’t get far. The language barrier didn’t help. So the article actually answered some of my questions. I was at a QSMC factory just down the road from a Foxconn factory. Our building did not have any nets.
The workers I saw seemed very young on average, even taking into account that our brains associate smaller size with youth. The environment was mildly military in nature to me. But the average worker seemed pretty happy to be there. What I didn’t understand is that all those young single people together…I thought it would be a meat market. But they seemed to mostly be trying to stay single and make money and marry someone from the hometown when they were done.
Alameda, CA Housing Prices Plunge 21% YoY
http://www.movoto.com/alameda-ca/market-trends/
San Diego, CA Housing Prices Plunge 14% YoY; Inventory Explodes 101%,/b>
http://www.movoto.com/san-diego-ca/market-trends/
I didn’t see the median price change calculation anywhere no the link, but here is what I get for the 1-year percentage change:
($499,000/$575,000 - 1)*100% = -13.2% (almost 14%).
Realtor Charged With Child Molestation
http://www.newson6.com/story/25325012/grove-realtor-charged-with-child-molestation
Moreno Valley, CA Housing Demand Plunges 20% YoY; Craters To 10-Year Low
http://www.zillow.com/local-info/CA-Moreno-Valley-home-value/r_25981/#metric=mt%3D30%26dt%3D1%26tp%3D6%26rt%3D8%26r%3D25981%26el%3D0
Temecula, CA Housing Prices Crater 11% YoY; Inventory Skyrockets 143% As Demand Collapses
http://www.movoto.com/temecula-ca/market-trends/
Brentwood, CA Housing Demand Crumbles 24% YoY; At New 10 Year Low As Prices Slide And Inventory Doubles
http://www.zillow.com/local-info/CA-Brentwood-home-value/r_17155/#metric=mt%3D30%26dt%3D1%26tp%3D6%26rt%3D8%26r%3D17155%252C52808%26el%3D0
http://www.movoto.com/brentwood-ca/market-trends/
rent to price ratio 444- wow, my hood is 200 and I thought that was insane.
http://www.zillow.com/homedetails/1815-Reinelt-Ave-Santa-Cruz-CA-95062/16127326_zpid/
Arlington, VA Housing Prices Plunge 31% YoY; Inventory Up 93%
http://www.movoto.com/arlington-va/market-trends/
Oxide, this is why you don’t buy rental properties in Santa Cruz. $800,000 home rents for $1,800/mon. The property taxes and insurance together probably cost $900/mon.
It does not matter how deep your cash reserves are if the investment does not make economic sense.
Burbank, CA Housing Prices Turn South; Inventory Explodes 116% As Buyers Evaporate
http://www.movoto.com/burbank-ca/market-trends/
HA, Ha, ha, hahahahaha. How are prices “turning south” when the price of a single family home increases from $406/SF to $448/SF in one year.
Housing Analyst = Housing Fraudster
Yawn, please go away or post something meaningful! HA~~~~
And they’re going to keep falling.
Now how about your losses to date?
The prices are not falling. Look at home sizes and price/SF. The prices are increasing.
Falling.
“hahahahaha…”
You must have your computer monitor upside down. This explains much.
That must be it, why would someone lie when its so easy to click and see that he is.
Its also possible Jingle doesn’t know how to read data in that format.
First column is “Today”, last column is “1 Year Ago”. Make sense?
You have to look beyond HAs post. Go to “single family”, check the $/SF index. It is increasing. If you did not let HA lead you around by the nose, you could see the truth too!
You’re a fraud.
You are such a joy, HA. I always enjoy two year old personalities….it’s just that I usually see them in 2-year old children. HA!
Agoura Hills, CA Housing Prices Crater 37% YoY As Inventory Balloons
http://www.movoto.com/agoura-hills-ca/market-trends/
HA, Ha, ha, hahahahaha. How are prices “collapsing” when they go from $357/SF to $387/SF in one year.
