Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: TobagoJack who wrote (108662)	2/22/2010 12:29:39 AM
From: Hawkmoon	3 Recommendations Read Replies (1) of 116555

reflect on this What's the average salary of a Chinese miner in the Ordos region? What's the average price of one of those apartments or houses in Ordos? Why are so many Chinese workers holding off from immediately moving in to these obviously beautiful homes? Maybe because they realize that they cannot afford the prices those brand-spanking new apartments are being sold for? Maybe they see a bubble that you don't see? There's no market if all you have is supply and little to no demand. It's a gross perversion of "Supply Side" economics... Demand drives supply... Not the other way around, unless it brings down prices to levels where consumers are motivated to act. If you don't have willing demand willing to provide "price discovery" then you can tack whatever price tag you so desire on an object and it means nothing. An empty town like Ordos is a "canary in the coal mines" that you shouldn't ignore, regardless of your "800 year plans". It harkens back to the argument I've been making here in the US. If people don't have jobs that pay them sufficiently, they won't buy things. They won't take out credit (or they'll default). Be sure and keep us apprised how that works out in Ordos. I suspect that some RE speculators in that project are going to have some nasty surprises awaiting them. But it's alright.. you've stated that you're happy to see a greater gap between rich and poor manifest itself. You're going to find out, I fear, that the "Greater Fool Theory" requires players who can actually afford to play the game. Hawk

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