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China's Housing Bubble Goes Mainstream America
It has been four years since we first introduced the non-believing world to China's ghost cities. Two years later, we revisited to check on the widescale immigration that was expected to occur into these salubrious suburbs. Alas, another epic Keynesian fail as we so delicately described the 'if we build it, they will come' mentality. Now, four years after the news of the Chinese real estate bubble began to break on tin-foil hat-wearing blogs, the mainstream media (to wit, Sixty Minutes) have gone in depth - taking a wonderfully eery trip through these ghost cicties explaining the growing (and in some places popping) bubble in Chinese real estate markets. The incredulous host concludes this chilling saga, "Meanwhile, people who can afford it are still buying as much real estate as they can... potential buyers crowding buses to see new construction and new owners line up to register their new apts... Like us in our bubble, they just don't believe the good times will ever end."
CBS Sixty Minutes Transcript:
If trouble comes in threes, then what'll be the next global market to melt down after the U.S. and Europe? Some are looking nervously at China.
China has been nothing short of a financial miracle. In just 30 years, this state-controlled economy became the world's second largest, deftly managed by government policies and decrees.
One sector the authorities concentrated on was real estate and construction. But that may have created the largest housing bubble in human history. If you go to China, it's easy to see why there's all the talk of a bubble. We discovered that the most populated nation on earth is building houses, districts and cities with no one in them.
IT'S EMPTY!!
Lesley Stahl: So this is Zhengzhou. And we are on the major highway, or the major road. And it's rush hour.
Gillem Tulloch: Yeah -
Lesley Stahl: And it's almost empty.
Gillem Tulloch is a Hong Kong based financial analyst who was one of the first to draw attention to the housing bubble in China. He's showing us around the new eastern district of Zhengzhou, in one of the most populated provinces in China - not that you'd know it. We found what they call a "ghost city" of new towers with no residents, desolate condos and vacant subdivisions uninhabited for miles, and miles, and miles, and miles of empty apartments.
Lesley Stahl: Why are they empty? I've heard that they have actually been sold.
Gillem Tulloch: They've all been sold. They've all been sold.
Lesley Stahl: They've all been sold? They're owned.
Gillem Tulloch: Absolutely.
Owned by people in China's emerging middle class, who now have enough money to invest but few ways to do it. They're not allowed to invest abroad, banks offer paltry returns, and the stock market is a rollercoaster. But 15 years ago, the government changed its policy and allowed people to buy their own homes and the flood gates opened.
Gillem Tulloch: So what they do is they invest in property because property prices have always gone up by more than inflation.
Lesley Stahl: And they believe it will always go up?
Gillem Tulloch: Yeah, just like they believed in the U.S.
Actually, property values have doubled and tripled and more -- so people in the middle class have sunk every last penny into buying five, even 10 apartments, fueling a building bonanza unprecedented in human history. No nation has ever built so much so fast.
REAL ESTATE IS CENTRAL TO THE CHINESE ECONOMY
Lesley Stahl: How important is real estate to the Chinese economy? Is it central?
Gillem Tulloch: Yes. It's the main driver of growth and has been for the last few years. Some estimates have it as high as 20 or 30 percent of the whole economy.
Lesley Stahl: But they're not just building housing. They're building cities.
Gillem Tulloch: Yes. That's right.
GIANT GHOST CITIES
Lesley Stahl: Giant cities being built with people not coming to live here.
Gillem Tulloch: Yes. I think they're building somewhere between 12 and 24 new cities every single year.
Unlike our market driven economy, in China it's the government that has spent some $2 trillion to get these cities built - as a way of keeping the economy growing. The assumption is "if you build it, they'll come." But no one's coming.
Lesley Stahl: Wow. This is really completely, totally empty and it goes up -
Gillem took us to this shopping mall that's been standing vacant for three years.
Lesley Stahl: Can I find this all over China?
Gillem Tulloch: Yes, you can. They've simply built too much infrastructure too quickly.
Lesley Stahl: But I see KFC behind you. I see Starbucks over there. I see some other very recognizable American franchises coming in here. At least they-- does that mean they have faith that this is going to ignite?
Gillem Tulloch: No, these are all fake signs. Just to get potential buyers the impression of what it might look like if they moved in.
