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What Is Really Going On With China Real Estate: A Standard Chartered Survey

Tyler Durden's picture




 

In pursuing an answer to the most elusive question around these days, namely just what is going on in China's real estate market, Standard Chartered has conducted the first phase of an exhaustive survey analyzing precisely what the real estate trends in Beijing, Shangai, and other Tier 1, 2 and 3 cities. The survey attempts to answer such key questions as: "What is really going on in China’s real-estate sector? Are prices falling – and if not, will they? Are developers’ finances
getting tight, and if so, will they be forced to cut prices? Confronted with the State Council’s stringent cooling policies, are developers postponing project starts and stopping construction? And if they do stop building, will this derail the economy and thus force the State Council to loosen policy?" For all curious to learn more about the truth behind the hype regarding China's real estate, which has more polarizing opinions than pretty much any other issue, this is the presentation for you.

Some of the key findings:

  • The Tier 2 and Tier 3 cities have not seen much of a correction in land or apartment prices. Moreover, developers’ sentiment about sales volumes seems pretty good, and they do not appear to be postponing construction. A wave of new supply is planned for September. Developers on the whole seem to think sales volumes will be down 20-30% y/y this year, which is eminently survivable.
  • This is important, since if sales and construction activity holds up in most Tier 2 and Tier 3 cities, then the economy will not tank, and the State Council will not be forced to loosen real-estate or monetary policy.
  • Developers expect apartment prices to fall more in the Tier 2 and Tier 3 cities, but this is acceptable, and developers are taking advantage of lower land prices to build up their land banks. Credit conditions have tightened, but not to the extent seen in 2008. Moreover, many developers still appear to be pretty cash-rich.
  • Problems such as land hoarding and accessing bank lending to fund land purchases still appear common, however. We are also seeing significant foreign investment buying in Tier 2 and Tier 3 cities.

We expect to see a series of rebuttal research promptly.

Full presentation:

 

 

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Sat, 08/07/2010 - 03:47 | 508702 Tense INDIAN
Tense INDIAN's picture

HUGH hendry on Chinese economy::

 

http://www.youtube.com/watch?v=ektMQGbW3wk

Sat, 08/07/2010 - 15:06 | 508958 Zero Debt
Zero Debt's picture

Nice post! I like the part in this when they show the footage of the stock broker with the bull statues have lost their horns.

Also the part with the approximately 100 floor tower which is empty, it is quite funny, when they go in front of it, you can see that the grass is mostly gray (where is the gardener), a few poor trees with no leaves, a not-so-fancy car on the parking lot and a small shed 50 m from the entrance.

This malinvestment is going to be with China for a long time.

South China Mall in Guangzhou is a classic:

http://www.youtube.com/watch?v=emzKAa9rKgU&feature=related

And the city of Ordos, notice how the city planners manage to make each zone completely without integrated services (no shops, corner stores, community centers, hospital, police station, just residentail buildings hoarded for malinvestment):

http://www.youtube.com/watch?v=P-Ef79KcH0Y&feature=related

However let us not forget Downtown Detroit, also an example of government-planning going slightly wrong:

http://www.youtube.com/watch?v=0JbGxIR8JTk&feature=related
http://www.youtube.com/watch?v=T6WKMNmFsxM&feature=fvw

Monroe, Michigan, asphalt turning into grass, not as bad but concerning:

http://www.youtube.com/watch?v=6uIQJMrpZUY

Tempe's Twin Towers:

http://www.youtube.com/watch?v=cTdqh0mlCqI&feature=related

Chernobyl (notice the abandoned filter mask on the floor), touches on the interrelationship betweeen the economy and the energy challenge:

http://www.youtube.com/watch?v=inGCHRJwOoY&feature=related

In this following recent China news report they point out the similarities between Japan starting from 1985 and China starting 2005, and must ultimately fall.