Housing Analyst = Housing Fraudster
Like this;
2013 median: 1,299,000
2014: median: 814,000
What’s not to like a about falling housing prices?
As Ben often points out, median can be useless and deceiving. Check $/SF. Prices are holding up fine. I am sure you can always find some obscure location where two houses sold and the one last year sold for twice the one last year. HA, Ha, ha…..you are so much a Housing Fraudster.
Falling prices across California J._Fraud. Save yourself.
Encino, CA Housing Prices Collapse 30% YoY As Inventory Explodes 102%
http://www.movoto.com/encino-ca/market-trends/
HA, Ha, ha, hahahahaha. How are prices “collapsing” when the price of a single family home increases from $388/SF to $418/SF in one year.
Housing Analyst = Housing Fraudster
Yawn, please go away! HA~~~~Huckster Anonymous. Go to a meeting.
Like this J.Fraud….
2013 median: $999,950
2014 median: $699,000
Down we go!
‘HA, Ha, ha, hahahahaha. How are prices “collapsing”…’
Actually the $999,950 figure is for March 2013. The April 2013 median was $1,099,000, while the April 2014 figure was $699,000.
The one-year percentage decline is easily found by copying and pasting this formula into Google:
(699/1099-1)*100% = -36.4%.
Next…
There you go using math….
Sorry…math is what I do.
These kinds of comparisons only work if you’re selling identical widgets where location makes no difference. Trends are skewed because there are so few transactions within one locale, and if you begin to expand the area to include more transactions, trands are skewed because of locale. This is assuming identical homes.
The data’s no good eh? Right Mz Craterton.
The data is fine. It is you that is a fraudster.
What are your losses thus far J._Fraud?
“As banks stop rolling over troubled loans, however, they are forcing hundreds of companies in these industries to shut down, according to Robert Davis, senior portfolio manager of INGIM emerging markets high yield dividend fund, who went on an investment trip to China in March. ‘We heard many smaller companies are failing due to a liquidity crunch and we expect the situation to worsen,’ he said.”
Bahahahahahahahaha… now just it who, deep down, rules what?
Make money available - meaning roll over loans - and you allow companies to survive. Say no to the rollover and these companies go out of business, and when companies go out of business a lot of jobs vanish.
Be nice to your banker because, no matter what you have been told, it’s the bankers who ultimately call the shots.
Bahahahahahahahahahahaha.
China is currently in a state of extreme distress folks…. and it’s getting more volatile and incendiary. Remember….. they are floating a false capitalist system against a hidden backdrop of doctrinally pure, unadulterated communism.
“doctrinally pure, unadulterated communism…”
Not sure how that description fits a cesspool of corruption and elitism.
Communism? No… you’re thinking of Cronyism.
”I was right, the housing recovery was a sham’: The Guardian’s Heidi Moore. “Weather has been blamed for a lot, and it’s true it has some role, but there are so many other metrics that go in the direction of real trouble,” says Moore. “People haven’t been able to borrow for a mortgage for years — that has nothing to do with the weather, I promise you.” The same goes for issues like rising prices and low supply, she adds.’
‘According to the AEI’s International Center on Housing Risk, 24% of all mortgage loans are now being offered to candidates with debt to income levels higher than the CFPB’s qualified mortgage rule limit of 43%.’
‘As the Wall Street Journal reports, “New lenders spring up to cater to subprime sector”. Adding to the risk, over 50% of all home purchase loans now utilize only a 5% down payment, putting banks and lenders again at great risk of a housing market price decline.’
‘The only thing it seems going well for the housing market is the home price inflation driven by investors and the non-traditional home buyer. But how long will what seems to be a temporary rise in prices driven by investors last?’
‘The housing recovery is essentially non-existent except in price, and eventually these disconnects will work themselves out, likely with housing prices joining the other fundamentals at lower levels.’
‘The housing recovery is essentially non-existent except in price, and eventually these disconnects will work themselves out, likely with housing prices joining the other fundamentals at lower levels.’
