9 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

by 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
        No, not like that: Evergrande is in the first group here, fruitlessly producing something of no real value, as there is too much of it. The second group are those who invested in Evergrande itself, or the housing it built. It sucks for everyone. It sucks for Evergrande, as sooner or later it had to go bankrupt. It sucks for those who invested in the housing, as it's clear that if they actually tried to sell or rent out the housing they would end up with some paltry sum. It sucks for those who invested in Evergrande, as they're going to lose money. It suck ls for those who can't afford a place to live because of the inflated prices. I think there are really no winners here. No middlemen filling their pockets. It was a loss for everyone.
        petesergeant 3y ago
        > I think there are really no winners here As with any bubble, the winners are the people who cashed out at the right time
        foobarbaz33 3y ago
        > It suck ls for those who can't afford a place to live because of the inflated prices. Wouldn't a bubble pop help these people? Wouldn't the ruling class on the opposite end of the leverage chain have benefited greatly with stacks of cash? The fun party is over now, but at least profit was successfully extracted from others. The extreme losers being people on the other side of the chain, paying mortgages on property that will never be built.
    - TheOtherHobbes 3y ago
- xwolfi 3y ago
  But Japan has a population crumble, a long LONG tradition of home price devaluation (earthquakes destroy everything, why build super high quality stuff and why maintain, after 10 years your protection is more fragile or obsolete) and prices are extremely low. In China, they had a speculative bubble sure, but what s gonna kill the market is that in 20 years a lot less young people will exist to even buy the houses, like in Japan.
- badpun 3y ago
  People live incomparably harder lives in Nigeria than in Japan, and yet they have plenty of children. It's about values, not circumstances.
  - filoleg 3y ago
    Well yeah, once you go down in standards of living low enough, the math flips over in favor of having children again. Because at that point, the mortality rate of children is high enough, you need extras just in case. And then someone’s gotta work your fields just to survive, after all. So the more the better just from the financial and survival standpoint alone. To greatly simplify, it basically makes it so that it makes sense to have children on the far ends of wealth and poverty, and much less sense to do so in the middle.
pmontra 3y ago
The defaults changed, at least in the West. When I was little it was still married-with-children by default, probably at relatively young age, and people had to decide not to have children. That was in part helped by the lack of widespread use of contraceptives. The norm in my primary school was two or three kids per family. I remember only one classmate with no brothers or sisters. Of course zero children families were not represented in there. Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do. Cost of housing, living, parenting is also an issue but I think that the default mindset is more important and sets the conditions for higher general costs: if on average people can spend all their money for themselves, the society and the market adjust and people who have to spend time and money also for kids are at a disadvantage. If the default is changing in China too, their population is going to shrink no matter what.
- KaiserPro 3y ago
  The "west" and china have _very_ different demographic pressures. For example china famously had(has?) the one child rule. This meant a deliberate shift in how children were raised (all your eggs in one basket) > Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do. I suspect you probably want to look deeper into the causes of that more. Yes contraceptives have a role to play, but they are not automatic, they require a deliberate choice, sometimes daily (https://www.statista.com/statistics/573210/contraceptive-use-among-women-by-type-and-age-in-england/ https://www.statista.com/statistics/573210/contraceptive-use... granted this is for the UK, and doesn't account for people not taking it. The point is that younger women are taking pills daily) Why are people not having kids? the answers are more complex than you seem to be suggesting.
  - argiopetech 3y ago
    If you look at the historical birth rate through the 20th century (hard to find data before 1950, but not impossible), the birth rate hovered around 5 children/woman or 35 children/1000 population. These numbers drop immediately and precipitously starting in 1960, the year "the pill" became publicly available. Lots of people, young and old, take pills every day. People forget and unwanted pregnancies still happen, but a) that's not suggestive that the pill doesn't work or that it isn't responsible for a significant drop in realized fertility (the birth rate data makes that clear), and, b) the medical advances and cultural shift the pill enabled (casual sex is okay, sex outside of marriage is okay, children outside of marriage still pretty undesirable for most people) also paved the path for emergency contraception and the widespread acceptance and availability of abortion (to the extent that we now end the lives of 73 million unborn per year - that's a top-20 country, by population, per year). In summary, is it more complex than "the pill did it"? Yes, but not much more. Birth control (of all types) is responsible the bulk of the reduction in birth rate.
ilikerashers 3y ago
I wonder how much of the world's growth is squeezed by these kinds of inefficiencies. Property speculation keeps prices high, and people paying off mortgages in dead-end jobs. Education costs force parents into difficult decisions to move out of HCOL areas where they likely have higher-value jobs. Energy and Water costs spike while providing no societal benefit. The West is obsessed with keeping these in place, the rising East seems better placed to change economic inefficiencies. Not sure how it'll play out but I feel like Western society is being pillaged by the PE crowd who can take advantage of the above.
- MiguelX413 3y ago
  What does PE mean?
  - Kbelicius 3y ago
    Probably Price-earning ratio (share price/earning per share)
  - SideQuark 3y ago
    Private Equity
- red-iron-pine 3y ago
  > the rising East seems better placed to change economic inefficiencies lol wut? china changing ineffeiciencies? this must be winnie the poo propaganda. china is corrupt as all hell and much of their building material is of dubious and shady quality. japan and korea are stagnating, and much of SEA is still struggling to modernize and combat their own structural inefficiencies. PE is a cancer, but I'd be curious to know how much of a stake foreign firms have in those orgs.
  - ilikerashers 3y ago
    You've got to admit, it'll be interesting to see how this plays out. Eastern countries with more direct government intervention, strong-arm leaders like Modi, Winnie the poo vs waning Western powers. China didn't bail out its property gamblers, the West bailed out its banking gamblers. The West excels at high-level corruption. It's not bribing an official down a back alley, it's done Manhattan high rises and Mayfair team rooms. Both are indefensible but as bad as each other.
tnel77 3y ago
Can you elaborate on the crackdown/reforms on private education?