Lesley Stahl: They're not real? So I see KFC didn't-
Gillem Tulloch: They haven't--
Lesley Stahl: Buy this space or rent this space?
Gillem Tulloch: No, they haven't.
Lesley Stahl: Starbucks?
Gillem Tulloch: No.
Lesley Stahl: They just put the sign up?
Gillem Tulloch: That's right.
It's all make-believe -- non-existent supply for non existent demand.
Lesley Stahl: Look at that. Swarovski. Piaget. They're hoping for high end too.
Gillem Tulloch: H&M. Zara.
Lesley Stahl: And it's all Potemkin.
Gillem Tulloch: Yeah.
It's surreal and it's everywhere. Like the city of Ordos in Mongolia built for a million people who didn't show up. And no, you are not in England. You're in Thames town -- a development near Shanghai built like an English village.
Gillem Tulloch: And it was finished, I think, around five or six years. And it must have cost close to a billion U.S. dollars. And you'll see, it's still standing there empty.
Lesley Stahl: Well, I heard that there is some industry there or some business, one business there.
Gillem Tulloch: Marriage.
Lesley Stahl: Wedding pictures!
And what's more uplifting than a wedding -- or 10? You can see these empty developments on the edge of almost every city in China.
WHAT ABOUT THE URBANIZATION?
Lesley Stahl: What about the idea that China is urbanizing? People are flooding into cities by the hundreds of millions. And that this really is a smart move: build the housing to accommodate the urbanization process.
Gillem Tulloch: Well, so people are being moved into the cities. But that doesn't necessarily mean that they can afford these apartments which, you know, cost $100,000 U.S. or whatever. I mean, these are poor people moving into the cities, so they're building the wrong sort of apartments.
And what's worse, to build all these massive cities, they've had to tear down what was there before, clearing rice fields and displacing by some counts tens of millions of villagers. On the edge of Zhengzhou, Gillem and I came upon a strange sight.
Lesley Stahl: I'm just watching what they're doing, these-- do you have any idea?
Gillem Tulloch: I think they're trying to recycle the bricks.
These villagers were salvaging what's left of their homes, bulldozed to make room for more empty condos, already encroaching in the distance.
Lesley Stahl: There are all these empty apartments over here. Can they conceivably move into those up-scale places?
NOONE CAN AFFORD IT SO THE BUBBLE BURTS
Gillem Tulloch: Most people in China live on about less than $2 a day. And these apartments probably cost upwards of $50,000 or $60,000 U.S. So it's very unlikely.
Lesley Stahl: What will happen to them, do you think?
Gillem Tulloch: I mean, they'll be forced to relocate somewhere. I have no idea where they'll go.
These are the immediate casualties of the building boom. And there's another problem: analysts warn that all this building has created a bubble that could burst.
Lesley Stahl: So if the bubble bursts, who's left holding the bag?
Gillem Tulloch: There are multiple classes of people that are going to get wiped out by this. People who have invested three generations worth of savings -- so grandparents, parents and children - into properties will see their savings evaporate. And then, of course, 50 million construction workers who are working on all these projects around China.
The prognosis of a bubble about to burst isn't only coming from financial gloom-and-doomers. We heard it from the most unlikely source.
Lesley Stahl: Are you the biggest home builder in the world?
Wang Shi: I think. Maybe.
Lesley Stahl: You may be?
Wang Shi: Yes. Only the quantity, not quality.
Wang Shi is modest, but his company, Vanke, is a $53 billion real estate empire, building more homes than anyone in China. He was born on the frontlines of communism, and joined the Red Army. But he secretly read forbidden books about capitalism, so that when China liberalized its economy, he rushed to the frontlines of the free market. Even he thinks today's situation is out of control.
HOW MUCH???
Lesley Stahl: Are homes in China too expensive today?
Wang Shi: Yeah.
Lesley Stahl: Here's a number I saw. A typical apartment in Shanghai costs about 45 times the average resident's annual salary.
Wang Shi: Even higher, even higher.
Lesley Stahl: What does that mean for your economy if it's just too expensive for the vast majority of people to buy?
Wang Shi: I think that dangerous.
Lesley Stahl: Dangerous.
