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Did China Just Crush The US Housing Market?
A few days ago we finally closed the door on any argument who the marginal buyer in the US luxury housing segment was - the answer: Chinese oligarchs, scrambling to launder their "hot" domestic money abroad (as we predicted first two years ago) and now that Switzerland is no longer a safe offshore venue where one can park cash, they picked US luxury housing as the best money laundering alternative.
This means that far from indicating a recovery, as the recent surge in the high end of the US housing segment had long been touted, all the relentless move higher in ultraluxury properties prices was simply a recycling of China's hot money, which unlike in the US, never made its way into the Chinese stock market (explaining why the Shanghai Composite has barely budged in years) and merely ended up in US real estate. If anything, this is simply another confirmation of the epic capital misallocation, and the complete lack of "trickle down" resulting from failed global central banking policies.
So now that the "who" has been answered, just one question remained: "how?"
How did millions of Chinese "buyers" manage to get tens of billions of yuan or dollars out of the mainland - a country which as is well-known has strict capital controls when it comes to individual and corporate offshore outflows? Under Chinese law, citizens are allowed take only the equivalent of US$50,000 out of the country each year: hardly enough to buy a storage closet in any of New York City's Central Park West duplexes.
Today we learn the answer and it has to do with officially sanctioned "money laundering" services by not one but two of China's largest banks: Bank of China and also Citic.
As Hong Kong's SCMP reports, A day after Bank of China (BOC) was accused by China's state broadcaster of breaking foreign exchange rules by helping people take money out of the country, it has emerged a second state bank has also been offering the service.
And the biggest irony is that Citic is ultimately controlled by none other than the "State Council" or China itself. In other words, while China was prohibiting the outflow of hot money with one hand, with the other it was providing the very services it had previously forbidden!.
Industry sources told the South China Morning Post yesterday that China Citic Bank - controlled by the Citic Group, which in turn is directly controlled by the State Council, China's cabinet - also facilitated the movement of currency overseas, including Hong Knog. "It is definitely not an illegal business," said one source.
"Both BOC and Citic Bank have been able to do this business only after they got approval from the Guangzhou branch of the People's Bank of China. So the PBOC definitely knows what the business is about," said the source, who declined to be named as he was not authorised to speak to the media.
"If there is any problem, it should not be a problem about whether this business is legal or illegal but more about how exactly the business is done, especially about internal risk controls and customer background checks at those banks."
On Wednesday, CCTV aired footage showing an employee of a BOC branch in Guangdong coaching an undercover journalist on how to channel large sums of money overseas.
CCTV accused the bank of "blatantly offering money laundering services" and fabricating information through its money transfer platform Youhuitong.
BOC said the Youhuitong service was part of a legal pilot scheme launched in 2011. It said the CCTV report "deviated from the facts" and had a "biased understanding" of Youhuitong.
What is disturbing is the implication that the PBOC not only was aware of these secretive and law-breaking deals, but was effectively encouraging them:
On the sidelines of the Sino-US Strategic and Economic Dialogue in Beijing yesterday, PBOC Governor Zhou Xiaochuan said the central bank would need more time to investigate the situation.
Analysts cast doubt on whether such a scheme that allowed for free currency exchange could exist. "The government is very concerned about hot money flows," said Teo Weechoon, a forex analyst at Nomura in Singapore. "If there was a pilot programme like this, I don't think the limit would be much higher than it already is."
Industry sources said BOC and Citic Bank were chosen by the Guangzhou branch of the central bank in late 2011 and late 2012 respectively to join the pioneer programme, which was part of Beijing's efforts to better manage its huge foreign exchange reserves - the world's largest at over US$4 trillion.
And sure enough, where two of the largest Chinese banks were involved, many other were sure to follow: "a report by the official Shanghai Securities News yesterday said China Construction Bank offered similar services." We expect to learn soon that virtually every domestic bank was breaking regulations, with the PBOC's blessing of course, and allowing residents to quietly transfer their funds from China to the US, London, Zurich and any other venue where Chinese oligarchs wanted to park their cash.
Finally, "why"?
Well, from the individual's standpoint taking money away from China's corrupt system and "investing" it in the US housing market certainly seems like far more safe proposition.
But why would the PBOC agree to quietly bless this activity which it has, at least openly, blasted vocally in the past?
Simple - to keep inflation in check.
Recall that China is a country which creates nearly $4 trillion in bank deposits every year. Also recall that back in 2011 China nearly chocked when inflation briefly soared out of control, leading to sporadic "Arab Spring" type riots in various cities. And since China simply can not reduce the pace of its loan creation at the macro level without crushing the economy, what it needs is to find outlets - legal or otherwise - that permit the outflow of funds.
