http://globaleconomicanalysis.blogspot.com/2011/07/property-loans-halted-in-chinas-2nd-and.html
Bubbles Pop
Jeremy Warner makes a case there is a bubble in Chinese real estate. Moreover, and by definition, bubbles pops.
The question at hand is "when?"
Warner states "soon". However, it is difficult to predict exactly when bubbles pop. There was clearly a Nasdaq dot-com bubble in 1998. However, the bubble got more extreme, rising another 100% in 1999. The bubble did not pop until March of 2000.
Australia's property bubble has popped and it will play out in years of pain. Many are still in denial.
A US housing bubble was brewing for years. Even after it popped in summer of 2005, many did not recognize that fact for 18 months as the chain reaction mentality "it's different here" spread to every city that had not yet burst.
We cannot say "when" China's bubble will burst or if it will be city-by-city as happened in the US, or one big bang where everything implodes at once.
However, we can say with certainty China's property bubble will pop. We can also say the longer it goes before it bursts the bigger the mess when it does. As with the US, the property bubble will take China's massive credit bubble and banking system with it. Indeed, China property bubble is only a subset of a much larger credit bubble.
China's implosion looks to be massive. Few are prepared for the implications of a rapidly cooling Chinese economy.
Bubbles Pop
Jeremy Warner makes a case there is a bubble in Chinese real estate. Moreover, and by definition, bubbles pops.
The question at hand is "when?"
Warner states "soon". However, it is difficult to predict exactly when bubbles pop. There was clearly a Nasdaq dot-com bubble in 1998. However, the bubble got more extreme, rising another 100% in 1999. The bubble did not pop until March of 2000.
Australia's property bubble has popped and it will play out in years of pain. Many are still in denial.
A US housing bubble was brewing for years. Even after it popped in summer of 2005, many did not recognize that fact for 18 months as the chain reaction mentality "it's different here" spread to every city that had not yet burst.
We cannot say "when" China's bubble will burst or if it will be city-by-city as happened in the US, or one big bang where everything implodes at once.
However, we can say with certainty China's property bubble will pop. We can also say the longer it goes before it bursts the bigger the mess when it does. As with the US, the property bubble will take China's massive credit bubble and banking system with it. Indeed, China property bubble is only a subset of a much larger credit bubble.
China's implosion looks to be massive. Few are prepared for the implications of a rapidly cooling Chinese economy.
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