Monday, August 9, 2010

It's The Mother Of All Bubbles


In the latest issue of  The Casey Report  Bud Conrad does a fantastic job analyzing the truth about Asia. Japan is a ticking demographic time bomb. The Chinese government has created the mother of all bubbles and when it pops, it will be felt around the world. The China miracle is not really a miracle. It is a debt financed bubble. Sound familiar?

I picked out 4 charts from Bud’s article that paint the picture as clearly as possible. The chart below shows that compared to the real estate bubble in Japan during the late 1980s and the current bubble in China, the US housing bubble looks like a tiny speed bump. The US has 20% to 30% more downside to go. For those looking for a housing recovery, I’d like to point out that Japan’s housing market has fallen for 20 years with no recovery. I wonder if the National Association of Realtors will be running an advertisement campaign in 2025 telling us it is the best time to buy.
Take a gander at home prices in China. Since the 2008 financial crisis, the Chinese housing market has skyrocketed 60%. There are now 65 million vacant housing units. The question is no longer whether there is a Chinese housing bubble, but when will it pop. There is one thing that bubbles ALWAYS do. An that is POP!!!
The price of land in and around Beijing has gone up by a factor of 9 in the last few years. Delusion isn’t just for Americans anymore. These two charts should be placed next to the word “bubble” in the dictionary. This will surely end in tears for anyone who has bought a house in China in the last two years.
More Here..


Warning:
Significant Chance of Recession Next 2 Years: SF
More Here..

8 comments:

  1. How do you say kaboom in Chinese?

    ReplyDelete
  2. August 25th, 2010.

    ReplyDelete
  3. The translation, 2:12, roughly is "feng pi"...with a little humor included.

    ReplyDelete
  4. Oh no! Not another soothsayer/prophet with his "The world will end on XXXXX!!!...Muahh hahahahha" (Evil prophet laugh).

    Shit will crash...But in domino fashion...Not in one day but in several...As each country braces and shuts down individual financial systems to stop the bleeding aka closing down Wall St. trades, bank contracts and banks so there are no runs on the banks.

    Will we riot? Will Barry call for Martial Law? Will people stop going to work in the cities making everything go to a grind? Will truckers and shippers be threatened to work as to not let trade or commerce from crashing?

    Man this shit is crazy! Yet it's all kinda plausible...Who needs the Sci-Fi channel when I live in a Matrix already?

    Funny I bought a smaller "Bug Out bag" today...With the basics, some tools, 1st aid kit and toiletries...Just in case.

    ReplyDelete
  5. Instead of frittering about China`s bubble which can be mitigated by 1-1/2 billion people, and thus somewhat absorbed like a foam covered runway, you`d better be casting an eye north toward Canada (you know, that really large country that barely has the population of California) We are developing the mother of all real estate bubbles as we speak-very soon you will hear Godzilla roar. It`s gonna go nuts.

    ReplyDelete
  6. 6:17 we had a piece on the Canadian Real Estate bubble just the other day.

    ReplyDelete
  7. EA - Could you find where Canada would fall in that chart of the U.S., Japan and China. To my knowledge, Canada's housinh valuee is $1.5 trillion dollars which is more than our GDP which is $1.4 trillion. Again, very difficult to find Canadian charts on housing and Canada has the larggest bubble forming the world.

    ReplyDelete
  8. Been reading that the Chinese banks were lending huge amounts of money to home buyers, apparently without too many strings attached. So people were speculating by buying several homes. The banks then pulled back and stopped lending to people who wanted to buy a third house!

    This is not the same as the value of real estate suddenly plummeting, although that still could happen. Been reading that Canada's housing bubble may be bursting too. It depends on how interrelated the world financial banks are to know how they'd be affected by more bubbles.

    ReplyDelete

Everyone is encouraged to participate with civilized comments.