THERE'S THE BUBBLE
Wang Shi: That's the bubble. So I think that's the problem.
Lesley Stahl: Is there a bubble?
Wang Shi: Yes, of course.
Lesley Stahl: There is a bubble and the issue is will it burst or not? That's the big issue--
Wang Shi: Yes, if that bubble - that's a disaster.
Lesley Stahl: If it burst?
Wang Shi: If it burst, that's a disaster.
To try and prevent the disaster the Chinese government decided to act. Heard of their one child policy? Since 2011, China has had what amounts to a one apartment policy, where it's very hard to buy more than one apartment in major cities. Because of this, prices plunged. The bubble was being tamed. And yet, the taming was creating all kinds of unintended consequences.
Lesley Stahl: Are many developers in debt?
Wang Shi: Yes, yes.
Lesley Stahl: And are many stopping development in the middle of projects 'cause they don't have the money to go forward?
Wang Shi: Yeah, that's problem. That's a huge problem.
A problem because the slowing down of construction led to a downturn in the overall economy. Unfinished projects dot China, and not just apartment buildings.
Lesley Stahl: Look at this. Can you believe it?
Analyst Anne Stevenson-Yang who has traveled across China showed us a giant project all but abandoned in the port city of Tianjin with concrete skeletons as far as the eye can see. The plan is to build a new financial district to rival Manhattan including a Lincoln Center and a World Trade Center, only taller. But it all seems frozen.
[Anne Stevenson-Yang: There's supposed to be a Rockefeller Center here.
Anne Stevenson-Yang: I hope they have a Christmas tree too. Skating rink.]
City officials told us everything stopped because developers want to build all the facades at once to match. But on the ground we heard a different explanation.
esley Stahl: Workers told us that many of these buildings haven't had any work done on them for weeks, months, as if the developers just don't have the money to go on.
Anne Stevenson-Yang: It's true. You see that happen first. The migrant workers will go home. That's often the first sign that the debt crisis is starting.
Lesley Stahl: The debt crisis?
Anne Stevenson-Yang: Well, when you stop paying your bills, then everything stops.
It could become a debt crisis because of the huge loans most of the developers took out. If they can't repay them, the whole economy'll seize up.
AND THE CONSEQUENCES OF A REAL ESTATE BUBBLE???
The government's great fear is that all this could lead to social unrest and that's not hypothetical.
Last year when home prices fell, it infuriated all those owners of multiple dwellings, who watched the value of their nest eggs plummet.
esley Stahl: And there's already been some demonstrations over real estate around the country.
Wang Shi: Yes.
Lesley Stahl: Have you had demonstrations against your showrooms anywhere? You're company?
Wang Shi: Often!
So often, Wang Shi shudders to think what would happen if the bubble actually burst.
Wang Shi: If that bubble break, that maybe who know what will happened? Maybe that-- maybe--maybe the next Arabic Spring--
Lesley Stahl: Arabic Spring. You mean people coming out and demonstrating.
Wang Shi: Hmmm.
Lesley Stahl: A lot of economists say that it's too big for even this government to control.
Wang Shi: A ha. I believe that top leaders have enough smart to deal with that. I hope!
Lesley Stahl: You're doing this.
Wang Shi: But that's uncertain.
Meanwhile, people who can afford it are still buying as much real estate as they can. They're even finding ways around the one apartment restriction in big cities. Can't buy in Beijing? Just cross the city line and the boom is in full swing. Flyers advertising new projects, potential buyers crowding buses to see new construction and new owners line up to register their new apts. Like us in our bubble, they just don't believe the good times will ever end.
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US housing market Trillion times worse than Enron....
http://youtu.be/vpCL3nCJ14E
Somehow the MSM missed this story.
It doesn't mean the developments won't, eventually, have owners and habitants, just very different ones that own them now.
That's how the US built railroads; sucker in one set of investors, build some track, go bankrupt, the new corporate entity buying up the assets of the old but, mysteriously, having a similar management structure as the old, the interests of stockholders swept away in court.
So the China build-out gets financed on the broken dreams of the middle class; duh, welcome to my world. What's the Chinese characters for "the red pill"?
