Bumping,
Did any of you see tonight's CBS 60 Minutes airing of China's Ghost Cities??? China has built several entire cities which stand completely empty. A housing bubble of historic proportions is waiting to pop, it seems. The individuals interviewed by Leslie Stahl indicate that it will be huge, enough to bring the Chinese economy to a halt and set it back for years.
The apartments and other buildings, based on the report, are too expensive for the peasants to buy. Why do they continue to build them? Middle class Chinese are buying them right and left, which has fueled the building frenzy, for investment. The Chinese can't invest out of the country and their stock market sucks, so they have been plowing their lives' savings into apartments and real estate. The government limited the number of apts. the individual could buy to one, in an attempt to slow it down, but the middle class has found ways around it. The buying middle class are certain the market will continue expanding; they are delusional according to the Chinese developers, who stand to lose everything because they can't pay back massive loans. The government encouraged the building because it buoyed their economy and provided jobs to 60,000,000 or so peasants. Where have we heard this before? It makes the housing bubble lead up to the burst and the '08 US recessioin, which occurred in large part because of the same issue - look like an ant in comparison.
Major, major problems are in the balance. My comments from this original OP:
"Re Economics: The Invisible Hand will reach out and touch all nations, just as it did with the Japanese miracle 2 decades ago. The Chinese have a Field of Dreams goal, "If you build it they will come." (60 minutes stole my tag line). It is admirable, but sooner or later the Chinese economy will have to compete directly with the world. Absent serious government support, can it thrive? Do they really have a free market capitalisitic economy? Or is the government propping up currencies, spending on infrastructure and enabling 'capatilistic' endeavors to such a degree that, once it is required to compete mano a mano, it will suffer?? Those are 64 dollar questions. There are others."
There are no free lunches, and if you dance to the music, sooner or later you will have to pay to the piper.