Which is why it is not at all surprising that as SCMP reports, the scheme was launched in 2011, just as China's scary encounter with soaring inflation was unfolding and Beijing needed a fast way to solve the overabundance of domestic liquidity. Basically at that point the central bank agreed to keep its eyes shut as wealthy oligarchs transferred funds to developed world nations, something the US government and NAR were delighted by as it kept real estate prices (if only at the very top) soaring, dragging the entire housing market higher with them. Furthermore recall: the one thing the Fed has wanted more than anything for the past several years is inflation. And since the US economy is nowhere near strong enough to create the kind of inflation needed, with the bulk of the Fed's reserves ending up in the capital markets and the latest and greatest credit bubble, the Fed would be more than happy to import some of China's inflation from it, even if that means a housing market which at the upper end is no longer accessible to anyone but the 0.0001%.
Indeed, this summary explains everyone's intentions to keep the scheme afloat for as long as possible, at least until CCTV busted it and laid it out for all 1+ billion Chinese, most of whom are not oligarchs and can't take advantage of the PBOC-sanctioned loophole.
So what happens next? Assuming there is the anticipated resulting backlash and crackdown on Chinese banks, which will finally enforce the $50K/year outflow limitation, this could well be the worst possible news not only for Chinese inflation, which suddenly - no longer having a convenient outlet for the unprecedented liquidity formed in the country every month - is set to soar, but also for the ultra-luxury housing in the US.
Because without the Chinese bid in a market in which the Chinese are the biggest marginal buyer scooping up real estate across the land, sight unseen, and paid for in laundered cash (which the NAR blissfully does not need to know about due to its AML exemptions), watch as suddenly the 4th dead cat bounce in US housing since the Lehman failure rediscovers just how painful gravity really is.
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The Chinese ferners buying in Cali are 100% cash.
Got a cash offer for my house a while back, with assurances I could continue to live in it.
Scared shit out of me. Didn't even respond to it.
If that's what's going on I'll be sitting tight until the storm is over, thanks.
I would have jumped on that faster than Elton John would jump on Mikey. Ask Mikey; he'll eat anything!
Exactly. And that is why all this is being overseen and sanctioned at the very top of the ChiComm command economy. The reigning leadership are individually up to their eyeballs in this, taking kickbacks from the shadow banking segment (which is probably 50% of all financial dealings in China) and having vast hidden investments of their own.
This cannot continue nor was it ever intended to. It is economic rape. China is doomed. The country will probably be bankrupt inside of 2 years. And the leadership, they will have vanished to their vast wooded estates in Washington state and Canada never to seen nor heard from again, except maybe as local warlords.
But that little drama will be but a side-play of the most profound event the human species has ever witnessed; the implosion of the entire current global economic system and the utter end of globalism.
most profound event the human species has ever witnessed; the implosion of the entire current global economic system and the utter end of globalism. should be quite a show
Money is moving out of public debt and into private assets. Tell tale for sure.
This is like when them folks on Phuket island saw the Pacific receeding.
CrazyBob - Yep, doing it.
If the dollar crashes their US RE crashes along with it - cannot separate the two.
Correct. However, they now hold something tangible vs a lot of paper.
Hahaha, fuck the Chinese government. If the Chinese think that's an opaque bureaucracy, just wait until their house gets foreclosed in a non-judicial state, in particular California, where most of the Chinese house purchases have been.
This was a setup from the beginning. The Chinese are going to lose their asses, just like the stupid Japanese did in the early 1990s after their US real estate binge in the late 1980s.
I am Chumbawamba.
So true. I remember reading Rising Sun by Michael Crichton and being concerned about the message. Now I wish he were alive to edit it for our modern dupes who didn't learn from history.
Miffed;-)
Miffed, I'm afraid that the only thing we learn from history is that we don't learn anything from history
Mark Twain said: "History doesn't repeat itself - at best it sometimes rhymes"
Fuck, I'd settle for a Haiku about now...
Fraud is boiling
No Rule of Law
Bankster heads wil be rolling
The only thing I remember about Rising Sun were the missing panties.
I've been saying that for years. China is being setup by the best money changers in the world. Those who reside in London and New York.
We (America/England) built the factory (China). We milked the factory. And when the time is right, the factory will be sold off in pieces or bombed.
That was the model they used for the US. Rinse, Repeat.
It's only the"0.1%" of the PRC's populous who will be effected. Now move along.
0.1% of a lot of people is still a lot of people. And they'll be all the people at the top, with connections everywhere.
Scale, baby. We're all about scale now. All the falling-down that's coming our way is at scale.
Problem with Chinese buying US real estate is that 30 minutes later they want to buy another house.
