RED ALERT: Chinese property bubble about to burst.

[touchring]

From Shanghai to Hong Kong to Singapore to "Chinese Vancouver", the meltdown will take place by the end of the year. All the signs are there.

1). Chinese developers paying >100% interest rates for loanshark loans - probably with the intention to abscond.

2). Singapore developers bundling free $100K luxury cars.

3). A run on Chinese state banks - http://www.itulip.com/forums/showthr...-p.a.?p=210583

4). Bonds issued by Chinese builders plunged 20% (versus 7% by USA builders) - http://news.businessweek.com/article...3LTCIJASK7Q7IH

Commodities, especially copper, iron and even precious metals will be badly scrwed, take care.

[thriftyandboringinohio]

Re: RED ALERT: Chinese property bubble about to burst.

...Commodities, especially copper, iron and even precious metals will be badly scrwed, take care.

Thanks for the words of caution.

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

Thanks for the words of caution.

Ironically, America's economy will boom if commodities crash.

I suspect that Barack Obama may actually be secretly trying to engineer deflation. What is the fastest way to turbocharge the American economy before November 2012?

Answer: Gasoline at 2 bucks by June 2012.

The plan:

1. Strengthen domestic banks, particularly BAC to prepare for the crash.
2. Leave the Europeans to their own peril.
3. Yuan offensive.

[jpatter666]

Re: RED ALERT: Chinese property bubble about to burst.

Ironically, America's economy will boom if commodities crash.

I suspect that Barack Obama may actually be secretly trying to engineer deflation. What is the fastest way to turbocharge the American economy before November 2012?

Answer: Gasoline at 2 bucks by June 2012.

The plan:

1. Strengthen domestic banks, particularly BAC to prepare for the crash.
2. Leave the Europeans to their own peril.
3. Yuan offensive.

OMG -- the Michelle Bachman plan.... :-P

Still, it's an interesting enough theory and does correspond with one of my personal maxims:

Politicians will sell their mother (and country) to get re-elected.

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

OMG -- the Michelle Bachman plan.... :-P

Still, it's an interesting enough theory and does correspond with one of my personal maxims:

Politicians will sell their mother (and country) to get re-elected.

How will Obama get elected if he doesn't fix the unemployment problem?

His solar plans are becoming a disaster. There's no way America can reduce unemployment by exporting since you can't beat the Chinese.

The only way is by boosting domestic consumption, and the best way of doing that is to reduce the price of energy. Reduce gasoline to 2 bucks and within 3 months the economy will boom.

[Slimprofits]

Re: RED ALERT: Chinese property bubble about to burst.

Psychologically, you have it backwards. I think psychologically is the correct word.
The election is in 13 months.
Gasoline prices have been falling since the beginning of May and there was no mini-boom associated with the good weather and summer vacations.
The national average sits at $3.45.
The latest reports have consumer spending and confidence (tied to stock markets) taking a hit lately.

If oil prices fall enough that the national average prices for gasoline is $2.00 within say 6 months, other asset classes will deflate in price as well.
A stock market crash of those proportions would insure Obama's blowout defeat.

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

Psychologically, you have it backwards. I think psychologically is the correct word.
The election is in 13 months.
Gasoline prices have been falling since the beginning of May and there was no mini-boom associated with the good weather and summer vacations.
The national average sits at $3.45.
The latest reports have consumer spending and confidence (tied to stock markets) taking a hit lately.

If oil prices fall enough that the national average prices for gasoline is $2.00 within say 6 months, other asset classes will deflate in price as well.
A stock market crash of those proportions would insure Obama's blowout defeat.

It is no longer for Obama to decide. Bernanke's money printing doesn't work. Obama is gona lose anyway, so he might as well try the other way. Sometimes the unexpected might happen.

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

Obama is a poker player and doesn't show his cards until the last moment. Look at how he goes after the terrorists. On one hand he withdraws from Iraq and Afghanistan, on the other hand he expands covert operations against Bin Laden and the leaders of Al Qaeda without anyone knowing it. Even the Paks are in the dark. He even built a new base in Saudi Arabia to launch drones to Yemen. Obama knows Sunzi Art of War, catch the leader and you defeat the enemy all. Fact is, he has caught Bin Laden by surprise.

If anyone has forgotten, he engineered the deflation, starting with forcing Comex to increase margin requirements for Silver in late spring. With Europe and especially China at their most vulnerable, an attack on commodities and foreign stock markets will reverse the flow of funds and investments.

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

Thanks for the words of caution.

10 weeks on, the Chinese real estate bubble has collapsed, everyone is still focused on Euro problems.