Yeah?, well in the world of real estate price equals value. Cut the price and you cut the value. And if you cut the value then home debtors go underwater.
“‘The housing recovery is essentially non-existent except in price …”
Think about this statement a bit: Just how would you go about measuring the value of a home if you didn’t use its price?
Must I invoke the 15 year old Chevy example?
“Must I invoke the 15 year old Chevy example?”
Yes, because I do not understand what you mean.
Is there any value when there is no demand at that price?
Of course you must, HA. Repeating the same memes each day appears to be vital to your mental health. I don’t want you to skip a day.
Don’t take the data personal Mz. Craterton. It is what it is.
“Just how would you go about measuring the value of a home if you didn’t use its price?”
I’d base it on the comps. Oh wait…
“Think about this statement a bit: Just how would you go about measuring the value of a home if you didn’t use its price?”
For starters, do it the way insurance companies do. Base it on replacement cost. Only a debt donkey needs to insure for purchase price. No one needs to insure for wish price.
Replacement cost covers only the structure, not the land.
Are you sure?
HA, Ha, ha. Touche. Whip him Oxy, whip him good.
fires don’t burn down the earth
wow, ain’t you the profound one?
“whip him good”
What’s that for? Because I was doing math with you?
I still would like you to answer if your six mortgages @ 4% are GSE guaranteed. I’ve asked many times. I am curious about specuvestors gaming the taxpayer. Something Paladin would have been interested in.
“fires don’t burn down the earth”
but the debt donkey pays as if it were so.
Blue asks,
“I still would like you to answer if your six mortgages @ 4% are GSE guaranteed. I’ve asked many times. I am curious about specuvestors gaming the taxpayer. Something Paladin would have been interested in.”
My loans are not guaranteed by anyone or the government. They are non-recourse debt secured by the homes. The loans were obtained at or near the bottom of the interest rate market about 12-18 months ago. All my loans (except my home, which is at 3.25%) are at non-owner occupied rates. I don’t believe in deceiving the lenders about claiming owner occupancy (though I have never seen anyone challenged on that falsehood).
My original acquisition loans were at rates around 5.25% to 5.50% in 2008-2010. When rates dropped, I refinanced all the properties.
I don’t make FED policy, but I accept it as an opportunity when it presents itself as beneficial.
“Base it on replacement cost.”
Now you are talking.
And you have me reaching for my copy of Barron’s HOW TO PREPARE FOR THE CALIFORNIA REAL ESTATE EXAMS (bought from local Border’s Bookstore before it closed a couple of years back at fire sale discount price).
There are basically three real estate appraisal methods:
1. Income approach: The value of the property is the expected net present value of future income (rents minus ownership costs).
2. Sales comparison approach: Value is estimated by analyzing sales prices of similar properties (comparables) recently sold.
3. Cost approach: Often advocated on the HBB by Housing Analyst, this approach is based on replacement cost of a structure. If you can build it new for $55/sq ft, why pay over $300/sq ft for a used dump?
Obviously 2. is out when nothing is selling, leaving 1. or 3. as the only choices.
As HA points out here every day of the year, 3. suggests recent sales prices for the trickle of homes that are selling represent mania pricing.
Once interest rates revert to historic norms, 1. will indicate the same.
You know the market is out of whack when method 2. comes in with a much higher appraised value than either 1. or 3.
And that’s exactly where things currently stand in coastal California.
Exactly Whac, that is why I bought real estate in 2008-2010. I bought below reproduction costs. It is hard to lose when you get below that level. In my area, I averaged about $80-90/SF on most deals. Prices have bounced back nicely.
You paid 2x over construction costs for a used house.
Just how would you go about measuring the value of a home if you didn’t use its price?
in 2006 i look at a house in mexico that was supposed to be for sale. they didn’t have a price on it yet. i went in and estimated what i’d be willing to pay for it. my price was around $60,000. in the next few days a sign went up with an asking price..