WeedHopper.....when you can take the pebble out of my hand...
Let's try that again.
Hello NSA. Yes im online Imagine that. LOL
Keep trying you might even be good in 10 years.
NSA or someone who was being a dick tried to and reset my browser, it was not a nice thing to do but im not dead yet. lol
I don't see the difference.
I keep a tight net on my computer somone got in.
Quick. Like Stop my internet quick.
My poor foxxy lost her memory.
NSA. Most likly did it but i found the program so its a win win.
NSA doesn't care about you at all.
Do they care about this?
https://www.youtube.com/watch?v=CH6GpXAXmx8
Do they care that these Fragmentation Grenades can be mounted at the front of an arrow and rained down upon the Long Beach, CA Oil Refineries?
People can actually do that. Subsequently the refinery fires will cut off the flow of Gasoine to the Entire West Coast.
Without Refined Oil Products the Food Supplies are diminished rapidly and millions of people starve.
I shot an arrow in the air,
And where it lands I did not care.
Since you are the expert on what the NSA cares about...Just what do they care about?
Do you just like to hear yourself talk? WTF did cougar say to warrant wolf tickets? Cuz that's all you're selling.
The nsa isn't working for you. It's a business. And now an institution. And like all institutions, it's there to preserve itself.
It doesn't give a fuck about you.
I hope those Chinese that are moving to California...speak Spanish...they are going to need it.....and they are going to need a gang or two to fit in..
The spanish will be speaking Chinese if they want to get paid.
I love it when you see someone speaking for the first time, but their voice is totally different that what you expect.
Like most white people, you worry too much about the mexicans. It's NOT the mexicans (and spanish) you've got to worry about. It's the people with LOTS of money. And it's NOT just the Chinese buying Californian and Florida. Whites are too obsessed with skin color to figure out threats, very odd.
Mexicans can eat, some can even cook.
Once you had really, really, really, good smack your mama in the
teeth cooking. Well.
The belly is the quickest place to the heart.
Its difficult to hate someone who can make good food.
Just saying.
So what color do you consider all Mexicans and Spanish people have?
need a good laugh.
Sounds like you've havent been to california in a while. Asians gangs are huge!
Good to know, i haven't been to California in 15 years.
It was ok when i went PD was a ...... I will not say 55.
All DAY LONG. 2miles from the line and 53 or 54 meter.
When you need to tag team for a ticket. There is something,
wrong.
You better add London to that list!
Realtors/estate agents of London property often don't even bother marketing in the UK anymore and offer properties straight to China as they are cash buyers. If the dodgy money from China is cut off then watch out below as the Swiss and Liechtenstein flush is all but over. The main problem for the Chinese will be where can the money go if they sell, certainly not back to the offshores because of data exchange agreements and neither can it go back home. Interesting dilemma.
If the Chinese money dries up then the impact on the London market could be significant.
I dont know about london but the chinese love Scotland.
Ireland is a good second since they dont know what food is.
Chinese would be the best thing the Scots/Irish have seen since
the romens showed them coins.
True, but don't forget you've got ex-eastern block mob/oligarch loot, middle-east loot, and non-Chinese asian loot. There's lots of wealth in Malaysia too, not all asians are Chinese. The top 1% (and 10%) world wide are riding the capitalist wealth bubble.
Asians from my experience. Don't hate in the same way
whites or other people do.
Asians are a lot like vulcans in star trek.
Asians have a method, thats all.
Its not all or nothing, just a system of what works or doesn't.
The issue is more or less, do you take pleasure in harm.
The Asians i've met dont.
Thats not to say harm is not done but the feeling of pleasure.
is missing.
The KKK would hang and burn people and feel good about it,
you would be hard pressed to find and Asian who felt good,
about hanging or burning someone alive.
Hmmm, the KKK hasn't burned anybody in good long while. Jews on the other hand.....
They sure been busy burning them in Gaza recently...
Don't know how long you been hanging in AsiaLand but (depends on which country) in Japan and China, they are very racist, especially Japan.
China is more accepting as they have different races and languages/dialects but still racism within their provinces exist.
In Japan, don't matter how long you been from Korea (ie 500 years ago), they still keep track of that and you are still Korean, not Japanese.
But the banks HATE cash deals, as they are not part of the take, and, if the banks sell a forclosure then the lose the leverage of that property on the books. A cash market disappearing should not effect the banking in America or London, or am I missing something obvious here?
Cash is king as far as most sellers are concerned. A bank would be very happy to have someone with cash help them slightly out of zombie status by taking one of those houses they got stuck with.
Banks want mortgages, yes. But they want paying mortgages, and not dead ones. They will take cash to get out from under dead mortgage property.