The end result of the US railroad system is perhaps the best BTU of Ton per value on the planet in tune with USA truck and canal transport.
Tie that in with the USA requirements for China on intermodal ship transport.
Cough, Cough China.
Per my view we in the US are atop the Ponzi scheme
Lords of the flies, the Ponzi only lasts as long For me as long as I care.
Sorry your view of how you wished it to be does not correspond to reality.
Because I love you I will do my best to protect you as I see it.
Physically and psychically, genetically the masses do not have this ability to stand up and deliver or understand.
I do care. I have the power and will exercise it to my best ability.
We have decision points, the secret is there is no scecret: only options, decisions, those of us who band together, let them go, kill the stupid MO FoS or find a way to save em will be the last ones standing. The truth is: nobody knows the answer, few have a clue to the questions, so many looking for direction.
These are the people I follow.
As the systems crash, more and more people either don’t care, care so much, or are in the middle, kill the rich. For me I don’t care.
Some were forged to take up the sword, to slice and dice.
Others to die or be protected.
The truth of human relationships over a long historical context cannot be refuted per the data, that has never stopped us.
How we think about things matters.
Chew, Choo.
The truth of the matter of my housing situation is that several months ago I left a nice apartment in one of the best places on the planet to take over a house on what many here perceive to be a world of danger.
After careful review of the law and such, having selected a good house candidate I made a move and saved a beautiful house from destruction because of neglect of dispossession.
Long may you be possessed.
Dispossession is that state of being whereby humans may give it all away because they have it all and know it.
A state of being.
After I finish the kitchen, will share the pictograms with Zero Hedge.
Takeover!
Keep talking to yourself Loki Boy.....
They learned from what happened to New Orleans and Fukushima. These are strategic backups in case of flooding or earthquakes.... no more relief efforts, just move to your new pre-built cities.....
Or as the Japanese would have it, Just-in-time-cities.
They have a shelf life of about 50+ years.
Meanwhile back at the ranch Rocky. In this US of A some of us who see empty houses in need or redemption will take them over.
1900 to 1930 abandonnments, artpieces above most McMansions in terms of basic BTU per SQ/FT ability to live without the new world brand of how you should think of how things work.
As the moose tosses your sorry ass into the air, keep you leather helmet on tight.
Ground control to major Tom!
Just fucking with you all. Or not.
Sorry Leslie Stahl & 60 minutes loses a ton of what little credibility they/she had. This is not 'news' (this 'story' has been out there for years --- by a variety of sources)....... it is nothing more than infotainment for the political majority of the USA .. led by Sweden's Crown Prince of Peace who won a Noble Peace Prize .... for what?
Leslie Stahl & 60 minutes has a ton of credibility to lose? I haven't watched that propaganda once in 25 years.
They can suck the peanuts out of my asshole.
On the bright side, they are going to have AWESOME sets for The Walking Dead seasons 4&5. Hell, maybe this will even get a 28 Months Later up and running!
I can see the Chinese taking on thousands of US retirees to accommodate them in these ghost cities while providing them with medical care etc. at a fraction of the cost of what they would cost the government in the USA.
Seriously though, what do you expect the Chinese to do?
They have a choice between paying welfare or providing jobs regardless of whether these ghost cities fulfill any valid economic criteria.
When the free market is pushed aside in both China and the USA the results are what they are......potentially chaotic.
And there you have it folks. The banksters fleeced the United States citizen to build empty cities in China.
Burn it down. Burn it all down.
Basically, China shares more with Spain than just national colors.
For a second I hoped I was logged into the Onion.... Oh dear god this can't be real.
Miffed;-)
Once again, another "investigation" that fails entirely to understand how development works here.
When farmland is sold, or housing redeveloped, the residents get a very fat relocation package that consists of free houses and cash. Because of the danwei system, the majority of people own their property outright. It was either given or bought at a token amount. The current generation is the one that's suffering, due to the lack of free housing, or they are living in places where they are not residents for work or whatever other reason. Go back to their hometown though, and their family has property.