They point out that there is enough empty real estate to house 200 million people, based on recent meter reading from 660 cities:

http://www.youtube.com/watch?v=z0Mb11ynUSU&translated=1

Was referenced by Andy Xie:

http://www.marketwatch.com/story/chinas-overhang-of-empty-apartments-201...

I don't know what Standard Chartered is smoking. They write "...if sales and construction activitity holds up .... the economy will not tank ..." Well, if sales and construction activity continues, the shadow inventory will continue to build up even more and more, and the economy will tank harder and harder. It probably did not occur to these guys that there could be other use for this money. The value of an additional surplus of real estate is very questionable when there is already a massive inventory surplus, both in commercial real estate and domestic dwellings.

Marginal utility, scarcity, value-added and utility of output is so out of theoretical fashion. Now it is all about growth, liquidity and using as much inputs as possible.

I cannot believe that they even not bother to begin discussing (over)supply, shadow inventory and (under)demand. At least they show that many developers have problem paying for land (which is not surprising), most developers are under pressure to develop land held for more than two years, more than half don't foresee hardly any price increase this year, but next year (hope?), tonnes of flats will go for sale during the coming two quarters, median expectations for around 30% more space sold compared to last year, and prices are already starting to fall or stagnating. The whole report lacks perspective of volume, inventory and occupancy rates. Empty real estates do not produce any cash flows.

Another funny thing...why do they only ask developers...who are the sellers, perhaps they should go out to ask some customers?

Oh, and why do they not approach the issue of yields, cash flows and ROI of completed projects? These would be useful figures, to get an idea of estimated future returns of these properties.

Singapore may have some issues with their casino bets, golf course, F1 track, etc...

http://www.youtube.com/watch?v=dPd7VtVjmpg

Hey, go play the Vancouver BC Real Estate Market Roller Coaster, it's fun!

It is a real 3D simulation of real estate price volatility from a first-person perspective. Awesome. Of course, nobody would ever do this in real life.


http://www.youtube.com/watch?v=hqOn5XEm86A&list=QL

Finally, visit this place...

http://www.deadmalls.com/

Mon, 08/09/2010 - 10:29 | 510563 ZeroPower
ZeroPower's picture

Great collection of links

Sat, 08/07/2010 - 03:46 | 508703 niubi
niubi's picture

the beijing land price collapse in chart 8 is misleading. the government took most properties, and pretty much all central land parcels, off the market in may. 12 prime parcels have just gone back onto market, bidding started last week, so expect that avg beijing land price to shoot to not far from previous highs within a quarter.

Sat, 08/07/2010 - 03:58 | 508706 Lux Fiat
Lux Fiat's picture

P. 6 - "This was a Tier 1 bubble and it looks to have been pricked without killing the Tier 2 and Tier 3 markets."

Sounds a lot like the comments made about subprime CMOs in 2007 and 2008.

p. 7 - "Local governments are interested in sustaining land values, so they will control supply."

I am not an expert on China real estate, but much of what I have read indicates that the sale and development of land has been a major source of income for local gov'ts (and a major potential Achilles heel).  Will local gov'ts "control supply" and choose actions that could be negative in the short-term, but positive in the long-term?  Hmmm....

p. 12 "Prices nationwide appear to have reacted moderately to the April measures."

These observations seem a bit premature.  In the US, there is roughly a 12-18 month lag time from when demand drops off until prices start adjusting in earnest.  I imagine Chinese sellers are not so psychologically different from their US counterparts - it will take a while for the reality and acceptance of lower demand to sink in, and for prices to reflect that shift.

The comments and observations in this report make me think of one of the country's previously hot property markets in the summer and fall of 2006.  I see a lot of similarities in the patterns and in the psychology of the market participants.  Funding situation doesn't seem that far off either.

 

 

Sat, 08/07/2010 - 05:00 | 508708 jwalker46
jwalker46's picture

TD, would you please enable downloading, of just post a link to the file?  Many thanks.