And, of course, if the property is being sold by the mortgaged property owner, they absolutely want cash.
Russians don't even rate a mention?
Russians are KHANS. They pore liquid gold and silver down the
mouths of elites.
Russians can be spoken in one word
"RESPECT" .
Thats it. Respect a russian for good or ill.
The ex-east-block mob/oligarchs are buying London and Miami.
As Japan's arua of business acumen was fading they bought Pebble Beach for a record amount in 1990 - kinda feels similar.... I've got a 1 mil bid for all those 5 mil aspen condos....
Umm, something tells me the US housing market is not about to be 'crushed' by this ...
No, it won't get crushed. Prices will go up, and inflation will go into overdrive as all those dollars held abroad come home to roost.
Yuan appreciation. liberalize the capital account. New Treasury study being undertaken to assess the prospects of capital flight without accompanying inflows
Funny you mention Yuan. Thats the elite plan, to make the
Yuan the next gold.
Even funnier is that will never happen.
REN-MEN-BE will super-sede it and end all plans of global domination.
Sun Tzu Art of War
Did you ever read Sun TZU. He was the biggest asshole that
ever existed, or close.
He killed the emperor's favorate mistress. To prove a point.
Make killing mech's out of lovers not fighters.
Sun Tzu was stupid.
Politics is stronger then steal.
yep, I read it, the military strategy is sound
Maybe an asshole but he was not stupid.
With all the citizenship programs here in the caribbean, they will come to us. I hope
I can sell them our house too.
YOY Vancouver prices are up another 6%
http://www.theglobeandmail.com/news/british-columbia/prices-for-detached-homes-hit-record-high-in-greater-vancouver/article19457249/
Just like the Fed increasing the balance sheet, the Chinese buying real estate, at the end of the game you still need to find a buyer that can buy from you.
Yes, but it's also about getting rid of worthless currencies and buying something that is real.
Median price of $500k? That's a one-bedroom condo in most decent parts of Los Angeles.
Need some more drill-down on the data, by price and zipcodes.
edit: if it was sanctioned, then I'm sure they can just remove an reference to the offending story, and carry on as usual.
Chinese blowing up NYC RE big time.
I love it.
Say, DiBlasio will be happy to welcome all his fellow "Communists."
Because the Yuan is worth less than the Dollar, you just need hyper speed nitro printers. That way you print as many as you need to buy what ever you like. Yes the US has a monopoly on the reserve currency, but all the printers are made in China.
I can't wait until it all blows up in their faces.
Can a US citizen buy RE in China?...
Nope.
Presumably the fed knew all about this and it was one reason why they could afford to taper. So untaper?
Well the Fed spent 2trillion on mortgages why can't Chinese oligarch s?
No?
Don't worry, BoJ will fill the gap.
great article ZH
Side door to USA Visa......citizenship. Just you wait and see. Schumer was bantering about something a couple of years ago
Wouldn't suprise me. Anything to keep the social securiy ponzi scheme/boomer voting block promises as politcal capital. The federal government importing all of these people from socialist/communist/ouwardly corrupt systems won't bat an eye at the political shenanigans here, and be grateful to drink water from the faucet.
This is how it works in most of Latin America. Invest X dollars (usually between $100K-$200K) get citizenship - period.
"How did millions of Chinese "buyers" manage to get tens of billions of yuan or dollars out of the mainland"
Who says it was ever there? You're missing the obvious. China is an exporting nation. You produce garments, electronics, hillarious rubber dog poo... whatever... then ship that abroad for which you get paid abroad. Apart from what's needed to cover costs, the money never enters China. It goes to an offshore bank from which you draw a cashiers check to pay for the house in L.A. or Vancouver which is listed as a company asset.
Likewise, importers need foreign exchange to purchase abroad. Not subject to capital controls. I'm sure you can figure out the rest.
Just as America has too many lawyers, China has way too many accountants for the amount of actual business conducted, and have you noticed.... nearly every Chinese family has a registered "business" of some sort - usually import/export.
http://pagead2.googlesyndication.com/simgad/9769656891141381534
What? I missed that...
Hmmm...could be on to something. Son married into Chinese family in HK. Bride is an accountant in a family of accountants. I am more than ever sure that accountants do all the dirty work. But it pays...the bills. Man, this is not how to live.
Would not surprise me if they all move here to the States. They'll bring FRNs by the bushel.
You know, I may have overstated when I said nearly every family has a business set-up, but many do, and for good reason. There's nothing you could call "social security" in China. Families have to arrange that themselves, and so they pool resources across generations. The best way to do that is to set up a business, let the smart family members run it while the rest go to work there at whatever they do best. Everyone gets a cut, the business gets handed down, and the old folks draw a pension. Not all that strange really. Something like that existed in America at one time.
