8 ms·

In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers.

In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. In the short term, though, this is likely to trigger a domino effect of other property developers defaulting and a lot of pain for everybody who (thought they had) bought property with them. The real tests are whether China will allow the Chinese entity to go bankrupt (and not just the HK one), and what's going to happen to foreign shareholders and ordinary Chinese citizens who trusted these companies with lots of hard-earned money. One unpredictable ripple effect will also be on the crypto markets: there have been persistent rumors that Tether is heavily invested in Chinese property developers in general and Evergrande in particular.

yreg 3y ago
In the long term, the bursting of Tether is probably…
- 1over137 3y ago
  and in the short term too!
blueyes 3y ago
When large groups of assets and securities go to zero, it always has a a ripple effect on markets across many other assets. That was the story of Bear and Lehman in 2008-9.
EZ-E 3y ago
> In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. I unironically think a property bubble pop is a great way to defeat the demographic slump in the long term. That and the recent crackdown/reforms on private education makes me think the party is aware that property bubbles and education costs are a liability
- mrjin 3y ago
  I doubt that's going to help. The decades of property bubble has changed the mindset of the people. Just look at Japan, it's property bubble burst was decades ago, but till now, are there any signs of turnaround? Young people have enough trouble just to get a shelter and feed themselves, and now you want them to have kids which add more pressure onto what they are already struggling to coup with. How likely is that?
  - Drakim 3y ago
    Yeah, it's gonna be very hard to get the genie to go back into the bottle, people won't forget that real estate is very powerful for financial speculation, and that even if the bubble bursts again and again you have plenty of years with amazing returns. At least the same hasn't happened with food and drinkable water yet.
    - Anotheroneagain 3y ago
      The problem gets deeper: This may sound insane, but I would argue that the productivity is way too high. There is too much stuff, which is too cheap, which makes it too hard to make money by actually producing anything. This it turn splits the economy into two groups: One that doesn't have money, live scrapping the bottom, and typically in debt. The other that does have money, with no good opportunities to invest, which causes bubbles.
      - rightbyte 3y ago
        Ye the competition is too high in the base and the profit taken by middle men. However, I think covid changed that, where producers collectivly realized that if they just raise prices the middle men need to pay up. Being stuck in a sector that operates "efficiently" sucks. You want guilds, like lawyers and doctors, or inefficiency, like the financial sector.
        Anotheroneagain 3y ago
kylebenzle 3y ago
Tether is by far the largest counterfeiter of USD and has already been shown to be backed largely by nothing. The introduction of Tether coincided with the hijacking of the Bitcoin GitHub repo by the for profit company Blockstream. Blockstream's Samson Mow had close ties with Tether and El Salvador dictatorial President who made Bitcoin a national currency on exchange for billions of dollars of free Tether dollars. Tether is not and does not need to be backed by anything other than US intelligence agencies. There is no proof of this other than the fact that the larger USD counterfeiter is allowed to exist and control the price of the hijacked Bitcoin chain with the ticker, BTC.
- RustyRussell 3y ago
  This is ridiculous, sorry. The NY AG investigation showed Tether was actually mostly backed at the time (surprising me, too!) And the Blockstream FUD is tired (I am the longest serving technical employee at Blockstream)
- bouncycastle 3y ago
  I don't like Tether myself, but it's definitely not counterfeiting. To counterfeit something, you need to pass it off as the real thing. Tether is not the real USD, it's just a currency made to be worth around the same amount as a dollar, and the value often hovers around $1, but it's not always $1. Another real world example is the Hong Kong Dollar. Just because it's pegged to the USD, does not mean it's counterfeit.
karmasimida 3y ago
> domino effect of other property developers defaulting It has already happened. Evergrande and Countrygarden, two of the biggest developers both defaulted. The insolvency of Chinese property sector is old news.
motbus3 3y ago
This is true. The (ironic) lack of control of property holding to sell moronic. Well, technically it is the lobby industry which helps no citizen when they push back for measures that avoid accumulation of properties causing the market to concentrate loads of money on real state for obvious reasons. In my city, they tried to implement taxes for those who own more than two properties and it would be more expensive for properties that had no one living. The result is that the proposal was quietly removed from the voting in a Friday night before a weekend followed by long holidays.
misja111 3y ago
> In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. The effect of China's property bubble was an oversupply of houses, leading to unnaturally low property prices. The long term effect will be a consolidation in the property branch, leading to less supply and higher property prices. Whether this is good or bad I don't know, but it certainly will not lead to more affordable housing than right now.
- petesergeant 3y ago
  Was there an oversupply in actually built properties in places people want to live? My understanding is that property prices in major cities are still massively unaffordable
  - tsss 3y ago
    What does it matter? All the people who bought apartments in the middle of nowhere as an investment now want to buy the apartments in real cities => thus more demand.
dathinab 3y ago
> affordable housing is in the interest of everybody except property developers. it is, but it's also complicated as the problems are quite a bit different in China then in the US the reason there was a bubble in China was because they sold (barely) affordable (apartment owned, not rented) housing to a huge amount of people while not producing it. Like they financed it similar to a snowball system. Group B buys housing but pays for the housing bought by Group A then Group C pays for Group B etc. But at some point it fell apart and people realized the housing they should have gotten "soon" isn't being build (or stuck in a partial state) and the company has no money anymore. (Kind oversimplifying the whole thing.) To top that off there are (state build) ghost cities which have cheap appartments and acceptable building build quality, the problem is there is nothing there, no jobs(!), no supermarket, bus, people, "anything", if you are unlucky even electricity might be cut of in parts of it, (also I guess for rent not apartment ownership). (But there are also enough examples of western media reporting about ghost cities messed up because turns out just a few years later it wasn't a ghost city anymore.) And to make that worse it's not just Evergrande. It outside of the areas with a lot of central government focus there where many cases of houses building companies which had money issues trying to pretend everything is fine by cheeping out on building cost to a point where houses build that way are basically unusable. Through from the outside it looked like there is still progress. Issue with that is, it is really hard to guess how bad it is, pro-china media most times doesn't mention it and if it says it's a rare exception and/or videos are fake, anti-china media says it's bad to a point it's everywhere, and you find little in between. And both sides are known to lie a lot.
- dpflan 3y ago
  Very curious how these opportunities for housing were marketed to the masses? These ghost cities you describe, I can see how the new housing can be presented as a life-changing opportunity, with nice images/videos but the reality is...a ghost town, facade of a city.
  - rfwhyte 3y ago
    They are marketed as investments, not housing. The majority of people buying these "Homes" never intended for themselves or anyone else for that matter, to live in them in the first place.
wolf89618 3y ago
[dead]
shortrounddev2 3y ago
> affordable housing is in the interest of everybody except property developers. Property developers are the answer to affordable housing. We cannot have affordable housing without building millions of new housing units. It's the home OWNERS who are dragging their feet to try to artificially inflate their property values
slimebot80 3y ago
So the long term is more affordable housing, but Xi's perceived success was lifting millions out of poverty, with a majority tied to realestate. Time to invade Taiwan, I guess.
sparrowInHand 3y ago
This bubble makes up large parts of the world wide pension schemes. Without rents to enslave the younger generations, the wealth will be extracted by other means, aka prices rising or services getting ever more expensive. There is no escape from this.
- faeriechangling 3y ago
  You can always rob the pensions of the young