Sat, 08/07/2010 - 10:56 | 508809 jwalker46
jwalker46's picture

Thank you, Dental Floss.

Sat, 08/07/2010 - 05:35 | 508711 Clancy
Clancy's picture

Oh look  real-time numbers on Chinese housing prices.  Thanks internet!

 

http://beijing.koubei.com/

Sat, 08/07/2010 - 05:45 | 508712 reckoning
reckoning's picture

the source of the data are the china real estate developers... i could have written a report accurately reflecting their collective opinion without even speaking to them.... and i wonder how much leveraged risk with exposure to the chinese real estate market standard chartered holds on their books... they must have attended lloyd's most recent weekend seminar on initial preparations for unloading assets that are about to blow up in your face...

Sat, 08/07/2010 - 07:21 | 508724 AUD
AUD's picture

Don't know about China but here in Australia it seems to be full steam ahead, depending on the location.

The most productive farmland in the country (coastal high rainfall, basalt soil) is being subsumed by real estate development.

Sad really.

Sat, 08/07/2010 - 07:26 | 508726 Gordon Freeman
Gordon Freeman's picture

Yes, it certainly is.  Wait until sad turns to tragic...

Sat, 08/07/2010 - 08:45 | 508752 Hedge Jobs
Hedge Jobs's picture

Full steam AUD? Not what my business contacts are telling me. Why did inflation pull back so sharply in the June quarter then? slower growth would be my best guess. 

Sat, 08/07/2010 - 09:12 | 508767 AUD
AUD's picture

Your business contacts are having you on.

Like I said, it depends on the location, but South Coast NSW, just some of the most fertile farmland in the entire nation is going under the developers concrete.

As someone who has lived there previously & had family there for years I've seen it progressively raped. Visiting just last weekend I can tell you it's full steam ahead.

 

Sat, 08/07/2010 - 10:40 | 508802 Sqworl
Sqworl's picture

Proof...Cemex bought largest building materials and went Poof!!! 

Sat, 08/07/2010 - 13:46 | 508889 Oh regional Indian
Oh regional Indian's picture

AUD, same echo here in India too. We have, in addition, the furious development (recently slowing, but the land has been bought, fenced, guarded and lost to farming), of Special Economic ZOnes, 10's of 1000's of hectares (millions of acres) gone to the future makings of Industry.

In-dust-ry!

I wonder if anyone has done research on correlation between the BRIC nations key stats (or shadow stats). I'd imagine it's pretty high.

 

ORI

http://aadivaahan.wordpress.com

Sat, 08/07/2010 - 19:34 | 509118 ozziindaus
ozziindaus's picture

The Aussie RE market has turned retirees, plumbers and taxi drivers into RE moguls/players/speculators. Not saying everyone doesn't deserve a good chance in life, but historically, this class of people are never entitled to such wealth. 

Sat, 08/07/2010 - 07:33 | 508730 jm
jm's picture

The report implies that Chinese real estate regulation is stop-go, ranging from extreme central control to complete deregulation in a procyclical way.  

Anecdotally, the secular trend in mainland real estate seems down.  Some developers are unable to sell real estate in Beijing they've owned since the Olympics.  If this is widespread, seems the high has been hit, and won't be back for a while. 

I've also heard that the term on mortgages is very, very long, but I don't know how high leverage is.

Suzie, if you are out there... care to add some insight?

Sat, 08/07/2010 - 09:21 | 508772 niubi
niubi's picture

max term on mortgages is 30 years, but you can only get the difference between 65 and your age up to 30 years, so if you are 40 years old the maximum mortgage you can get is 25 years.

 

minimum downpayments  start at 20%, avg downpayment percentage closer to 30%. 

Sat, 08/07/2010 - 12:36 | 508849 jm
jm's picture

That doesn't sound like a bubble to me.  20% - 30% is a lot of skin in the game.

 

Sat, 08/07/2010 - 16:41 | 509015 Clancy
Clancy's picture

I believe the Chinese government still chips in 10% of the down payment.