As for the offshore stuff, well... they're just doing what any western corporation does, no? Keep your profits abroad? We see it as foreign investment (or tax evasion) whereas for them it's more like insurance - a safe place to land if things go south in China.
As for me, I'm still trying to puzzle out if a crash in China brings West Coast RE down, or drives it up (or maybe it's a wash?). You could make a case either way I suppose. Anything "investment class" could certainly face liquidation, but since those investments were basically meant as insurance packages to be sold on, I'm guessing some pretty stong buying might appear if China becomes dicey. No way to really know I guess. Just have to wait and see.
You export machinery, clothing, etc from China to US. The bill is one billion dollars. You have an agreement with the company who is taking delivery. The price is padded by 1 million dollars. They wire $999 million to China for the goods and another $1 million to a US bank. Presto, i million has been exported to the US. Without a very detailed forensic accounting investigation, it is almost impossible to spot.
Ah the art of "pump and dump" done at a grand macro professional scale! Lot's of Americans also involved in the same speculative game but at a much smaller scale...
Now repeat after me: "Life is good"... When there are no rules!...
And as angry as it should make any American?... Look in the mirror and ask yourself how we allowed Washington D.C. to let them get access to it along with our technical manufacturing base -in both cases just rewriting the rules to simply give it away!
Hope we can all sit back and learn to enjoy the self-inflicted "gun shot wound" to the lower extremities we've given ourselves!
When the big reset comes, let's ride this foreign scum out on a rail.
After all, they bought all this property with ill-gotten, illegal, invalid FED funny money.
When the big reset comes, let's ride this foreign scum out on a rail.
Ah 22s that's where the U.S. military comes in with the gun ever so firmly fixed at the temple of the Chinaman to "buy" more in the "Land of the Free Home of the Brave" till he drops...
But I digress... I think you've missed the more important point.
Never shit in your own pool and blame it on the "house guest" when you initiated the rules for doing so!...
He'll no, I wanna sell 'em something.
An excellent piece of work. But one question remains: Have the Chinese oligarchs thought about how they will re-patriate those assets when they need them? Or are they all planning to emigrate?
My house in the SW suburbs of Chicago is being sold to the Chinese. For Cash.
This is not a big $$$ sale so I gues it's not just upscale properties as far as I can tell.
I'm guessing they'll get burned when things take a dump.
Couldn't happen to a nicer bunch of asshats.
mom in law decided on a whim to sell her townhouse in a retirement/golf course development, it's nice but the community is generally mid eighties. yesterday she popped by the realtor just to see what she might have to do, paint, change the carpets etc. prior to putting it on the market---the realtor sold it for cash sight unseen! we have to have her packed and out by EOM!! talk about a hairball.
Americans are the bitches in the prison ass fuck gang rape.
Americans are the bitches in the prison ass fuck gang rape.
.1% love the Chinese money coming back to the states. Inflates their houses without inflation reaching the serf work rates
THIS is why i will always love you, zh
Why won't the Chinese simply legally allow the outflow of money ?!
Why are there restrictions on cach outflow ?
This can easily be fixed.
Chinese of the older generation are savers and encouraging them to spend their money is not easy (They remember the last famine, The Great Leap Forward). Same in Japan. They refuse to spend so economy suffers. There was a time a huge down payment was required, and entire mtg had to be paid within a short period of time in China, 10 years? 40% down?
U.S. NUNBA WON!: In debt, incarcerations, wealth disparity, drug consumption, rapes (if you include the 200,00 a year in the military), and going hard to triple it's already record breaking number of crooks and dirty dealers. (Feel free to add to this list). USA! USA!
Not surprising. There has never been more worthless paper in circulation. The 0.01% have a real problem on their hands. The billions can become completely devalued with the stroke of a few pens overnight, say for example on 07/20 to 07/21 2014.
Forget conspiracy for a moment. Economics is nothing but common sense. There isn't enough collateral in the world to back up all the public, private and corporate debts. Just not possible.
Collateral that IS proven and actually accounted for will get revalued to save the balance sheets and restart the game.
Top 0.01% know this, have seen this coming along time already and their purchases are testament to what I'm describing. Money is worthless, it is FAKE. Money has no basis anylonger, no accountant can verify where this money is coming from and just exactly what this money is really worth.
Lagarde's speech should give everyone pause. Even if the conclusion that the reset is coming in 10 days is incorrect, the point is that Lagarde made a pretty weird speech at the beginning of the year, that the global economy is in shambles and confidence is tapered over with propaganda and lies.