yreg 3y ago

In the long term, the bursting of Tether is probably…

1over137 3y ago
and in the short term too!

blueyes 3y ago

When large groups of assets and securities go to zero, it always has a a ripple effect on markets across many other assets. That was the story of Bear and Lehman in 2008-9.

EZ-E 3y ago

> In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. I unironically think a property bubble pop is a great way to defeat the demographic slump in the long term. That and the recent crackdown/reforms on private education makes me think the party is aware that property bubbles and education costs are a liability

mrjin 3y ago
I doubt that's going to help. The decades of property bubble has changed the mindset of the people. Just look at Japan, it's property bubble burst was decades ago, but till now, are there any signs of turnaround? Young people have enough trouble just to get a shelter and feed themselves, and now you want them to have kids which add more pressure onto what they are already struggling to coup with. How likely is that?
- Drakim 3y ago
  Yeah, it's gonna be very hard to get the genie to go back into the bottle, people won't forget that real estate is very powerful for financial speculation, and that even if the bubble bursts again and again you have plenty of years with amazing returns. At least the same hasn't happened with food and drinkable water yet.
  - Anotheroneagain 3y ago
    The problem gets deeper: This may sound insane, but I would argue that the productivity is way too high. There is too much stuff, which is too cheap, which makes it too hard to make money by actually producing anything. This it turn splits the economy into two groups: One that doesn't have money, live scrapping the bottom, and typically in debt. The other that does have money, with no good opportunities to invest, which causes bubbles.
    - rightbyte 3y ago
      Ye the competition is too high in the base and the profit taken by middle men. However, I think covid changed that, where producers collectivly realized that if they just raise prices the middle men need to pay up. Being stuck in a sector that operates "efficiently" sucks. You want guilds, like lawyers and doctors, or inefficiency, like the financial sector.
      - Anotheroneagain 3y ago

kylebenzle 3y ago

Tether is by far the largest counterfeiter of USD and has already been shown to be backed largely by nothing. The introduction of Tether coincided with the hijacking of the Bitcoin GitHub repo by the for profit company Blockstream. Blockstream's Samson Mow had close ties with Tether and El Salvador dictatorial President who made Bitcoin a national currency on exchange for billions of dollars of free Tether dollars. Tether is not and does not need to be backed by anything other than US intelligence agencies. There is no proof of this other than the fact that the larger USD counterfeiter is allowed to exist and control the price of the hijacked Bitcoin chain with the ticker, BTC.