Sat, 08/07/2010 - 21:14 | 509190 niubi
niubi's picture

no, the chinese government does not pay part of the downpayment.

Sat, 08/07/2010 - 09:18 | 508770 Chunkton
Chunkton's picture

Well at least we all know you can always trust a Banker to steer you into profit, right? How do I get into Chinese real estate?

Sat, 08/07/2010 - 09:18 | 508771 FranSix
FranSix's picture

Bloomberg article on Soho China billionaire:

http://www.bloomberg.com/news/2010-08-03/beijing-billionaire-who-grew-up...

 

The problems might not be in the real estate, but in the Yuan.

Sat, 08/07/2010 - 09:24 | 508775 Oswald Spengler
Sat, 08/07/2010 - 09:35 | 508778 Segestan
Segestan's picture

State Banking and free market analysis do not produce facts. Oh, sure the upper income group buys, but where is the real consumer wages in  this market? $50-70 a month? China is a house of cards.

Sat, 08/07/2010 - 09:45 | 508782 oogookiz
oogookiz's picture

Standard Chartered had this exhaustive survey contracted out. They just signed the final document.

 

Sat, 08/07/2010 - 10:06 | 508791 wyosteven
wyosteven's picture

Chasing the RE sausage in the communist state of illusion.

Credibility = -0

Sat, 08/07/2010 - 10:43 | 508803 Sqworl
Sqworl's picture

Mortgage lottery system via Fortune Cookies!!! lol

Sat, 08/07/2010 - 13:41 | 508885 Kayman
Kayman's picture

China- the best truth that can be manufactured.

Sat, 08/07/2010 - 13:50 | 508894 Oh regional Indian
Oh regional Indian's picture

But Kaymen, Chinese "truth" is usually copied and cheap. 

It's a rudder-less nation. Mao the Merciless made sure of that.

The Japanese took care of some (China was the most exploited and humiliated nation in the last three centuries especially at the hands of UK, Russia and Japan).

Of course, every "advisor" from the "throne" in London was, curiously, ___.

Fill in the blank.

 

ORI

http://aadivaahan.wordpress.com

Sat, 08/07/2010 - 14:11 | 508912 Gloomy
Gloomy's picture

Great commentary from Doug Noland:

 

2007 vs 2010

Greek and periphery European debt markets have stabilized.  The euro is above 133, having now recovered back to April levels.  Global risk markets have rallied, and commodities markets are again heading north.  Throughout the markets, risk premiums have contracted meaningfully.  Debt issuance at home and abroad has rebounded.  I have posited that the Greek debt crisis provided another critical juncture for global markets.  Others contend that Greece is a small country with limited global impact.  Moreover, possible effects from Greek problems have diminished as the crisis has subsided.  I’m unswayed. 

The current environment increasingly reminds me of the long, scorching summer of 2007.  The subprime crisis turned serious in early June.  And not to pick on Ben Stein, but this week I went back and reread his August 12, 2007 New York Times article, “Chicken Little’s Brethren, on the Trading Floor.”  Mr. Stein’s perspective at the time was in tune with the majority of analysts and pundits: subprime was just not that big of a deal; markets had way overreacted. 

From his article:  “The total mortgage market in the United States is roughly $10.4 trillion. Of that, a little over 13%, or about $1.35 trillion, is subprime… Of this, nearly 14% is delinquent… Of this amount, about 5% is actually in foreclosure… Of this amount… at least about half will be recovered in foreclosure. So now we are down to losses of about $33 billion to $34 billion… But by the metrics of a large economy, it is nothing. The total wealth of the United States is about $70 trillion. The value of the stocks listed in the United States is very roughly $15 trillion to $20 trillion. The bond market is even larger.”