The whole "empty city" thing is due to outsiders speculating en mass on new developments. Jacking up the prices above what those who are more likely to live there are willing or able to pay for it. Hell, there was a "ghost mall" nearby, which had been pretty empty for a few years, just went there a few days ago for the first time in a long time and it's booming. Parking lot crammed full, people everywhere. When 5th ring was built, people laughed and said it was a failure, ditto for 4th and 6th rings. Now, however they are cram packed. Idiot economists are so desperate to understand how things work that they grasp at any potential parallel they can think of, and most of the time, they are stupidly wrong.
Unfinished projects just mean the company's investments go poof. It's no longer possible to prebuy property that's not basically finished. Project goes poof, it's sold at auction to a company that can either use the land or complete the project. Simple as that really. And in the meantime, it acts as a great wealth transfer from rich investors down to the workers. If idiots swarm in to snap it all up, and then take a bath, that's their problem. If they took out loans, the shit will just be seized and auctioned off for what it can get. There's no such thing as non-recourse here. If you want to look for a sign of a popping bubble, start looking at how long city property sits unsold on the market. Normal units, not luxury ones obviously. Put a place up, and you'll get 5-10 buyers wanting to see it every day for a week at most, then it's sold. Usually with a slight discount if it's all in cash. It's not nearly as dire as the idiots in the west want to pretend it is.
Laomei makes about the only accurate comments so far here. Its interesting that ZH continues to call this old story to the surface when it has been addressed by facts as Laomei points out.
The displaced farmers are the winners here as they get a nice relocation package for land that was basically given to them. No one is forcing anyone by gun (Chinese cops don't carry guns!). There are isolated cases where farmers don't want to give up their land for roads or other state or private construction. But because of the money paid to them, this is pretty rare and when it does happen, these people actually often have more say that someone in USA.
http://www.reuters.com/article/2010/06/08/us-china-cannon-idUSTRE6570QY2...
Take a look at this article about a farmer who fired a homemade cannon at government officials to attempt to keep them off his land. Now, they eventually took his land I think, but he survived the incident, was paid money, and is not in jail.
Try this in the USA and your "homemade" cannon fire will be returned with enough firepower to turn you into a flaming ball of shit. The press and the populace will label you a crazy or a domestic terrorist.
Laomei is correct that when a project goes bust, those who invested lose out. Its the old saying, investing is all about risk. This is no doubt a game of hot potato, but is that any different then it ever is?
Developers carry the risk while building the projects. Before the projects are even finished, they have transfered that risk to individual buyers. Most of these buyers are not really "investing" with the hope of flipping apartments. Many are buying with the plan to give these apartments away to their children or grandchildren. It is important to remember that these apartments are not built-out. They are empty concrete shells that can last for 50 years.
Those that are flipping have been winning, prices are doubling and more and buyers are still lining up. Ya, its the game of hot potato, but that is life. When the game ends, it is not like those playing it did not understand the rules. They understand very well.
The new laws going into effect will make flipping much less profitable. Amazingly, at least in the next few weeks, the property market will be red hot with hot money flowing in to try to scoop up apartments before the April 1 changes go into effect.
What will happen to prices after April 1? Will they fall by 50%? 100%? very unlikely. At best, I think they will stop raising.
Will China see a 50-100% drop in prices? The answer is simple, Location, Location, Location.
Build a city out in the middle of a desert and unless you can offer something special like prostitution and gambling, then who the hell wants to live in a desert? However, build an apartment complex next to a major university and nightlight district and you will most likely see continued strong demand.
So it is simple, Location, Location, Location. That will determine the winners and losers as speculative demand starts to fall off. The game of hot potato will end and there will be some winners and some losers.
And life will go on....
Can't eat a luxury villa.
"Before the projects are even finished, they have transfered that risk to individual buyers"
Not true anymore. Once upon a time it was possible to sell property before it was finished. That regulation changed a while back. It has to reach a certain state of completion before it's allowed to be sold. Developments that fail are auctioned off. Most developer loans are now backed with financial products and the developer loans, while paying good rates, have very high starting amounts. Typically in the neighborhood of $160k just to get in on them. If you can toss that kind of cash around and not care about the money coming back for 2~3 years, then no one will really feel sorry for you if you lose it.