$500,000. 6 months later it was $450,000. since then the owner has died and the heirs have it listed online. the new price is $95,000 and they have held that price for 2 years. still no takers. they might be willing to take an offer of $60,000 now, but the day it went up for $500,000 i was no longer interested.
why are comps so important to you if you’re buying? you have a sense of value, don’t you? you wouldn’t pay $10,000 for a common used bicycle even if you could easily afford it, so why would you pay $1,000,000 for a common used house even if you could afford it? would it matter to you if you knew someone had paid $10,000 for a similar bicycle? would you buy it because it seemed like the in thing to do? if so, you would be a fool. fools don’t keep their money long.
“A ‘housing recovery’ is a falling prices to dramatically lower and more affordable levels by definition.”
There it is.
‘A network of loan guarantees set up to improve companies’ access to credit in one of China’s richest districts is creating new risks of default as some debts sour, another sign of how private firms are bearing the brunt of an economic slowdown.’
‘Chinese media have reported on a credit crunch developing among steel and textile manufacturers in Hangzhou city, 175 km (110 miles) south of Shanghai in Zhejiang province, as the failure of some to repay loans pushes their burden onto healthier firms.’
‘Unlisted polyester yarn producer Hangzhou Jianjie Chemical Fibre Co Ltd was recently liquidated following the default of another textile firm whose debts Jianjie had guaranteed, China Business News, a national newspaper, reported.’
‘Jianjie’s collapse in turn affected five other textile firms. In all, 3 billion yuan ($480 million) in bank loans to the six firms are at risk, the paper said.’
‘China Business News also reported that Hangzhou Zhongxin Steel Structure Manufacture Co Ltd, which makes scaffolding, had shut down and could place another 1.2 billion yuan in bank loans to four other companies at risk. Zhongxin, whose website is no longer accessible, couldn’t be reached for comment.’
“The crisis of mutual guarantees is very serious and there is no good solution for this problem,” said Zhou Dewen, vice chairman of the China Association of Small and Medium Enterprises in Wenzhou, another prosperous city in Zhejiang.’
The ‘recovery in housing’: A Visual
http://howcanoneknow.org/blog/wp-content/uploads/2011/09/Dead-cat-bounce-graph-yahoo-finance.gif
Buckle up!
‘Under the situation of China’s economy recession however, abruptly opens up the infrastructure projects to private investors, showing how the government is running out of valuable funds, becoming overburdened by local government debt, and thus a reflection of why main government bodies, are unwilling to increase their debt. Experts remind us, there is no profit investing in the infrastructure of China, and the private investment cannot be openly and transparently monitored. So people need to protect themselves without being fooled.’
‘Marketing Professor Frank Xie at University of South Carolina Aiken: “This is actually a trap and a trick. Because actually we know, the current Chinese economy is in a serious recession. Whatever the scenario is, be it inflation, property bubble, security market or local government debt, they are in fact all in a very precarious and dangerous status. China’s state-owned banks are all short of money. In fact, the nation has no money!”
“This is actually a trap and a trick. Because actually we know, the current Chinese economy is in a serious recession. Whatever the scenario is, be it inflation, property bubble, security market or local government debt, they are in fact all in a very precarious and dangerous status. China’s state-owned banks are all short of money. In fact, the nation has no money!”
It is going to be fascinating to watch the denouement of the China bubble. So far they are in the denial stage; next up: anger.
‘For some Chinese investors, the first step to purchasing millions of dollars in property on the other side of the globe is a lot like ordering a new t-shirt online – search and click.’
‘Social media is the catalyst, connecting Chinese buyers and overseas agents. At least one prospective buyer entrusted an agent with $US100 million to invest in residential housing. Others bought houses in Houston or plots of land in Colorado, sight unseen, according to real estate agents.’