Efforts to quantify potential damage from subprime or, more recently, Greece completely miss a fundamental facet of analyzing Bubble Dynamics:  both were examples of the marginal borrower abruptly being denied access to liquidity/Credit in a highly speculative, hence susceptible, (“Ponzi Finance”) financial environment - thus marking critical junctures for their respective Bubbles.  The Mortgage/Wall Street Finance Bubble, in the case of subprime, and the Global Government Finance Bubble, with respect to Greece, marked critical inflection points for both market perceptions and stability.

Amid this past month’s global market rally, perceptions have shifted to the view that the European debt crisis is behind us.  Recalling the summer of ’07, the subprime crisis “officially” erupted in early June with the halting of redemptions by two structured mortgage product mutual funds managed by Bear Stearns (these funds collapsed later in the month).  From a July high of 1,555, subprime worries hit the S&P500 for about 10%, with the market trading below 1,400 intraday on August 16th.  Living up to market expectations, the Fed was quick to the rescue. 

In an atypical inter-meeting move, the Federal Open Market Committee (FOMC) cut the discount rate 50 bps on August 17th, 2007.   With an escalating subprime crisis, speculative markets moved confidently in anticipation of another aggressive round of monetary easing.  The S&P500 rallied over 12% in less than two months.  After having traded at almost 5.30% in mid-June, 10-year Treasury yields sank below 4.33% by early-September.  Despite escalating mortgage tumult, (“safe haven”) benchmark Fannie MBS yields fell from 6.40% in June to 5.40% by late-November.  The drop in market yields incited a rush to refi mortgages in late-2007 and into 2008.  Dynamics that would culminate in a historic Credit market seizure and liquidity crisis were being masked by melt-up/dislocation in the Treasury and agency markets.

With fed funds at near zero, the FOMC has had little room to cut rates in response to the Greek/European debt crisis and a faltering U.S. recovery.  The markets, however, clamored and the Fed delivered assurances that additional quantitative ease would be forthcoming as necessary.  Akin to the summer of 2007, markets have rallied in anticipation of a further loosening of monetary conditions.  Ten-year Treasury yields closed today at 2.82%, down 113 basis points from the early-April (pre-Greece) high.  Benchmark MBS yields are down 111 bps to 3.56%.

The 2007 subprime eruption and the Fed’s response had a profound impact on perceptions throughout various markets.  The dollar index – which had traded above 82 on August 16th 2007 – was down to 75 by late-November.  The prospect for additional dollar devaluation gave further impetus to buoyant commodities markets.  The Goldman Sachs Commodities Index jumped from 485 in August to end 2007 above 600 - on its way to almost 900 by mid-2008.  Crude prices almost doubled in 10 months.  Many of the “emerging” markets ran to frothy new highs – right before the big fall. 

The implosion of the Mortgage/Wall Street Finance Bubble unfolded over about 18 months.  There were powerful countervailing forces.  On the one hand, a marked change in market perceptions was leading to a reduction in the availability of mortgage Credit.  As new buyers/speculators lost their ability to obtain mortgages, it quickly became apparent that many key housing market Bubbles would soon burst.  The U.S. housing mania and economic boom were doomed.  This led to a broadening panic out of private-label MBS and a liquidity crisis for the overheated ABS/CDO marketplace.  The dominoes had started to tumble.

Meanwhile, the behemoth Treasury, Agency and GSE MBS markets (with GSE securities enjoying a combination of explicit and implicit government guarantees) enjoyed big rallies.  Liquidity problems in subprime-related sectors were for awhile more than offset by liquidity overabundance in the more dominant fixed-income markets.  Ironically, the initial bursting of the mortgage finance Bubble – with all eyes fixated on the Bernanke Fed – fostered destabilizing liquidity excess.  The declining dollar; leveraged “dollar carry trades;” an unwind of bearish bond positions and interest-rate hedges; a mortgage refi boom and resulting hedging against MBS pre-payment risk; Fed-induced speculation on lower market yields; a bout of safe-haven buying; and large foreign central bank Treasury purchases all combined to create an over-liquefied and highly-speculative market backdrop.  The resulting liquidity-induced rally throughout global risk and commodities markets only exacerbated systemic vulnerabilities to the unfolding Credit and economic crises.