Chinese "real estate" development should not be viewed through Western filters. In China, real estate development is the mechanism of distributing what a Communist Govt takes from its people, steals from its people or deprives its people of. Should it be a "bubble", and eventually collapse, Govt has a different concern and subsequent need than in the West. For China, this very important mechanism to distribute monetary power amongst the elite will need to be replaced or the Government implodes.
Chinese "real estate" development should not be viewed through Western filters. In China, real estate development is the mechanism of distributing what a Communist Govt takes from its people, steals from its people or deprives its people of. Should it be a "bubble", and eventually collapse, Govt has a different concern and subsequent need than in the West. For China, this very important mechanism to distribute monetary power amongst the elite will need to be replaced or the Government implodes.
My big question is even if they do ever move in, how do they get around? I didn't see anything type of public transportation or parking, just a big road.
I wonder what will come of the cities built for Fukishima since they were not used?
Maybe they can store used nuclear fuel in all the bathtubs.
Anyone with a brain already knew this.
But look how CBS are framinig it - If the Chinese Housing bubble bursts - THAT is why we are all going down the chute. It's not our fault.
I'm long chinese drywall :)
Like us in our bubble, they just don't believe the good times will ever end.
We will all "raff out roud" as tanks and armored vehicles roll over the bodies in the streets as civilians go crazy during this time of epic economic and financial collapse in the communist state. That is until we recognize the DHS logos and see the gutted mall shops with "engrish" names.
Too bad that people have to stand on the verge to realize that things are so fucked up. Ignorance is a bliss, ignoranc is a bliss...
At least in America, when government sponsored the construction of future slums, we let the poor move in. China is now discovering the penalty for not doing that, i.e., the owners can never get out of their investment.
Talk about illiquidity. Tell me you wouldn’t rather own gold than this crap Warren.
Oh yeah, this is so Bush’s fault. I do not understand how did he manage to ruin this country that much?? I mean we all say that Obama is not a great President, but has it ever occurred to you, that the kind of USA he received was ruined already. Bus with his tax and benefits reform made people broke. He made people turning to instant online payday loans, making credit cards empty. A lot of us are going through foreclosures! Why…because our mortgage system is terrible. Well thanx god mortgage regulations has been recently changed. Maybe something is going to changed finally.
It must be nice to live in a world where things are so simple. Bad things happen .... the boogey man did it ... er I mean the shrub did it!
Take the red pill. THINK. Follow the money, the wormhole goes deeper than you can imagine.
Ever heard of the New World Order, Agenda 21, Bilderberg, World Bank, IMF, Brave New World, Zionists, Club of Rome, Illuminati, Rothchilds, Rockefeller, Kissinger, Brzezinski, Alan Watt or David Icke? Read up on them for a few answers.
utter propaganda.. China wants to move 400 million into cities in the next 10 years.
400 million!
yes, like Geithner wanted to pay his taxes and Obama wanted to close Guantanamo.
You see this out in the countryside more and more lately. It's called Xin Nongcun. Farm land is being better organized, scattered homes are being knocked down and rebuilt in a central location, typically the part of the village with the worst land. This means that everyone gets a nice big new house, with actual utilities and better services. While the land itself becomes more available for more efficient farming or exploring larger ventures. It's city-building and it's pretty cool to see happen before your eyes.
The standard build is something called "cang fang". Typically 3 stories, with the top 2 being residential. 1st floor can be used for just about anything. Garage space, retail, storage, whatever. The trend is to build all these up, then the 1st floor is rented out or the owner goes into business for themselves. 1st phase is normally construction materials or selling items of immediate need. Once that stage of development has been finished up, there's a shift to more traditional retail. If the 1st floor business is a success, a family typically will rent out the 2 floors above and buy a new place to call home. If the new town is growing quickly (as wages increase and jobs appear), there's a massive payday when it comes time for redevelopment into larger residential. And it's pretty much risk free the whole way for the former farmer.... who still has land to their name.
At the same time, yes, the cities continue to explode in population. And the boundaries of the cities continue to expand. Having property well within the boundaries is high in demand, especially if it is unfinished. And there is always always always demand for rental.
Another article that misses the point. China is an autocratic country devoid of democracy. This is not a "real estate bubble", it is the very visible mechanism of State controlled graft and apparatchik compensation in a communist country undergoing growth. The Govt owns the land. The Govt lets the contracts, either directly or indirectly but funded from State controlled banks. With more growth, the apparatchik community expands and needs to be fed, individually, ever more so to keep up with their "private" cronies.
