China’s real estate bubble

March 26, 2013

Banner - Aside 2

China BuildingsSource: China’s real estate bubble – CBS News.

China has been nothing short of a financial miracle. In just 30 years, this state-controlled economy became the world’s second largest, deftly managed by government policies and decrees.

One sector the authorities concentrated on was real estate and construction. But that may have created the largest housing bubble in human history. If you go to China, it’s easy to see why there’s all the talk of a bubble. We discovered that the most populated nation on earth is building houses, districts and cities with no one in them.

This article got my attention because of two different items.  One is how our prosperity did not disappear; it was simplly moved to another continent. The second is that I recently posted the words that started ultra-conservatism in our country. Those words were “Government is not a solution to our problem, government is the problem.” from Ronald Reagan’s first inaugural speech. He ushered in the feeling in this country that government serves no purpose and should just get out of the way of the private sector and everything will be alright.

Obviously China has taken the exact opposite track. Their government controls almost everything in that country. To see them go from number twelve to number two in less than thirty years is nothing short of amazing. But of course their prosperity is coming at the expense of the American worker as our corporations continue to move jobs to their country.

2 responses to China’s real estate bubble

  1. 

    It’s easy to blame the corporations, which, by the way, I and millions of other Americans benefit from when they do well, via our retirement portfolios, but the truth is the American public would be very unlikely to pay for American produced goods. To the best of my knowledge, Walmart and it’s multitude of foreign made, cheap labor products is thriving here in America. Why? Because we as a country appear to value low prices.

    Ironically, while in China this last November, several locals told us they were less than impressed with the new Walmarts opening there because almost all of the goods are made in China.

    We had a great run, and this country will continue to be a wonderful place to live, but the rest of the world is entitled to their piece of the prosperity pie too, don’t you think?

    Like

    • 

      Tamara, you certainly are insightful for using so few words. I think I agree with everything you said.

      Corporations like everything else in life are not black/white but instead shades of grey. I too was one of the fortunate that managed to accumulate my retirement portfolio at the right time. Most of that wealth came from the prosperous Clinton years. I was fortunate in that I got out of stocks before the dot.com bust. It is a shame to see so many that followed us in the time since then to see little or no gain that we did.

      From what I have studied we Americans are famous among most Europeans in that they are amazed how we accept such cheaply made products. You are right in that most Americans will buy the cheapest they can. That does directly relate to us losing so many middle class jobs in the country in the last thirty years.

      I certainly don’t begrudge China for their inherited prosperity. They deserve their share. Your last paragraph sounds like Jimmy Carter’s malaise speech. “We had some good times but they are over now”. That attitude got Reagan elected and that just made matters worse. 🙂

      It is sad to see that our educational system has not be able to make up for the loss of low-skilled jobs that created the middle class of our generation. I can see the envy of later generations when they look at us baby-boomers and won’t be surprised if they try to take some of that prosperity away from us via Social Security and Medicare cuts in the not too distant future.

      Like