RustyRussell 3y ago
This is ridiculous, sorry. The NY AG investigation showed Tether was actually mostly backed at the time (surprising me, too!) And the Blockstream FUD is tired (I am the longest serving technical employee at Blockstream)
bouncycastle 3y ago
I don't like Tether myself, but it's definitely not counterfeiting. To counterfeit something, you need to pass it off as the real thing. Tether is not the real USD, it's just a currency made to be worth around the same amount as a dollar, and the value often hovers around $1, but it's not always $1. Another real world example is the Hong Kong Dollar. Just because it's pegged to the USD, does not mean it's counterfeit.

karmasimida 3y ago

> domino effect of other property developers defaulting It has already happened. Evergrande and Countrygarden, two of the biggest developers both defaulted. The insolvency of Chinese property sector is old news.

motbus3 3y ago

This is true. The (ironic) lack of control of property holding to sell moronic. Well, technically it is the lobby industry which helps no citizen when they push back for measures that avoid accumulation of properties causing the market to concentrate loads of money on real state for obvious reasons. In my city, they tried to implement taxes for those who own more than two properties and it would be more expensive for properties that had no one living. The result is that the proposal was quietly removed from the voting in a Friday night before a weekend followed by long holidays.

misja111 3y ago

> In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. The effect of China's property bubble was an oversupply of houses, leading to unnaturally low property prices. The long term effect will be a consolidation in the property branch, leading to less supply and higher property prices. Whether this is good or bad I don't know, but it certainly will not lead to more affordable housing than right now.

petesergeant 3y ago
Was there an oversupply in actually built properties in places people want to live? My understanding is that property prices in major cities are still massively unaffordable
- tsss 3y ago
  What does it matter? All the people who bought apartments in the middle of nowhere as an investment now want to buy the apartments in real cities => thus more demand.

dathinab 3y ago

> affordable housing is in the interest of everybody except property developers. it is, but it's also complicated as the problems are quite a bit different in China then in the US the reason there was a bubble in China was because they sold (barely) affordable (apartment owned, not rented) housing to a huge amount of people while not producing it. Like they financed it similar to a snowball system. Group B buys housing but pays for the housing bought by Group A then Group C pays for Group B etc. But at some point it fell apart and people realized the housing they should have gotten "soon" isn't being build (or stuck in a partial state) and the company has no money anymore. (Kind oversimplifying the whole thing.) To top that off there are (state build) ghost cities which have cheap appartments and acceptable building build quality, the problem is there is nothing there, no jobs(!), no supermarket, bus, people, "anything", if you are unlucky even electricity might be cut of in parts of it, (also I guess for rent not apartment ownership). (But there are also enough examples of western media reporting about ghost cities messed up because turns out just a few years later it wasn't a ghost city anymore.) And to make that worse it's not just Evergrande. It outside of the areas with a lot of central government focus there where many cases of houses building companies which had money issues trying to pretend everything is fine by cheeping out on building cost to a point where houses build that way are basically unusable. Through from the outside it looked like there is still progress. Issue with that is, it is really hard to guess how bad it is, pro-china media most times doesn't mention it and if it says it's a rare exception and/or videos are fake, anti-china media says it's bad to a point it's everywhere, and you find little in between. And both sides are known to lie a lot.

dpflan 3y ago
Very curious how these opportunities for housing were marketed to the masses? These ghost cities you describe, I can see how the new housing can be presented as a life-changing opportunity, with nice images/videos but the reality is...a ghost town, facade of a city.
- rfwhyte 3y ago
  They are marketed as investments, not housing. The majority of people buying these "Homes" never intended for themselves or anyone else for that matter, to live in them in the first place.

wolf89618 3y ago

[dead]

shortrounddev2 3y ago

> affordable housing is in the interest of everybody except property developers. Property developers are the answer to affordable housing. We cannot have affordable housing without building millions of new housing units. It's the home OWNERS who are dragging their feet to try to artificially inflate their property values

slimebot80 3y ago

So the long term is more affordable housing, but Xi's perceived success was lifting millions out of poverty, with a majority tied to realestate. Time to invade Taiwan, I guess.

sparrowInHand 3y ago

This bubble makes up large parts of the world wide pension schemes. Without rents to enslave the younger generations, the wealth will be extracted by other means, aka prices rising or services getting ever more expensive. There is no escape from this.

faeriechangling 3y ago
You can always rob the pensions of the young