I highlight the 2007/08 experience as a reminder of how bursting Bubbles and financial crises can (tend to) evolve over many months – with surprising ebbs and flows and occasional confounding twists and turns.  I don’t see anything in the current backdrop that tempts me to back away from my view that the Greek crisis marked a critical change in market perceptions.  Those that dismissed how the subprime eruption had fundamentally altered the financial landscape would later regret their complacency.

Today, I believe global faith in government policymaking has been badly shaken.  There is now an appreciation that policymakers are running out of options.  Confidence that fiscal and monetary stimulus ensures a sustainable global recovery has waned.  There is recognition that massive stimulus can’t assure market stability; in fact, profligate fiscal and monetary measures will likely prove destabilizing.  There is appreciation that global central bankers can’t guarantee normally-functioning markets.  There is, these days, no denying that structural debt issues will be a serious ongoing problem.  And, importantly, the world is increasingly keen to the severity of U.S. financial and economic problems.  Indeed, the post-Greece backdrop beckons for reduced risk and less leverage.  Yet the markets can – at least for a period of time – luxuriate in destabilizing policymaking-induced liquidity excess and dysfunctional markets.

The dollar is in trouble.  Our currency has now dropped for nine straight weeks, sinking to a near 15-year low against the yen.  Crude oil traded above $82 this week.  Wheat prices are up about 50% over the past month.  The last thing our struggling economy needs right now (in common with 2007/08) is surging energy and food prices.

And there is clearly interplay at work between tumult in the currencies and dislocation in our fixed income markets.  Fed talk of QE2; rumors of the Administration forcing Fannie Mae/Freddie Mac to refinance and/or reduce principal on troubled mortgages; the potential for a wave of mortgage refinancings; and the likelihood that many have been caught on the wrong side of a major move in market yields have Treasury, agency and MBS yields in near freefall.
 
August 2 – Bloomberg (Caroline Salas and Jody Shenn):  “For all the good the Federal Reserve’s $1.25 trillion of mortgage-bond purchases have done, they’ve also left part of the market broken.  By acquiring about a quarter of home-loan bonds with government-backed guarantees to bolster housing prices and the U.S. economy, the Fed helped make some securities so hard to find that Wall Street has been unable to complete an unprecedented amount of trades. Failures to deliver or receive mortgage debt totaled $1.34 trillion in the week ended July 21, compared with a weekly average of $150 billion in the five years through 2009… The difficulty of executing transactions may eventually drive investors away from the $5.2 trillion mortgage-bond market, which has historically been the most liquid behind U.S. Treasuries, potentially causing yields to rise, according to Thomas Wipf… The unsettled trades also stand to exacerbate the damage caused by the collapse of a bank or fund.  ‘You’re adding systemic risk into the market,’ said Wipf, chairman of the Treasury Market Practices Group and the… head of institutional-securities group financing at Morgan Stanley. ‘Investors are taking on counterparty risk in trades they didn’t intend to take on.’  An incomplete agreement can lead to a ‘daisy chain’ of unsettled trades because a broker-dealer acting as a buyer in one transaction may fail to deliver those bonds as a seller in another, according to Alexander Yavorsky, a senior analyst at Moody’s… Investment banks are required to hold capital against both sides of the trades, which also makes the agency mortgage-backed market less attractive to make markets in…”

It is worth noting that Treasurys held in reserve by foreign central banks at the New York Federal Reserve Bank have surged $74bn in just seven weeks.  Dollar weakness appears, once again, to be forcing foreign central banks back into the role as “backstop bid” for the dollar in global currency markets.  These dollar balances are then “recycled” back into our Treasury market, a dynamic that does not go unrecognized by the speculator community.  This presses market yields only lower, increasing the risk of prepayment on mortgage securities and forcing additional interest rate hedging (further exacerbating the decline in market yields).  And once a market dislocates, many will pile on in search of easy speculative profits.