See for yourselves
https://www.youtube.com/watch?v=QYmViPTndxw
If you're thinking of selling then put a bunch of "8"s in your asking price; they go nuts over it.
Chinese have been all over LA and New York thowing huge mountains of cash at high end housing. London picked up some of this as well. I heard Australia was the target off large scale Chinese buying, both high and middle end. I think those Chinese were working on getting Aus passports as well. In Asia, an Australian passport is worth it's weight in gold X 1,000,000.
Like petrol dollar recycling. It needs to go back to us treasuries which is funding their enemy or to the private sector.
Why?
Because China prefers that the US housing market not collapse - because we are all living in this giant house of cards - and if one card falls they all do
Have you seen your coin and bullion dealer today? How about yesterday? How about any day this week? Try for next week?
tick, tock, tick, tock
Humans sure aren't very creative! Duh! Chinese can easily buy gold bullion and other precious metals with Chinese currency. They have retail gold bullion stores all over the place (in the cities). Once they have gold bullion in Hong Kong they can ship it anywhere for peanuts (about 1% for insurance). Then convert that to whatever currency they wish and buy, buy, buy.
Most Chinese who get $50,000 per year of USD or foreign currency are just students of rich Chinese... and they need USD or foreign currency for college fees, books, rent and everything else. While $50,000 is a tad high... not so much for "rich folks".
Most Chinese who buy expensive stuff in the USSA appear with suitcases full of cash... probably cash they received from western customers for their products.
And finally... to spend your own money on whatever you want is NOT money laundering. Geez! What is cash for if not to buy what you want? Good grief! Furthermore, there is no real money on this planet any more. A debt instrument like a "note" (a "federal reserve note") is not money. It may be currency, but it is certainly not money. Money has value in an of itself, which is why only precious metal coins are (or can be) money.
A blast from the past?
Quotes: "on 4 november 1935 the gov't implimented currency reform as a solution to three problems: the US Silver Purchase Act of 1934, and deepening agri-depression, and japan's growing control over n. china. from 1890s until 1932, the int'l price of silver had declined as countries moved from silver to the gold standard abd their CBs liquidated their silver holdings. until 1932 the price of silverin china remained higher than the int'l price so that silver flowed in. this had benefits since the silver inflow effectively increased the money supply of the silver-backed currency without causing undue inflation." (read between the lines regarding Japan) pg.61
"the japanese had long tried (USSA today?) to undermine nat'l finances through officially sanctioned smuggling, much of it under the protection of the japanese imperialist army. the creeping japanese occupation deprived the nat'l of 90% of their former tax revenues from customs, salt, excise, alcohol, cigarettes, and the like(opium?). Nat'l local gov't income plummeted by nearly 1/4 between 1936 and 1940. in 1937, the nat'l (remember, this was the gov't that the ussa was backing 100%) were already running a 37% gov't budget deficit. then from 1937-39, expenditures rose by 1/3, while revenues fell by 2/3s. from 1927-37, they had relied ever moar heavily on borrowing to sustain gov't funding (ussa today?). as the war escalated , the borrowed money no longer financed investment but consumption-- primarily in the form of military expenses-- (pay close attention obama/Yellen?) so that the borrowing did not promise future income payments, but only future interest payments as well as inflation when they turned to the printing presses to meet expenses. the value of the nat'l yuan plunged against the US dollar from ~ 30 cents in 1937 to ~ 4cents in 1941." pg 136
"according to the conventional tale, the natioanlist-controlled areas alone suffered inflation, and this inflation reflected nat'l corruption!!! (how sweet it is?) yet communist-controlled china areas suffered equal rates of inflation for the same reasons that the nat'l-controlled areas did: the japanese had taken the productive parts of the chinese economy an launched a massive war, leaving the defending chinese, whatever their political pursuasions, little choice but to print money and let inflation rip (just replace a hostile japan today with a passive ussa overbearing colonial presence... reminiscence of good ole neo-slave-labor feudalism, with no mid-peasant class-- mao rolling in grave!). the (UsSa) japanese caused china's inflation, the implosion of its economy, the destruction of its cities, and the ensuing rampant corruption among its increasingly desparate population. spiraling corruption was the effect not the cause of china's economic maladies. japan (ussa?) was the cause." pg 158
"not only did japan's military (USSA? asian pivot?) strategy destroy the chinese economy, it also undermined the home economy. from 1936-45, the japanese government implemented a wide variety of measures to take control of production but that strangled the economy instead, just as the assasination finance minister, takahashi korekoiyo had predicted.( note: the rothschild's bank had huge $ skin in the game placed on japan to prevail)" pg 168
