Ever wonder why for the US, it is all about reflating the stock market bubble in order to boost the "wealth effect", if only for a small portion of the population?
Or, for that matter, why in China where the Shanghai Composite has gone absolutely nowhere since the Lehman crash (and certainly isn't up some 200% unlike the liquidity-supercharged S&P 500), it is all about preserving the sanctity of the housing bubble?
Then the following chart should make it all clear.
As we reported earlier today [7], in the US it is all about (record) financial assets. So much so, in fact, that financial assets as a percentage of total household assets have never been higher at 70.3%, which also means that real estate as a percentage of total is as low as it has ever been.
Meanwhile, in China few households care as much about financial assets (the ones that do are largely a part of the Politburo or the ultra-rich oligrachy). Instead, the largest Chinese household asset is Real Estate, which at 74.7% of total household assets [8], is by far the most valuable asset that China's population has.
[9]
Said otherwise, while the US, the Fed, and in general the Western world, will happily keep reflating the financial system until it all bursts again, in China it will be all about reflating the housing bubble. And while so far the Fed appears in control of the S&P 500, trading well over 2000, in China - as reported earlier today [10]- the housing market is in clear freefall, despite Beijing and the PBOC's best interests to levitate it. Keep a close eye on this bifurcation, because as the Chinese housing bubble goes, so goes the US financial bubble.
