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Political issues in the People's Republic of China.

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By late
#15196054
B0ycey wrote:
Actually this is pretty much spot on. In the West and particularly in the UK given Ingliz brought it up, the price is due to demand and low supply. The bubble won't burst whilst people want homes because they will just pay what they can afford. In China people were buying home, not to live but in invest so you cannot even compare the two. One has low stock high demand, the other has too much stock and not enough demand. Even the stupidest user should understand this but clearly not. So completely different situations.

But even so that doesn't effect China directly and as long as people assume their property is worth what they paid for and continue paying off their mortgages, it wouldn't even effect their economy then. This isn't a financial timebomb in the sense China will go broke, but those who have invested in Chinese property will struggle to sell their assets and lose money. In other words, it is a domestic bubble and not a national bubble hence why the Chinese government wants to control the prices of their real estate right now. Stop people being priced out in high demand areas and make sure people buy homes at the assumed price in low demand areas.



Krugman would disagree.

The FT article I linked just above goes over that nicely. I went back a second time for this post, and was locked out by the paywall. But you can read it if you haven't been there recently.

Bottom line, China is in an economic crisis, but how bad it will get when the bubble pops is not clear for a number of reasons.

What I think is that this bubble will continue to grow until it pops itself. If they wait that long, you could be looking at a major crisis, a depression or something close to it.
User avatar
By ingliz
#15196056
B0ycey wrote:a domestic bubble

I bought my UK house for £500 in 1969. To buy the same house today would cost £123,750.


:lol:
User avatar
By Rancid
#15196058
ingliz wrote:According to the most recent government figures released in November 2020, 268,385 homes in England had been empty for at least six months.


Does this filter out second homes of rich people?

In other words, this is likely not an indicator that there is no demand for housing. We know there is demand, so there's likely another explanation for this that doesn't contradict the thesis that in the west, we have high demand and low supply. Maybe some of that low supply is because asshole rich are buying more than one vacation home.

Also, all housing isn't the same, so you need to break this down by housing types (apartments, homes, luxury homes, luxury apartments, condos, etc.)

In any case, I think you need to dig deeper on this number.

I think it's fairly well understood that the Chinese real estate market is very different from just about any real estate market in the west.
Last edited by Rancid on 27 Oct 2021 15:56, edited 1 time in total.
By B0ycey
#15196059
ingliz wrote:I bought my UK house for £500 in 1969. To buy the same house today would cost £123,750.


Have your heard the words inflation and decimalsation. That is 50 years ago. Bread isn't half a penny either. :lol:
By B0ycey
#15196060
late wrote:Krugman would disagree.

The FT article I linked just above goes over that nicely. I went back a second time for this post, and was locked out by the paywall. But you can read it if you haven't been there recently.

Bottom line, China is in an economic crisis, but how bad it will get when the bubble pops is not clear for a number of reasons.

What I think is that this bubble will continue to grow until it pops itself. If they wait that long, you could be looking at a major crisis, a depression or something close to it.


What does it matter whether housing effects its GDP? The truth is their real estate market is likely to crash and they will still be making things and employing people in manufacturing like they always have regardless of this. And if their housing markets does crash then it will just give the CCP more reason to socialise their housing market doesn't it. The CCP doesn't seem keen to act on this, it is hardly making the news in any meaningful way and these articles are wishful thinking if you think China are about to go broke.

But I digest, the truth is the Chinese Market housing bubble has ALREADY BURST given the government is manipulating their market and people aren't buying homes there any more and as such are being left empty. And guess what. China still growing. The only signs of the housing market has burst is Evergrande are broke, trying to find funds to pay back loans and are trying to give homes as payment instead.

Also it is clear since 2008 that GDP doesnt means shit.
By B0ycey
#15196061
Rancid wrote:Does this filter out second homes of rich people?


It is second homes Rancid. Lack of housing is a big fucking problem in the UK. Also, he is wrong in real estate to GDP in the UK. The UK, it is 7% and Malta, it is 7.5%. Not that I think lives in Malta, but I thought I would just bring it up anyway. :lol:
By late
#15196064
B0ycey wrote:
What does it matter whether housing effects its GDP?



Because what I consider to be a conservative estimate is that a housing crash would wipe out 5-10% of GDP.

Because China limits what people can invest in, that means millions would see their retirement and health care money wiped out. If people panic, you could see deflation. I know the government has very deep pockets, but all it could do is shorten the duration of the collapse.

Most economists don't talk like that. But there is a serious problem here.
User avatar
By Potemkin
#15196066
B0ycey wrote:Fuck me. If I was working in 1969, I would be fucking RICH!

Think you have the wrong inflation figures. You might have got it from the same source as your real estate to GDP figures from bullshit.com


:lol:

https://www.in2013dollars.com/us/inflation/1969?amount=900

@ingliz's figures are in the right ballpark, @B0ycey.