"statistically , nat'l-and communist-controlled areas suffered from comparable levels of inflation from 1937-42. the US aid arrived, it helped prevent the stratospheric levels reached in Yan`an in 1943-44. the political effects, however differed. by 1943, nat'l soldiers and public servants were making 6-10%, respectively, of what they had earned in 1937. labor unrest grew (sound familar?). inflation became politically debillitating by alienating loyalties ( really pounding the gong` bouncing-board?)." pg 224-4
"in the final days of 1948, as the nat'l (chiang kai-shek ROC/ Taiwan... note: if not for korean war taiwan would be in china's control, and in fact no one really knows who cast the first stone of the ussr 's n korea and ussa's s. korea in june/1950?-- mao proclaimed the PRC communist [oct/1949?]chinese?) situation imploded, the US consul in shanghai reported: the tragedy is that china had such a rotten nationalistic democratic party (chiang kai-shek and his wife!?!), whicgh clung stubbornly to power even after it had obviously forfeited the people's confidence (an that the USSA backed natioanlist KMT party did in spades! with US spending upwards of 2billion$ in 1945-49 for the Taiwanese MF's). therby those who wanted a change had but one place to go." pg 263 fini
Conclusion: regarding todays episodic adventurism. the PRC's economical/polititical geo-landscape; the staggering parallels of corruption that Mao purged... and yet since his death in 9/9/1976-- the country has gone through some great changes, but the things mao feared the most, such as greed, avarice, and patrimony are back in vogue with dire consequences if left unabated to continue without a few dozen high-level heads rolling off these fucking greedy disea'ssed torso, and placed on display in Tiananmen square on a forked USSA$!!!
Quoted excerpts: "The Wars for Asia 1911-1949" s.c.m. paine c.2012 absolutely fantastic read JMHO
jmo
thankyou Tyler
may i have the poster version ?
a simple explanation is during the mid 80's & early 90's with a 30k stock market in Japan Yen, Yen, and moar Yen to the $ v. ~6yuan/$ ??? http://en.wikipedia.org/wiki/Japanese_asset_price_bubble but, the Chinese Shanghai has been stagnant and with ~6 yuan/$, and the USSA still the hegemonic king for at least another decade, why not.
who says they're not your classic speculators fluffing up the market as in FX roiling de baccarat`house into a systematic laundromatism...
http://www.doctorhousingbubble.com/japanese-real-estate-bubble-bear-market-in-real-estate-is-making-its-way-to-the-united-states/
I think it topped 40K.
Just the top Communist Party members looking out for each other.
Communism is a looting tool, and the looters need to take their loot away from the Communist mob, all the looters are high party officials, you can't be in business and make a lot of money and not be a party official, inflation has nothign to do with it, its a good old boys club where everybody ignores state crime or crime by state officials.
Its the dream of every Chicommie govt official to loot enough to move away from the Chinese govt.
Its gonna get ugly when the workers figure out there is no we in communism and their benefits were spent on housing for illegals in America
"Simple - to keep inflation in check."
Actually China is shifting the inflation back to the USA by spending the US$ here. The time where the USA can export its massive inflation is coming to and end.
The article states this is only an effect in the luxury multi-million dollar market. That is just not the case.
Hundreds of Chinese investors are trying to put their bullshit "wealth' into medium and upper medium priced home.
Yes, this works for local government because property tax receipts go up. And of course the banks always win with higher prices leading to larger interest incomes and fees.
But for the communities that see soaring prices it is a death knell. House poor communities cannot support local business and eventually the families go bankrupt and lose their homes. Again, the banks always win.
This is clearly so toxic to the health of the economy that it amazes me that their is no action to put a halt to investor-type behavior in the housing market.
We have all been totally sold down the river.
simple, when you get asked to eat some... what is your reaction...
a wise man in the past said, when someone you try to corrupt to says NO, it is just a polite way to tell you the price you tell is not enough.
everybody has a price. that's why hooker sucks dick to eat, why crack fagot suck dick for dose...
still wondering why i'm so special to get my wife still sucking me... wait, where 's my wallet ?!!?
I get your point and it is that no one forces a person to buy real estate.
But choices are not always choices. If I had you tied up and in an interrogation chamber and demanded you tell me which digit you wanted me to cut off first, would that be a "choice"?
If we had let the mindset of people like you, barre-de-rire, dictate how society is to operate then we would still be a feudal society. Tell your Chinese Oligarch friends that their people will be stewing their bones before the decade is out.
When the Chinese billionaires begin to buy real estate in Tel Aviv or Jerusalem, send me a notification.
Probably a good idea, though. If the Chinese buy Israel, they'll probably have more luck with their new neighbors than those goofy jews do.
buy real estate in Tel Aviv or Jerusalem...