by EZ-E 3y ago

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
      No, not like that: Evergrande is in the first group here, fruitlessly producing something of no real value, as there is too much of it. The second group are those who invested in Evergrande itself, or the housing it built. It sucks for everyone. It sucks for Evergrande, as sooner or later it had to go bankrupt. It sucks for those who invested in the housing, as it's clear that if they actually tried to sell or rent out the housing they would end up with some paltry sum. It sucks for those who invested in Evergrande, as they're going to lose money. It suck ls for those who can't afford a place to live because of the inflated prices. I think there are really no winners here. No middlemen filling their pockets. It was a loss for everyone.
      - petesergeant 3y ago
        > I think there are really no winners here As with any bubble, the winners are the people who cashed out at the right time
      - foobarbaz33 3y ago
        > It suck ls for those who can't afford a place to live because of the inflated prices. Wouldn't a bubble pop help these people? Wouldn't the ruling class on the opposite end of the leverage chain have benefited greatly with stacks of cash? The fun party is over now, but at least profit was successfully extracted from others. The extreme losers being people on the other side of the chain, paying mortgages on property that will never be built.
  - TheOtherHobbes 3y ago
xwolfi 3y ago
But Japan has a population crumble, a long LONG tradition of home price devaluation (earthquakes destroy everything, why build super high quality stuff and why maintain, after 10 years your protection is more fragile or obsolete) and prices are extremely low. In China, they had a speculative bubble sure, but what s gonna kill the market is that in 20 years a lot less young people will exist to even buy the houses, like in Japan.
badpun 3y ago
People live incomparably harder lives in Nigeria than in Japan, and yet they have plenty of children. It's about values, not circumstances.
- filoleg 3y ago
  Well yeah, once you go down in standards of living low enough, the math flips over in favor of having children again. Because at that point, the mortality rate of children is high enough, you need extras just in case. And then someone’s gotta work your fields just to survive, after all. So the more the better just from the financial and survival standpoint alone. To greatly simplify, it basically makes it so that it makes sense to have children on the far ends of wealth and poverty, and much less sense to do so in the middle.

