Hello hawkmoon, you wrote a lot.
You can if you're using that overpriced RE as collateral on outstanding loans …
… the entire point is that china financial system is barely at all leveraged, full stop, at all levels, for that is what excess savings and surplus capital tend to result in.
But homes are money pits. They require maintenance …
Hk homes are savings, and equivalent to a dozen or less good meals.
<<Andy Xie>>
… know him, and he lost it when let go by morgan stanley.
“China’s asset markets are a Ponzi scheme,” said Xie, now a Shanghai-based independent economist. “Property is heading for one huge bust that will take a year and a half to unfold.”
… How? Who is selling? Why? Who is buying secondhand homes? Why?
And yes.. you can have bubbles without leverage.. The Tulip bubble was achieved without leverage.
… rubbish. The tulip bulb crazy featured huge leverage in the form of promises to pay full purchase amount in the future. You must read your history books much more carefully than you obviously are
What's the equivalent "FDIC" coverage in a Chinese bank?
… Chinese banks is a money moving utility, not a hedge fund. All real estate purchases are secured by at least 30% down payment. Most folks buy real estate with full ability to service the debt for several years without rental income. When has any bank in the people’s republic failed? Which politician dare to allow such to happen? The problem with America is that the politicians are not afraid of the population. The issue with china is that the population know full well how terrified the politicians fear them.
chinese mayor kneeling, begging protesters to return to homes. can you picture any usa mayor doing such in supplication? of course not.
Bear in mind something else.. China's effective stimulus (compared by GDP) was more than THREE TIMES what Obama undertook. THREE TIMES!!
… is it not wonderful!? China inc did such because china inc could do such, as the such is a perfectly viable option, and the money by and by is put to proper use, as opposed to ending up in bankers’ pockets.
What happens when that liquidity is drained from China's capital markets?
… they are draining, because the stimulus worked and needs to be tapped off, as events should have worked out and did in fact do so |
