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Where The Chinese Liquidity Tsunami Is Going

Tyler Durden's picture




 

Unlike their American counterparts in the world of "what to do with all the easy money sloshing around the market," it appears the Chinese learned their hard lesson in the collapse of stocks in 2007/8. As the following charts make abundantly clear, the (hidden) inflation that trillions of dollars worth of central bank largesse is creating has piled into real estate markets in China and not in stocks - a problem for the central planners who know the potential for social unrest from a nation unable to afford housing (especially in light of its reform policies). Chinese stocks are -13% YoY, while Chinese real estate is +20% YoY. In the US, of course, we have an always-willing-gamble public more than happy to throw their marginal dollar at all-time high equity and real-estate prices.

 

2007/8 appears to have taught Chinese investors a harsher behavioral lesson...

 

Than Americans...

 

As The Chinese are piling everything into real estate...

 

So what next? Does the PBOC (and Fed) really think they can dis-inflate these bubbles with no untoward consequences?

 

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Tue, 01/21/2014 - 18:14 | 4353309 johngaltfla
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And with that real estate bubble about to pop in conjunction with their muni-bond bubble and in concert with the coming implosion of Puerto Rico and re-animation of the American Municide the SECOMP at 1500 doesn't seem so insane. FWIW, great news:

Most community banks in our region are bailing out of the mortgage business thanks to Dodd-Frank. Think about the implications on the US economy and the Housing Bubblicious 2.0 which will be popping here again soon (just like 1936).

Tue, 01/21/2014 - 18:22 | 4353339 TruthInSunshine
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There is so much debt, leveraged to such insane multiples, baked into so many asset classes, thanks to Federal Reserve monetary policy of the last 5 years, that the next implosion, amidst an economy declining rapidly in real terms, will truly & genuinely make 2008/2009 feel like an appetizer.

Tue, 01/21/2014 - 18:27 | 4353360 outofideas
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How is their farm land priced vs city dwellings? Heck, can you even buy farmland in China?

Tue, 01/21/2014 - 18:31 | 4353382 CheapBastard
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More infected in fresh wave of China bird flu - WHO

 

LONDON (Reuters) - Another 23 people in China have been infected with the H7N9 strain of bird flu in recent days, the World Health Organisation (WHO) said on Monday, adding to at least 24 new cases last week and confirming a fresh surge in the virus.

With many people travelling within the country for upcoming Chinese New Year celebrations on January 31, the United Nations health agency also said people should be aware of the risk that flu viruses might spread more widely.

 

 

http://news.yahoo.com/seven-more-china-bird-flu-cases-fresh-wave-1055015...

Tue, 01/21/2014 - 18:48 | 4353427 johngaltfla
johngaltfla's picture

Yes, you can invest in farmland in China.

Of course arsenic and other heavy metals in the topsoil are free.

Tue, 01/21/2014 - 18:54 | 4353439 BringOnTheAsteroid
BringOnTheAsteroid's picture

The line between heavy metal mining and farming is a little blurred in China.

Wed, 01/22/2014 - 08:12 | 4354881 strangewalk
strangewalk's picture

In large swaths of China today, cancer is doing what the bubonic plague did in middle Europe. CCP statistics greatly downplay this reality and the western press uses its numbers. When I taught English in China it seemed every one of my students had a friend or relative that had died or was dying of cancer, and it's worse in the countryside than in the cities. One of my students offered to give me a small farm, but when I did research on the area I discovered that half the people in the nearby village were dying of cancer. 

Tue, 01/21/2014 - 19:38 | 4353588 logicalman
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I doubt anybody has a clue who truly 'owns' what and how many promises on promises are stacked up on top of any of it.

It's all total bullshit, held in place by corrupt thuggish governments and the bought and paid for MSM

Fuck, I hate this shit.

There's not an ounce of honesty in any government or the financial system.

 

Wed, 01/22/2014 - 01:50 | 4354584 FreedomGuy
FreedomGuy's picture

In an economy everything is connected to everything whether the connection is distant or close. There is no real economy anywhere in the world. Everything is based on government-Fed-central banker interventions in monetary policy. Add to this direct legal intervention in everything from tariffs to wages and it is pretty complete manipulation and torture...but not control. Control is an illusion but influence is a reality.

It is why no one can accurately and quantitatively predict the economic future. As a rule of thumb though, anything based on lies will fail in time.

Tue, 01/21/2014 - 18:27 | 4353346 knukles
knukles's picture

But wait, this all makes sense.
When all the people go fucking berserk about whatever and start protesting about their crowded living conditions there'll be some nice new empty towns for them to be jam packed into asshole to elbow.
Pacify 'em for a few weeks....
Buy some time
Long term strategies.

Tue, 01/21/2014 - 18:29 | 4353370 TruthInSunshine
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dt

Tue, 01/21/2014 - 21:00 | 4353864 ReactionToClose...
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sorry if I appear dense .... this is the first I have heard/read:>>>>

"Most community banks in our region are bailing out of the mortgage business thanks to Dodd-Frank. Think about the implications on the US economy....."

Would agree that if that is the case (americans do not know what Dodd Frank nor FACTA are ....<<< ...in fact I know many in the securities industry who have never heard of FACTA [yup - a CEO of a securities broker-delaer is unaaware of FACTA ...because his prime broker wants him that way ...let alone Dodd-Frank ,,, both are nothing but 'moats' for the TBTF banks ...especially FACTA....<<<< ZeroHedge/Tyler Durden.....you should devote an entire series to the corruption & idiocy of FACTA):

please "johngaltfla" expand upon your anecdotal insights or experiences ...please>  I have viewed Dodd-Frank (as well as FACTA) as crony capitalism/my highly paid lobbyist did the job for us slow destruction of the free market system, at least in financial services.    There should be a TEA Party revolt by all the mid-tier/small financial services as to what was jammed down everyone's throat under the guise of preventing another 2008.  Alll  that happened is the smaller fin svcs firms got 'Corzined'

Where is ZeroHedge and all the other bloggers about this implication?  This is a natural for ZH versus Big Frame Blog....