pmontra 3y ago

The defaults changed, at least in the West. When I was little it was still married-with-children by default, probably at relatively young age, and people had to decide not to have children. That was in part helped by the lack of widespread use of contraceptives. The norm in my primary school was two or three kids per family. I remember only one classmate with no brothers or sisters. Of course zero children families were not represented in there. Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do. Cost of housing, living, parenting is also an issue but I think that the default mindset is more important and sets the conditions for higher general costs: if on average people can spend all their money for themselves, the society and the market adjust and people who have to spend time and money also for kids are at a disadvantage. If the default is changing in China too, their population is going to shrink no matter what.

KaiserPro 3y ago
The "west" and china have _very_ different demographic pressures. For example china famously had(has?) the one child rule. This meant a deliberate shift in how children were raised (all your eggs in one basket) > Now the default is single-no-children and you have to make an explicit choice to marry (you used to be nudged into it by society) and to have kids, by stopping to use contraceptives and to do all the things that long time singles are used to do. I suspect you probably want to look deeper into the causes of that more. Yes contraceptives have a role to play, but they are not automatic, they require a deliberate choice, sometimes daily (https://www.statista.com/statistics/573210/contraceptive-use-among-women-by-type-and-age-in-england/ https://www.statista.com/statistics/573210/contraceptive-use... granted this is for the UK, and doesn't account for people not taking it. The point is that younger women are taking pills daily) Why are people not having kids? the answers are more complex than you seem to be suggesting.
- argiopetech 3y ago
  If you look at the historical birth rate through the 20th century (hard to find data before 1950, but not impossible), the birth rate hovered around 5 children/woman or 35 children/1000 population. These numbers drop immediately and precipitously starting in 1960, the year "the pill" became publicly available. Lots of people, young and old, take pills every day. People forget and unwanted pregnancies still happen, but a) that's not suggestive that the pill doesn't work or that it isn't responsible for a significant drop in realized fertility (the birth rate data makes that clear), and, b) the medical advances and cultural shift the pill enabled (casual sex is okay, sex outside of marriage is okay, children outside of marriage still pretty undesirable for most people) also paved the path for emergency contraception and the widespread acceptance and availability of abortion (to the extent that we now end the lives of 73 million unborn per year - that's a top-20 country, by population, per year). In summary, is it more complex than "the pill did it"? Yes, but not much more. Birth control (of all types) is responsible the bulk of the reduction in birth rate.

ilikerashers 3y ago

I wonder how much of the world's growth is squeezed by these kinds of inefficiencies. Property speculation keeps prices high, and people paying off mortgages in dead-end jobs. Education costs force parents into difficult decisions to move out of HCOL areas where they likely have higher-value jobs. Energy and Water costs spike while providing no societal benefit. The West is obsessed with keeping these in place, the rising East seems better placed to change economic inefficiencies. Not sure how it'll play out but I feel like Western society is being pillaged by the PE crowd who can take advantage of the above.

MiguelX413 3y ago
What does PE mean?
- Kbelicius 3y ago
  Probably Price-earning ratio (share price/earning per share)
- SideQuark 3y ago
  Private Equity
red-iron-pine 3y ago
> the rising East seems better placed to change economic inefficiencies lol wut? china changing ineffeiciencies? this must be winnie the poo propaganda. china is corrupt as all hell and much of their building material is of dubious and shady quality. japan and korea are stagnating, and much of SEA is still struggling to modernize and combat their own structural inefficiencies. PE is a cancer, but I'd be curious to know how much of a stake foreign firms have in those orgs.
- ilikerashers 3y ago
  You've got to admit, it'll be interesting to see how this plays out. Eastern countries with more direct government intervention, strong-arm leaders like Modi, Winnie the poo vs waning Western powers. China didn't bail out its property gamblers, the West bailed out its banking gamblers. The West excels at high-level corruption. It's not bribing an official down a back alley, it's done Manhattan high rises and Mayfair team rooms. Both are indefensible but as bad as each other.

tnel77 3y ago

Can you elaborate on the crackdown/reforms on private education?