'Decimalisation'? Lolwut? :lol:
By B0ycey
#15196067
late wrote:Because what I consider to be a conservative estimate is that a housing crash would wipe out 5-10% of GDP.

Because China limits what people can invest in, that means millions would see their retirement and health care money wiped out. If people panic, you could see deflation. I know the government has very deep pockets, but all it could do is shorten the duration of the collapse.

Most economists don't talk like that. But there is a serious problem here.


Right, so 10% gets wipe off and what does that mean? Their growth figures are fantastic compared to the West and the West haven't collapsed on .1% growth for the past 15 years.

But sure, a lot of Chinese investors are going to lose money but I guess that is no different than any other risky investment. But that is a domestic not national crisis. China as a national state won't be effected in any meaningful way and it wouldn't even effect their domestic economy as long as People believe their investment is worth something given the bubble has already burst.
By B0ycey
#15196068
Potemkin wrote:https://www.in2013dollars.com/us/inflation/1969?amount=900

@ingliz's figures are in the right ballpark, @B0ycey.

'Decimalisation'? Lolwut? :lol:


If the average wage is £585 a week now, that means wages should be £9000 a week today. I don't know how that calculator works and what it is basing its information on. I suspect the service debt. But there is something not right in its figures I can assure you.

Also, it is in dollars. Try harder Pote. :lol:
User avatar
By Potemkin
#15196069
B0ycey wrote:If the average wage is £585 a week now, that means wages should be £9000 a week today.

What the fuck are you babbling about? :eh:

I don't know how that calculator works and what it is basing ifs information on. I suspect the service debt. But there is something not right in its figures I can assure you.

@ingliz said that he bought a house for £500 in 1969. Adjusting for inflation, that comes to under £10,000 today.

Also, it is in dollars. Try harder Pote. :lol:

It was the first result which came up, and I said "ballpark". The inflation figures in the US and the UK have never been far off each other.
By B0ycey
#15196071
Potemkin wrote:What the fuck are you babbling about? :eh:


I am taking about wages are on average £585 a week. That is the equivalent to £9000 if £500 was worth £7000 under ingliz figures. Under your calculator (in dollars) that is £4500 a week.

@ingliz said that he bought a house for £500 in 1969. Adjusting for inflation, that comes to under £10,000 today.


Then everyone should be buying homes after two weeks. Looking at your calculator it is based in purchasing power. And in laymen that means the things we buy are getting cheaper. Everything that is it seems apart from homes.
By late
#15196072
B0ycey wrote:

But sure, a lot of Chinese investors are going to lose money but I guess that is no different than any other risky investment.



China doesn't have much in the way of social programs. So if you're a typical Chinese person, that's both your retirement and health care money wiped out. That's hundreds of millions seriously pissed off people.

The Chinese government looks strong, autocratic governments usually do, right up to the moment they collapse.

This could get apocalyptically ugly real fast. Granted, I am on the extreme end of pessimism about China, but that's what I think.
User avatar
By ingliz
#15196073
@B0ycey

Did a working man earn £585 a week in 1969?


:lol:
User avatar
By Potemkin
#15196074
B0ycey wrote:I am taking about wages are on average £585 a week. That is the equivalent to £9000 if £500 was worth £7000 under ingliz figures. Under your calculator (in dollars) that is £4500 a week.

Are you high? *sniffs the air around @B0ycey suspiciously* :eh:

Wages were not, on average, £585 a week in 1969, which is when @ingliz bought a house for £500. They were, in fact, closer to £5 a week. Wages have, of course, increased in real terms since then, but not by as much as house prices have increased, which is the point he was making. And @ingliz's figures are correct.
By B0ycey
#15196076
late wrote:China doesn't have much in the way of social programs. So if you're a typical Chinese person, that's both your retirement and health care money wiped out. That's hundreds of millions seriously pissed off people.

The Chinese government looks strong, autocratic governments usually do, right up to the moment they collapse.

This could get apocalyptically ugly real fast. Granted, I am on the extreme end of pessimism about China, but that's what I think.


What do I think? I think a lot of people are going to be pissed off, the government will act accordingly and the blame will go straight back to Evergrande. I don't see anyone revolting against the government and the government will do all it can to maintain the the housing prices and hold back the tide as long as possible.
By B0ycey
#15196077
Potemkin wrote:Are you high? *sniffs the air around @B0ycey suspiciously* :eh:

Wages were not, on average, £585 a week in 1969, which is when @ingliz bought a house for £500. They were, in fact, closer to £5 a week. Wages have, of course, increased in real terms since then, but not by as much as house prices have increased, which is the point he was making. And @ingliz's figures are correct.


I am not taking about wages in 1969, but in 2021. It don't think this is so complicated to understand. If £585 in 1969 is worth £4500 today, then we should expect to see that figure today given that is the average wage. I am aware that wages in 1969 weren't £585, that is my point.

And to help you out better, if wages in 1969 was on average £5 a week, under your calculator (in dollars) that is the equivalent to £40 today and guess what, wages are more than that.

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