With Treasury, Agency and MBS prices melting up (yields in melt down), key markets enjoy extraordinary, albeit destabilizing, liquidity abundance.  Understandably, market participants dismiss talk of U.S. structural debt issues.  Many will justify the move on fundamental grounds – “It’s deflation, stupid!” Ironically, collapsing yields, the sinking dollar, surging commodities, recovering global risk markets and the onslaught of global liquidity create a backdrop conducive to future inflation surprises. 

Reminiscent of 2007/08, the initial crisis phase has unleashed wild volatility and instability throughout various markets.  Some can see that the glass is less than half empty, while attentive central bankers and sinking yields have most viewing things as positively full. The havoc and misperceptions create an increasingly dysfunctional market landscape.  Over time, the volatility, uncertainty and escalating market stress will prove a subprime-like wrecking ball on confidence.  I need to go back and count the number of trading sessions in 2008 between seemingly over-liquefied markets and Credit market seizure. 

My expectation remains that markets, having disciplined Athens and initiated austerity in the euro-zone, will inevitably set its sights on Washington profligacy. Too reminiscent of the Mortgage/Wall Street Finance Bubble, the markets seem determined to ensure that this disciplining process is methodically delayed until the very maximum levels of Credit excess, speculative froth, market distortion, and systemic vulnerability have been achieved.

Sat, 08/07/2010 - 15:21 | 508979 jesus
jesus's picture

post a link, not the entire fucking article. people like you ruin the comments section.

 

Sat, 08/07/2010 - 20:50 | 509170 Gloomy
Gloomy's picture

No, rude shallow morons like you ruin the comments-really!

Sun, 08/08/2010 - 15:55 | 509695 Immanuel Cunt
Immanuel Cunt's picture

Did you call Jesus a rude shallow moron?

Sat, 08/07/2010 - 14:49 | 508948 Atomizer
Atomizer's picture

Looks like a bubble, walks like a bubble and smells like a bubble.

Japan: America's Lost Decade --- Type in whatever country you want titled in bold.

http://www.youtube.com/watch?v=udT3dbbryEU

Wash, rinse and repeat cycle until it all topples on itself. BTW, it will happen.

The Collapse of complex Civilisations

http://www.youtube.com/watch?v=GzuviYRse3E

Have a great weekend and enjoy some music.

Eastern Sun & John Kelley - Rapture At Sea

http://www.youtube.com/watch?v=GJbwSxMYHlQ&feature=fvw

 

Mon, 08/09/2010 - 10:31 | 510573 ZeroPower
ZeroPower's picture

Fucking CH00000000000000000000NNNNN alert!!!!!11

Sat, 08/07/2010 - 14:50 | 508949 spekulatn
spekulatn's picture

Mortgage modification sells but whoz buying?

 

http://www.publicintegrity.org/articles/entry/2305/

Sat, 08/07/2010 - 14:56 | 508951 tom
tom's picture

Actually I agree that China's property bubble is very much concentrated in top tier cities, and a problem but a far lesser one in medium tier cities. The main reason it's an issue for the country as a whole is that all the major publicly traded banks and developers are so heavily involved, and they face some serious write-offs.

But the biggest issue for China are its huge bad loans to local infrastructure projects. There are literally hundreds of billions of dollars worth of loans out to projects that are earning little or no income. The government was in such a hurry to stimulate the economy and leaned so hard on banks to extend credit that ability to repay was simply overlooked on a massive scale. China also generally mispositioned itself for a V-shaped recovery in the US and Europe.

http://keynesianfailure.wordpress.com/

Sat, 08/07/2010 - 15:23 | 508982 jesus
jesus's picture

This should be called the "state of the koolaid" survey. It is asking the people most heavily invested in a chinese property bubble continuing and becoming larger if they believe it will continue and become larger, what do you think they will say? The devil is in the details, while most respondents say prices won't drop/haven't dropped, there are some who say they have and by significant amounts. What this tells me is that China is in the 2006 phase of their real estate bubble, denial is everywhere but the reality is starting to come through. Once the psychology here shifts, and it will be a quick occurrence when it does, then we will see the inevitable collapse.