China builds ghost cities to keep the corruption flowing. But is it really corruption - or just the necessary channels of doing business in a communist country UNDERGOING GROWTH?
Notice that there is no feedback loop in constraining "ghost cities". Pollution doesn't constrain. No inhabitants offers no constraint. The Chinese middle class - just who are these classes of "slaves" who are funneling their money into a different kind of "savings bank" that prohibits movement of wealth and recaptures, for the government (after all, they own the banks and hence these builders) what is perceived to be freedom through savings. This is all about how to funnel money to the community of cronies and their government autocrats.
China is not a Western democracy. Stop analyzing like it is one. Chinese autocrats don't care about ghost cities - it is the cost of maintaining control until...
The UN has no problem with gray and soot in China just green in US....Comrade Bankers. Starbucks Whorehouse would be more likely...What's Starbucks going to do about it? Get an army of yuppies to shake their i-pads at the outrage?
Communists strike again.
The country or the jew bitch?
Once Tokyo has been fully FUKU SHIMADEDDD, all the Japenese are going to move in to the new cities and every thing is going to be all
right.
Wait, can I buy one?
I thought the disconnect between US citizens becoming homeless and houses sitting empty was appalling when considered from a REALITY point of view. (The reality that people need a roof over their head)..
BUT this is INSANITY writ LARGE.
Imagine all the poor people in China and then imagine these empty places.
The fact that this can even be considered should wake every person up to the evils of state controlled capitalism (which is the only kind there is).
There is DEMAND for housing in China; however, there is no QUANTITY DEMANDED, because there is no DISPOSABLE INCOME to support the Chinese government's price. The market is artificial as the housing investment was driven by government control.
For those who don't know, the Chinese are IDIOTS...
The Chinese are NOT idiots, but are excellent breeders. Human life has been cheap under an autocracy governed society with a Confucious philosophy. This environment causes obedience, especially after the authorities run over a few disrespectful citizens with tanks.
In a relatively closed economy protecting one's savings from purchasing power erosion by investment in real estate is not a bad move. Any property in a country like China can be expropriated by the government as a result i can see how on the margin it may be more procedurally difficult for the government to expropriate a condo as opposed to gold. If the condo purchases are largely debt-financed then it is a clear problem for China and it is a bubble.
This is too easy. Sex is the answer. Porn made VCRs, porn (not pets.com) brought the average schmuck money to fuel the dotcom boom, the search for porn made Google. Move all the hookers into these ghost towns, let the party begin. How dumb are these politicians, CEOs and finance wizards not to know this? Duh.
china is turning into brick and concrete bills of U.S. dollars, because soon will not be worth anything.
"hear what one of the richest women in china has to say about...sponsored by viagra"
not bad.
anyway its a communist government. they can just bailout the developers just like the US bailed out the banks.
fa-la-la.
rich get richer - poor is already poor.
All made with the cheap copper piping and toxic drywall that we have banned here in the west
2 trillion to build those cities? A bargain, America's "Community Redevelopment Agencies" have far more debt than the Chicoms, and they're not so concerned about "paying" occupants either, in fact state financed alien & immigrants occupants are far more reliable voters, and much more willing to vote for more debt.
I wonder if the Chinese government has set Capitalism up for a big failure to turn the Chinese masses against Capitalism, and to maintain power, and as an effort to bring down the United States? Just a thought. I bet it's accurate though. Show the Chinese people that Capitalism is bad by getting them to make bad investments, and lose all there money? We just blame the individual in the US, but the Chinese will view the failure on a larger scale.
I wonder if the Chinese government has set Capitalism up for a big failure to turn the Chinese masses against Capitalism, and to maintain power, and as an effort to bring down the United States? Just a thought. I bet it's accurate though. Show the Chinese people that Capitalism is bad by getting them to make bad investments, and lose all there money? We just blame the individual in the US, but the Chinese will view the failure on a larger scale.
doubt so chinese people love to gamble and make money.
those who are rich in china will probably stash it away somewhere.
we're not dumb. what we siphon we keep somewhere.