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Another Sign of Gigantic Credit Bubble in China
Townhall.com ^ | June 14, 2014 | Mike Shedlock

Posted on 06/14/2014 3:10:50 PM PDT by Kaslin

China bulls point out that that home prices in China are based on fundamentals and 30% down payments are proof there is no real estate bubble.

In reality, much of those "cash" down payments are borrowed in various ways in China's shadow banking system, now estimated at $7 trillion.

(Excerpt) Read more at finance.townhall.com ...


TOPICS: Business/Economy; Culture/Society
KEYWORDS:

1 posted on 06/14/2014 3:10:50 PM PDT by Kaslin
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To: Kaslin
China set for current-account surplus: regulator
April 4, 2014, 4:55 a.m. EDT
MarketWatch
The Wall Street Journal
http://www.marketwatch.com/story/china-set-for-current-account-surplus-regulator-2014-04-04


2 posted on 06/14/2014 3:46:24 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: Kaslin; All

There’s an interesting BBC documentary called “How China Fooled The World”.

The synopsis;

“Robert Peston travels to China to investigate how this mighty economic giant could actually be in serious trouble. China is now the second largest economy in the world and for the last 30 years China’s economy has been growing at an astonishing rate. While Britain has been in the grip of the worst recession in a generation, China’s economic miracle has wowed the world.

Now, for BBC Two’s award-winning strand This World, Peston reveals what has actually happened inside China since the economic collapse in the west in 2008. It is a story of spending and investment on a scale never seen before in human history - 30 new airports, 26,000 miles of motorways and a new skyscraper every five days have been built in China in the last five years. But, in a situation eerily reminiscent of what has happened in the west, the vast majority of it has been built on credit. This has now left the Chinese economy with huge debts and questions over whether much of the money can ever be paid back.

Interviewing key players including the former American treasury secretary Henry Paulson, Lord Adair Turner, former chairman of the FSA, and Charlene Chu, a leading Chinese banking analyst, Robert Peston reveals how China’s extraordinary spending has left the country with levels of debt that many believe can only end in an economic crash with untold consequences for us all.”

It’s quite fascinating, and here’s the link to YouTube

https://www.youtube.com/watch?v=fd5MyeqkuyE


3 posted on 06/14/2014 3:52:57 PM PDT by AnAmericanAbroad (It's all bread and circuses for the future prey of the Morlocks.)
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To: Kaslin
China's economy is built on infinitely rehypothecated collateral. Some of that collateral has recently been discovered to be missing. Trouble is brewing.
4 posted on 06/14/2014 4:01:09 PM PDT by Myrddin
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To: Myrddin

I don’t know.

China runs a surplus against America, of over 300 billion dollars every single year.

America is sleeping about China. America needs to produce things, right here.

Just saying.


5 posted on 06/14/2014 4:03:35 PM PDT by Cringing Negativism Network (http://www.census.gov/foreign-trade/balance/c5700.html#2013)
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To: AnAmericanAbroad

Saw that a couple of days ago. Definitely an eye-opener to the next boat to hit the reality iceberg!


6 posted on 06/14/2014 4:35:44 PM PDT by VanDeKoik
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To: AnAmericanAbroad
When the housing bubble was in full expansion here in the US, people were somehow able to borrow money for their down payments without it being considered as such.

This allowed them to purchase homes with two loans without having to pay PMI, i.e. those people who were most likely to foreclose on their homes were the least likely to purchase insurance against such an event.

Sad. Sad. Sad.

7 posted on 06/14/2014 5:05:01 PM PDT by who_would_fardels_bear
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To: Myrddin
If this tweet is true, then China is inflating a very large cement balloon...

Chinese Cement Purchases

8 posted on 06/14/2014 5:07:31 PM PDT by who_would_fardels_bear
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To: VanDeKoik

Yes, it is quite an eye-opener. If the RMS China, Inc hits the ‘berg, well, man the lifeboats because it’s all going to sink mighty fast.


9 posted on 06/14/2014 5:31:48 PM PDT by AnAmericanAbroad (It's all bread and circuses for the future prey of the Morlocks.)
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To: who_would_fardels_bear
Rehypothecation evaporation
10 posted on 06/14/2014 6:45:30 PM PDT by Myrddin
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To: AnAmericanAbroad

I’ll take a look at that documentary and appreciate the tip.

However, all the Chinese did was copy the US.

The larger question is whether the outcome is intentional on their part, too...

and/or, almost tongue-in-cheek, whether the Chinese copy in this case is as good (rather, ‘bad’) as the original or worse.


11 posted on 06/14/2014 7:08:39 PM PDT by logi_cal869
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To: logi_cal869; AnAmericanAbroad
Copied the U.S.?
Perhaps in some fundamental form as to economic organization; but they also copied from the British, French, Japanese and Germans in adapting existing organizational forms to suit their own unique style of banking and economics.
There has been an extreme 'shake-out" occuring in the PRC in th elast few years dealing with and exposing corrupt politicians, gov't officials and their tools. While it can honestly be said that "those at the top" will remain unharmed; it can also be said that those who got out (moved finances out of the PRC) before 20010, or so, also got away with their ill-gotten gains.
Unfortunately, the corruption is of such an extreme level that it remains to this day a viable hindrance on the Chinese economic model.
Speculative real-estate purchases have crippled home ownership and housing. This was foisted along by very low, or non-existence, tax code and enforcement.
In the Chinese world, it is one thing to have a law on the books - it is quite another to actually enforce that law)
China is plunging to a bust...but it is also experiencing a level of extreme wealth rarely seen in history among an upper tier of its citizens.

Weird dichotomy.
12 posted on 06/14/2014 8:47:41 PM PDT by Tainan (Cogito, ergo conservatus sum -- "The Taliban is inside the building")
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To: Tainan

I realize my statement isn’t 100% accurate; the statement was sardonic.

Likewise my other comment about being a ‘worse copy’.

Frankly, I don’t believe it’s possible to say with anything but sheer speculation whether it will be the Europeans, the US or the Chinese that end up bringing down the whole house of cards. The irony is that the ‘global economy’ liberals always crowed about will ultimately be our doom.

Insofar as the Chinese societal problems go, the unrest is already happening...


13 posted on 06/14/2014 9:44:07 PM PDT by logi_cal869
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To: logi_cal869
"...I don’t believe it’s possible to say with anything but sheer speculation whether it will be the Europeans, the US or the Chinese that end up bringing down the whole house of cards."

IMO, it will be the Chinese who ultimately bring it all down...and mostly upon themselves. It is happening currently...early stages of collapse, that is.

" The irony is that the ‘global economy’ liberals always crowed about will ultimately be our doom.
Insofar as the Chinese societal problems go, the unrest is already happening..."


Quite so. And much more than most 'western' analysts will acknowledge. (Actually they do acknowledge it - but the information gets massaged so much as it travels up the pipe that it, somehow. changes its meaning by the time it gets presented) ...in complete agreement with your points.
14 posted on 06/16/2014 8:13:43 PM PDT by Tainan (Cogito, ergo conservatus sum -- "The Taliban is inside the building")
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