What is the Chinese equivalent of Time magazine?

 

Sat, 08/07/2010 - 16:07 | 508995 doublethink
doublethink's picture

So what is really going on? The shit is hitting the fan:

The banking regulator told lenders to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively....

http://www.bloomberg.com/news/2010-08-04/chinese-regulator-said-to-tell-...

 

Sat, 08/07/2010 - 17:21 | 509045 QQQBall
QQQBall's picture

 

Hail, hail the managed economy in China.

Have not seen anyone comment on that fact that a 50% haircut implies a market over-valued by 100%. If the commie banksters are so brilliant, how the hell did that happen?

 

Just asking...

Sat, 08/07/2010 - 16:07 | 508996 Atomizer
Atomizer's picture

1929 Stock Market Crash (Part 1)

http://www.youtube.com/watch?v=iLnDPntfNFw

How to create new forms of revenue?

Carbon Tax

http://www.thespoof.com/news/spoof.cfm?headline=s8i35831

Obamacare roundup in 4.35 minutes

http://www.youtube.com/watch?v=Q7jy6e4HSb4

The parasites continue to drain the host. Once host is dead, the parasites become extinct.

Chicago Climate Exchange

http://www.chicagoclimatex.com/

Sat, 08/07/2010 - 16:27 | 509007 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bob Chapman Friday discusses the third TARP/STIMULUS:

http://www.youtube.com/user/fairinfowar#p/c/C05903C49F5EDE13/13/PdA7kFY8M7o

Sat, 08/07/2010 - 21:27 | 509181 RoRoTrader
RoRoTrader's picture

Thanks for posting that link..........the 3 trial ballons were the FED hinting at canceling bank deposits placed at the FED and paying 2.5% interest, the FED hawk Bullard running the risk of deflation story in the New York Times and the 3rd being an El Erian statement which I missed.......anyone know what it was that El Erian said?

The net result according to Chapman is that FED has known it would have had to take this track and has planned for it since the calculation requires a $5 tillion stimulus over the next 2 years and the banks can create an infinite loan value from the trillion already given out which the banks were paid 2.5% on borrowed money loaned from the taxpayer returning ZERO interest.........is that the jist, more or less?

Matt Carniol has also been way ahead of the curve on calling all of this 3 phase trial ballon tactic by the FED.

http://www.fxinstructor.com/blog/author/mcarniol

This story was posted by Carniol on July 21st; http://www.fxinstructor.com/blog/the-feds-reserve-move-dollar-weakness.

 

Sat, 08/07/2010 - 17:06 | 509031 chinaguy
chinaguy's picture

How did they get their data? "from ten cities?" "From asking 30 developers?"

I didn't read past their data sources - GIGO

Sat, 08/07/2010 - 19:14 | 509112 ozziindaus
ozziindaus's picture

Well done, another ZH China Bull story.

If home prices dropped 50% in cities like Miami, Las Vegas and Los Angeles but remained steady in North Dakota and Montana, did the US have a housing bubble?

Sat, 08/07/2010 - 22:53 | 509278 TGR
TGR's picture

Besides the lack of a broad-source of data for its survey, Standard Chartered is also one of the main gateway funding sources for foreign investment into the PRC.

Wouldn't want to scare off potential customers too much with horror stories of a major correction in housing and the economy.

Mon, 08/09/2010 - 05:30 | 510278 Grand Supercycle
Grand Supercycle's picture

DOW and SP500 weekly charts update :

http://stockmarket618.wordpress.com

Do NOT follow this link or you will be banned from the site!