To: TobagoJack who wrote (61393 ) 2/22/2010 12:10:46 AM From: Hawkmoon Read Replies (3) | Respond to chinese speculators are mostly doing with equity, not leverage Nothing in this process inherently requires the “over exuberant” bout of investment to be funded by debt. Two of the most famous bubbles in history, the Tulip Mania of 1637 and the South Sea Bubble of 1720, were not caused by borrowing, but investors putting their own money into commodities or projects they barely understood (in fact, the South Sea Bubble was actually funded by de-leveraging, in which investors swapped claims on Britain’s national debt in exchange for equity shares in a company that proposed to restructure that debt). seekingalpha.com China’s banks may not have invested in risky mortgage securities like CDOs, but they make most of their business loans based on collateral in companies’ real estate assets , which frequently are pegged to the going price of nearby residential developments. If that collateral were suddenly cut in half, China could face a banking meltdown that makes the West’s financial crisis look like a walk in the park. ......We have been told that the value of the condo we bought last year has gone up 30% based on sales of new nearby developments, but it’s impossible to confirm since there is no secondary market. Originally we tried to rent the place, but we couldn’t find takers at any price that could remotely cover the mortgage , despite a prime location. feer.com DO like), but the actual value never seems to properly reflect what people are able to pay for it.
