All valid points..
But I think, in the case of Chinese money, there was so much that it not only kept US interest rates low, but it also enticed banks to develop sub-prime liar loans that would normally never have been entertained. It really could never have been done had their not been a Chinese appetite for higher yielding MBS, Fannies and Freddies, to replace the limited quantity of available 30 year T-Bonds.
They are just as much to blame as any investor in Yahoo was when it was $400/share (my ex-wife being one of them).
And some people then thought that houses, not work, were the ticket to success....
I also blame the Bush administration for it's deregulation of the banking system.
And I think it's pretty clear that mingling mortgage debt with securitization is not working.. It's turned the RE market into an illiquid stock market, with mark to market accounting, and created major instability in valuing what used to be the greatest family asset.
My father never liked the stock market. He was a Real Estate guy.. He'd buy distressed property, then renovate, and rent it. Fortunately he sold all of his rentals in 2007, at the height of the bubble. He passed away last summer, but I have to believe that were he still alive, he still be (falsely) believing that Real Estate is a far more conservative investment.
But would you buy a stock for 30 years on 80% margin debt? A stock with a hung overhang of unsold stock sitting around looking for buyers?
Note that China did not encourage the US government or the US population to do anything stupid.
Nor did we force them to buy our debt.
Just as no one is forcing Chinese banks to loan out money on speculative real estate ventures aimed at creating a false GDP:
israelfinancialexpert.blogspot.com
But Chinese real estate markets, with some 60 million houses sitting unoccupied, seems to be vastly more speculative. And then engaging in "shark loans" using the equity this speculation has built up in their homes, is downright ridiculous.
israelfinancialexpert.blogspot.com
the other team call themselves "China realists"
Well, I'm certainly not going to go that far as saying China is an enemy, but let's just say that I divorce the people from the established political/military leadership. In general, I hold no animosity towards the Chinese people and I do believe the majority work diligently, for very low wages. And I think they deserve a better government than the one they currently have. And I hope for the sake of their children, and ours, that our respective governments never get to the point of outright conflict.
But they're like every other culture, willing to take on excessive risk when they perceive it's to their advantage. And the Chinese government will let them in order to create the illusion of economic growth and employment.
And CNBC just reported that now the Chinese government is begging for the world not to push de-pegging of the Yuan from the Dollar, warning it would create major social instability in China..
But here we have TJ telling us everything's hunky-dory, with people working diligently, saving money.. etc. However, they are "saving it" in houses and apartments, which as all of us know is a money pit. Land is different, depending on location, but houses just deteriorate.
I'm more of the buyer beware mentality now. Because....
youtube.com
Hawk |