[lektrode]

Re: RED ALERT: Chinese property bubble about to burst.

10 weeks on, the Chinese real estate bubble has collapsed, everyone is still focused on Euro problems.

how about the run on (out of) commodities? and altho i had thot $4 gasoline (in mid '08, 5bux looked certain) would be a fond memory by now, we're still above that out this way... seeing 4.55 and higher, on the high end... pretty unusual for this late in the year, eh?

24 Hour Silver

24 Hour USDX

[nedtheguy]

Re: RED ALERT: Chinese property bubble about to burst.

redacted

[charliebrown]

Re: RED ALERT: Chinese property bubble about to burst.

what are you watching? Do you have boots on the ground there?

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

what are you watching? Do you have boots on the ground there?

No boots, but was a partner in a Chinese business until a couple years ago.

I'm watching government curbs on real estate speculation and the finance of real estate companies.

The bubble is sort of a ponzi like investment scam created by developers. Developers push the market by bidding up land prices, creating artificial transactions to push up bank valuation.

They are using the same kind of tricks used by Hong Kong and Singapore developers just before the Asian Financial crisis.

However, as compared to 1997, the scale of the scam is much greater as evidenced by entire cities were created every year. It is said that there are 70 million empty apartments in China. If there were 3 persons to a household, they would accommodate 200 million people.

The Chinese real estate investment scam drives world commodity markets and generates prosperity from Australia to South Africa to Brazil to Russia, which in turn consume more commodities themselves, e.g. domestic oil demand spiked in Brazil, Saudi Arabia, etc in recent years. And not to mention, drives real estate investment within the commodity producers themselves.

The effects of the unraveling of this scam cannot be underestimated.

[touchring]

Re: RED ALERT: Chinese property bubble about to burst.

4 months on....

A price war is in progress. What will happen next will be some of the smaller builders absconding with buyer's money, making everyone fearful of buying and trigger a massive credit crisis.

With that, the shit hits the fan!!



http://topics.scmp.com/news/china-bu...-as-sales-fall

Mainland developers escalate price war as sales fall
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Peggy Sito
Feb 24, 2012
Another building goes up in Beijing. January home prices in 47 of 70 cities fell, while values in the other 23 were unchanged from December.

Mainland developers have started another round of large-scale price cuts after property sales slumped in January.

The latest price war has been triggered by China Merchants Property, which has cut prices by as much as 20 per cent or more on 22 developments in 14 cities, including first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhen, as well as second and third tier cities like Chongqing, Nanjing, Suzhou and Tianjin.

The preferential price offer began last Friday and runs to March 31, according to China Merchants' website

The price cuts vary, depending on location and market conditions in individual cities. The biggest cut was seen in a development in Chongqing, where a batch of new units will be sold at a starting price of 7,000 yuan (HK$8,610) per square metre tomorrow, according to the mainland website, Guardian. That price is more than 20 per cent lower than the price of the previous batch of units - 9,200 yuan per square metre, Guardian quoted a sales executive at China Merchants as saying.

"Developers cannot find buyers if they do not cut prices," said Sherman Lai Ming-ka, chairman of Hong Kong-based property agent Centaline Property. "Buyers will return to the market if developers are willing to cut prices by 20 per cent."

China Merchants is not alone in its price cutting. Poly Real Estate Group launched a preferential price offer for 100 projects in 40 cities last month, and the offer runs until March, according to mainland publication 21st Century.

China Vanke and Evergrande Real Estate have offered special prices for some units in some projects, but not on the same scale as Poly Real Estate and China Merchants.

Poly Real Estate's January contracted sales fell almost 70 per cent from a year earlier, to 1.51 billion yuan, while China Vanke posted a 40 per cent year-on year-drop in January contracted sales, to 12.2 billion yuan.

Hong Kong-listed mainland developers such as Longfor Properties and Evergrande Real Estate have also reported year-on-year falls of more than 50 per cent in property sales in the first month of this year.

"Housing prices have dipped into negative territory since last October. We expect the current downward trend in prices will be maintained in the next one or two quarters," said Alan Jin, a regional property researcher, Asia ex-Japan, with Mizuho Securities Asia.

January home prices in 47 of 70 surveyed mainland cities fell, while home values in the remaining 23 were unchanged from December, according to the National Statistics Bureau. None of them posted gains, the first time that has happened in about a year.

"The housing market has yet to reach bottom," Jin said.

Jin estimates that the sector will need to repay 2.6 trillion yuan in borrowings, which is 30 per cent higher than in 2011.

peggy.sito@scmp.com Copyright (c) 2012. South China Morning Post Publishers Ltd. All rights reserved.