[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|
Status: Not Logged In; Sign In
LEFT WING LOONS Title: Building boom a bust? Editor's Note: This is the 10th of a series of reports from Dawn Fotopulos, an associate professor of business at The King's College, New York, about China. During our second week in China, we arrived at the outskirts of Xi'an and Beijing and saw very tall, very expensive, condo complexes rising from dozens of acres of bulldozed villages and farmland. If you owned a crane renting company in Xi'an, you'd be printing money for a living. These were 40-story (maybe taller) buildings designed in large, expansive clusters to accommodate thousands of inhabitants. But here's the strange thing. No one wanted to live in them! In China, if you live in a home, its value inevitably goes down. The perception there is that it "wears out" because people don't properly maintain anything in China. Perhaps it is too expensive. Maybe it's too much a bother. There could simply be a dearth of qualified or motivated souls to do the work. But one thing is clear. If the home is new, the best way to preserve its market value is to keep it empty. So there are cultural and economic incentives to keep brand, spanking new condo mega-complexes as empty as Communist rhetoric. (Column continues below) In the U.S. the reasoning is exactly the opposite. Just ask the real estate developers who speculated by building homes in Arizona or Florida. If a home is vacant, and there"s no one to maintain it, its value decreases each passing day. If it remains empty, the spiders and mice will take up residence. So in China, you see these mega-buildings in clusters of 20 or 50 or more rising amidst tired looking old neighborhoods. But no one lives there. It feels like the greater fool theory is operating in China as it does in the U.S. It's all supply and demand Underlying all this building is the pressure on local government officials to ensure year after year of economic growth in their area. Buildings must go up. Shops must open. If they don't, the local official is "out." And "out" means no further access to party privileges anymore. This is no small risk. To lose party privileges means no more customary 80 percent discount on living costs, no more drivers, and no more special "gifts" when new projects are awarded in the area. Being "out" means an immediate nose-dive in living standards for you and yours. Hmmm … maybe that's why our own politicians fight so hard to get re-elected! So never mind that no one is buying these condos in China. The Chinese government continues to subsidize the unrelenting rise of these 40-story mirages. Subsidies anywhere in the world never can be a long-term substitute for real demand. Without demand that is driven by enough legitimate buyers, every Ponzi scheme will crash. How much time this will take is the only unknown. The laws of "supply and demand" operate no matter what patch of soil you're operating on. Central planning works until it doesn't. It is the buyer who determines if the seller's revenues will be sustainable. No demand, no revenues, and eye-popping investment expenses on this scale are certainly fuel for an economic meltdown. China's resources are not limitless. Harry Markopolos, one of the most successful short investors on Wall Street, is shorting China. This is the world-famous fellow who sniffed out Bernie Madoff's spectacular fraud while the SEC was playing possum for 20 years. After my observation of the bloated supply of new real estate outside a few key cities in China, I think Harry's got the right "bead" on things. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: All (#0)
"libTURDISM is a terminal mental disease."
Spoiled, stupid and ignorant, brain dead phuckwads, libTURD fools, tools, and idiots, are the real sickness; the messiah "king" obammy and his regime are only the symptoms.
LMFAO You got some spittle on the side of your mouth there, MD. Watch Ysrael start a war now. That's all you Fundy Nazi Zionists got left. Overt violence.... See 9/11 Dancing Israeli's for details. No jobs. No income. Inflated Housing to keep banks looking solvent. The Depression Deepens....
How come the Federal Reserve is not downgraded by S&P? BUWAHAHAHAHAHAHAHAHA...8D tick tock...
|
|
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|