Can that be done? Do they allow foreign ownership of real estate? Do they allow the physical deed to real property out of the country? Or do they have a sooper dooper MERS system to expedite the process. Do they still have the 50th year jubilee where all bets are off and all real estate reverts back to the original "tribe"?
Just a few questions, I have more.
Does anybody doubt that the fed will buy these off balance sheet if needed?
Bankers broke the law? Tell me it ain't so.
I Am afraid this only half the story..
It is not just about inflation, but also about the $3 trillion of overseas debt it holds
Which as everyone knows it cannot just dump.
But these outfows are all challennel back through the bond holding departments where the real cash exchanges are made and this provides a nice neat way to allow citizens to buy up the US using its own debt help by China and hold inflation down.
This is not going to stop anytime soon and have spoke n to friend in China who we work with who is an exporter and effectively recycles his entire cash flow from recievables into China and back out again, says that any idea of this changing anytime soon is ludicrous as any Chinese busiessman knows as its is also extremely profitable for the banks and the last thing any Chinese bank needs now is anything that could curb any profits by so much as a single RMB
China doesn't have investigative journalists like they used to in the west. The release of the article must have had approval which has bigger implications.
The West has "investigative journalists" ???????
Other than Glenn Greenwald (re: the NSA leaks by Ed Snowden), WHO ELSE do you view as an "investigative journalist"? (And, by the way, Greenwald no longer lives in the U.S. out of fear of the U.S. government.)
Yo Jack,
Heraldo... for fuks sake man, we have Heraldo.
I did say "like they used to." :)
Michael Hastings...wait he is dead...Hunter S thompson...hmm he kicked it too. I guess 'no one' for $500, Alex
I don't know shit, and I'm not an "economist," just someone who keeps their eyes open and attempts to use their common sense.
This story is troubling. What it tells me is that this is intentional and the money that's allowed to leave China is being used as the means to cause hyperinflation in the US.
I live in Houston; a housing market that is on fire. I count several residential realtors among my many referral partners, and we're seeing many sales in cash, sometimes at twice the market value, from our Chinese friends. All those FRN's getting dumped back onto our shores will be the end of this system; we're in for a tsunami of Federal Reserve Notes coming home to roost. This is how it will happen.
Silver is up...
we're in for a tsunami of Federal Reserve Notes coming home to roost. This is how it will happen...
I don't know anything either, nor am I an economist, but to see it happening in Houston seems a little more than apropos. Aren't the majority of US "out of country" frns "petro-dollars" and the plastic stuff China sends our way petroleum based, so why not Houston as ground zero, again?
jmo.
hahaha the only demographic poorer than the US buyer is the Mexicans
My opinion: the Chinese are simply being practical. They are spending pieces of paper (FRNs, aka, U.S. dollars) of steadily decreasing value for a variety of TANGIBLE ASSETS in the U.S., Europe, Africa, etc. - such as gold, silver, copper and other industrial metals, housing, farm land, mining rights, water rights, specialized industrial factories and so on. It is called "diversification".
Isn't this exporting inflation?
Bank of China has temporarily suspended You Huitong to facilitate the central bank investigation.
The pilot reform was supposed to be low key and bank employees making outrageous statements about money laundering to potential customers was far from low key. Several banks were involved in the pilot program, including Citic and ICBC, but only at a specific branch. The bank was not supposed to allow any government officials or their relatives to use the service. The service is for wealthy clients with legitimate business needs, but only for investment emigration or overseas property purchases. Proof in the form of contracts or immigration papers were needed.
Big trouble in littel China
Lo Phat wants green eyed woman.
Interesting analysis but I am waiting to hear what Bill O'really, and Sean have to say about this. Maybe I will have to turn on the TV as I have not heard from them in about 15 years.
It is interesting Tyler but lets get to shit kicking that polar vortex thing again. :)
How else to become the world's reserve currency with those knotty little quirks called currency controls hiding under every land mine? Relaxing is mandatory I would think.
The train they just met on track 2 was the USA heading outbound to oblivion. I think it's a fast freight being diverted down a dirt road. Unfortunately, it's carrying the impounded funds of the middle class.
pretty clear: thery built up all those worthless FRN's.. time to put that force to use. they have destroyed their place in the sun, see bejing air quality... why not take those worthless fiat papers, convert to tangible things, with less bad air?
look at china's method of colonization over the centuries. they have always used other countries for trading first, then using the proceeds to buy the host countries' land and businesses while sending hordes of tired and poor chinese to diversify the local population. they are now officially colonizing the usa.
If I am living in my car, does that mean that it cannot be repossessed?