‘Gladys Wang, a Chinese agent based in Houston who has more than 1,400 followers on Weibo, China’s version of Twitter, said she had clients closing deals to buy $US300,000 to $US400,000 properties without even seeing them. “Many Chinese are not familiar with Houston, but they learnt more about the city by following my posts on Weibo,” said Wang.’
‘Instead of selling physical properties, some agents opt for land sales which cost less and close faster. Frank Hu, an agent listed in Soufun.com’s U.S. website, focuses on selling land in Colorado and Hawaii because the entry-level investment is much lower at $US10,000 to $US20,000.’
“Clients don’t need to visit the land before buying; there’s nothing to see about land. We only need to provide clients information like its location and price,” he said.’
‘For some Chinese investors, the first step to purchasing millions of dollars in property on the other side of the globe is a lot like ordering a new t-shirt online – search and click.’
Sounds similar to buying bitcoin.
Sounds like the Florida land bubble of the 1920s.
“Clients don’t need to visit the land before buying; there’s nothing to see about land. We only need to provide clients information like its location and price,” he said.’
Sure. Water, sewer, zoning, streets…..none of that matters. How about some nice lots in LeHigh Acres, Florida.
How about a bridge in Arizona……
‘Instead of selling physical properties, some agents opt for land sales which cost less and close faster. Frank Hu, an agent listed in Soufun.com’s U.S. website, focuses on selling land in Colorado and Hawaii because the entry-level investment is much lower at $US10,000 to $US20,000.’
lulz! I’m sure they had images of mountain properties when in fact they bought some arid land with no water rights far east of the front range. Maybe they can start a tumbleweed farm
Social media is the catalyst…
…of bad deals.
chanos and m whitney were right it just takes along time to unfold when gov’s can print money
‘China’s banking regulator has urged local authorities and banks to step up an investigation into iron ore financing deals in a bid to minimize default risks, prompting a sell-off in iron ore futures that saw prices fall nearly five percent.’
‘The probe, confirmed to Reuters by sources with direct knowledge of the matter, raised fears that the crackdown on commodities-backed financing could unleash a flood of iron ore sales from 100 million tonnes-plus of stocks sitting at Chinese ports, raising the prospect of a price slump.’
‘Trade sources said Chinese banks have started to tighten loan requirements for steel mills and trading firms seeking credit for iron ore imports.’
“The thing we’ve been hearing from traders is the margin on the letters of credit has gone up quite sharply over the last week - it used to be 10-20 percent and now is 40-50 percent, and that seems seems to be forcing a bit of liquidation (to cover the margin call),” said Graeme Train, an analyst at Macquarie Commodities Research in Shanghai.’
Copper, iron, what next?
Let’s take a look at this:
If there is a price slump then the financing that backed the purchases of iron ore takes a hit. But financing is what supported the price to begin with. So, in order to make the financing whole you will have to somehow make the price whole and the only way you can make the price whole is to support the financing.
Damn, people are just as smart on the other side of the world as they are on this side of the world.
Banking works so beautifully so long as the price of everything always goes up!
“Evergrowing Bank”
Do trees grow to the sky in the Chinese banking sector?
“Evergrowing Bank”
That name caught my eye as well; I can’t think of any other name so perfectly predicting its own demise when the tide next goes out.
‘During his latest outlook and opportunities talk, (hedge fund manager) Kyle Bass had this to say about Canadian housing.’
“Look, one of the potential butterfly effects (of a Chinese slowdown) is Canada… Canadian home prices are, on a median, nine times median income. The U.S. hit seven times at the height of the subprime bubble. Where Canadian housing sits today is completely unsustainable… All of the prescriptions for a problem in Canadian housing are out there… It sure looks to me that Canada is all of a sudden coming to a halt.”
Price competition in some areas of Hangzhou that have an excessive house supply is intense, which has hurt fair competition in the market.
_Hurt_ fair competition???
That _IS_ the very essence of fair competition! When supply exceeds demand, yes, price competition will be intense.
That’s what free markets are all about. Welcome to class…