Tue, 01/21/2014 - 23:42 | 4354348 TheReplacement
TheReplacement's picture

Why don't you write something and submit it.  If they post it I'm sure others will look into too.

Tue, 01/21/2014 - 18:16 | 4353311 wallstreetapost...
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Burst bubble!... burst.   There isn't enough bitcoins around to satisfy all the capital flight demand coming in China.

Tue, 01/21/2014 - 18:18 | 4353323 Yen Cross
Yen Cross's picture

 The PboC will, likely leverage future costs. That's why the yuan has been so "inexplicably abused" by the PBoC as of late.

Tue, 01/21/2014 - 23:45 | 4354355 TheReplacement
TheReplacement's picture

Wait until they block the BTC "protocol" at the great firewall and the only way to buy BTC is through certain banks, for a fee and a tax. 

 

Gimme a J

Gimme a P

Gimme Dat!

Tue, 01/21/2014 - 18:24 | 4353350 CheapBastard
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I met a lady from Indonesia who is furious with all the Chinese whom she blamed for pushing up their housing prices by 300% since about 2006 making 'an affordable place' unreachable for most locals.

Bottom line is the flood of PRC money reached far out globally, not only shoving RE prices up at home in China.

Tue, 01/21/2014 - 20:35 | 4353780 Freddie
Freddie's picture

Canada, Australia (?), NZ (?), California and probably a few others.   Hopefully they will go to Vegas as soon as the water runs out.

Tue, 01/21/2014 - 22:13 | 4354130 Jafo
Jafo's picture

You can take that question mark off Australia.  Twenty percent of homes sold at auction here in Sydney are going to non-resident Chinese.  These guys and gals in China are desperate to get some of their assets out of the reach of their masters in Beijing.

Tue, 01/21/2014 - 23:48 | 4354357 TheReplacement
TheReplacement's picture

Even worse.  Detroit is probably seeing a housing bubble because a chinese girl can collect house in Detriot for the price of a pair of shoes (remember that one?).  Could probably pickup a whole block of Detroit for a cartion of cigs if it wasn't for the fake money Chinese.

Wed, 01/22/2014 - 00:06 | 4354399 Chief Kessler
Chief Kessler's picture

I've got a fountain of hot liquidity just waiting to be plunged into Asian markets

Tue, 01/21/2014 - 18:26 | 4353359 frankTHE COIN
frankTHE COIN's picture

Japan was the 1st that showed what happens when both those Bubbles Burst.

Tue, 01/21/2014 - 19:07 | 4353478 css1971
css1971's picture

Oh I think the bursting of inflated credit bubbles goes way back further than Japan in the 1980s.  I think we can safely go back hundreds if not thousands of years on that one.

Tue, 01/21/2014 - 18:29 | 4353371 Peter Pan
Peter Pan's picture

It's not the prices of real estate that scares so much as the debt that is created in the process of generating those high prices.

When it sours it will be like releasing a tightly wound up barbed wire coil.

Tue, 01/21/2014 - 18:29 | 4353377 RabbitChow
RabbitChow's picture

I thought the Chinese were buying gold. Busts my bubble.

Tue, 01/21/2014 - 18:47 | 4353422 Crisismode
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The 1% Chinese are buying gold.

The peasant Chinese are buying gold.

The bourgeois Chinese are buying real estate.

 

 

Tue, 01/21/2014 - 18:32 | 4353387 pragmatic hobo
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it's just matter of time before chinese companies institute their own 401k plans ...

Tue, 01/21/2014 - 18:38 | 4353394 Rainman
Rainman's picture

Seems as good a time as any to cue up Larry Lang ( circa 2011) once again

" Every province in China is Greece "

"http://www.mining.com/every-province-in-china-is-greece-larry-lang/

 

Tue, 01/21/2014 - 18:57 | 4353443 teslaberry
teslaberry's picture

china-china-boh-bi-na bana-na-nana-fofina chee-chi-choh-chee-chow--ch-china!.

 

Tue, 01/21/2014 - 19:10 | 4353486 Bunga Bunga
Bunga Bunga's picture

4 trln Dollars are leaving China for Caribbean offshore haven:

 

http://www.theguardian.com/world/ng-interactive/2014/jan/21/china-britis...

Tue, 01/21/2014 - 19:32 | 4353567 reader2010
reader2010's picture

"Everything will be OK in the end. If it is not OK,  it's not the end."  - John Lennon 

Tue, 01/21/2014 - 23:50 | 4354362 TheReplacement
TheReplacement's picture

Don't like Lennon but that one is pretty good.

Tue, 01/21/2014 - 19:51 | 4353642 darteaus
darteaus's picture

And in piles of copper - the poor man's silver.

Tue, 01/21/2014 - 19:54 | 4353653 starman
starman's picture

To a state near you! Good luck with that!

Tue, 01/21/2014 - 19:56 | 4353658 OC Sure
OC Sure's picture

The purpose of centralized banking is not to make the economy work; it is for whomever gets the hot money first to steal from those who do.

Tue, 01/21/2014 - 21:29 | 4353975 The Wisp
The Wisp's picture

So The FDIC Guarantees your Money... They Just Don't Guarantee That It Will Be Worth Anything

Tue, 01/21/2014 - 23:37 | 4354327 joego1
joego1's picture

Its OK we know all the locals on my ridge.

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