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Advisor

china property defaults

http://www.telegraph.co.uk/finance/china-business/10703990/Looming-property-default-in-China-raises-...

 

The current administration has apparently decided to curb credit in the early part of its mandated term. Soft, hard, crash landing, anybody's guess and likewise about effect on grains- directly and through general commodity disorder.

 

Also hard to know if it makes them more or less predictable geopolitically. They tend to line up in general with the Russia/Syria/Iran axis against the west, don't know if this makes them more or less aggressive, but probably more unpredictable.

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7 Replies
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Veteran Contributor

Re: china property defaults

China also indicated that it would let their currency float a little more than in the past.

Could affect exchange rates some eventually.

Sounded like they wanted to devalue more - so their exports will be even cheaper, and imports more dear.

 

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Esteemed Advisor

Re: china property defaults

Dr. Copper seems to know something about its demand base.

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Advisor

Re: china property defaults

FWIW I have personaly discounted copper as an indicator of anything of the sort because neither the recent past price or the present selloff seems to have a lot to do with the actual demand for copper, it has to do with the demand for financial hoarding and subsequent (possible) dishoarding.

 

Although the underlying premise may be correct and might, as I said, have both direct and indirect impact on other commodities.

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Senior Contributor

Re: china property defaults

I don't know how people thought that housing could go on forever anyway,   its just a riduiculous idea that you can build houses forever to support an economy,,,,,

 

 

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Contributor

Re: china property defaults

Doesn't the government own everything in China just give 99 year lease to the people?

I hear on farm ground when the father dies the son has to negotiate another lease.

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Advisor

Re: china property defaults

But ya know, the so called recovery following the US financial system collapse has been as much as anything about the greatest credit expansion in history, which China undertook. Like our mortgage bubble, it was mostly accomplished through non or semi-official channels of a shadow banking system.

 

I think you'd also have to say that had a part in the extension of a highly profitable run for farmers.

 

As to whether there is somebody out there ready to step up and blow the next bubble to cushion the impact of the last bubble, I don't know.

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Advisor

Re: china property defaults

More AEP, for what its worth. On the one hand you need to keep in mind that he can be somewhat alarmist. On the other, reading conventional wisdom on some of this stuff is worse than reading nothing at all.

 

 

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026849/hsbcs-stress-test-includes-a-5...

 

"It matters. China’s $24 trillion credit nexus has grown to be as large as the entire US and Japanese commercial banking systems combined. We are all captives of Chinese credit loan saga now."

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