China: "If you build it (housing), they will come."

There is a new housing crisis upon us.

Were the Chinese not paying attention to the global housing debacle which crushed the global economy over the last decade?  

And if they were paying attention, why do they think their housing supply won't come crashing down like (cough, cough) some other countries?  

Perhaps, it is...

"No nation has ever built so much so fast"

Excerpt from CBS News 60 Minutes:

Lesley Stahl: How important is real estate to the Chinese economy? Is it central?

Gillem Tulloch: Yes. It's the main driver of growth and has been for the last few years. Some estimates have it as high as 20 or 30 percent of the whole economy.

Lesley Stahl: But they're not just building housing. They're building cities.

Gillem Tulloch: Yes. That's right.

Lesley Stahl: Giant cities being built with people not coming to live here.

Gillem Tulloch: Yes. I think they're building somewhere between 12 and 24 new cities every single year.

Unlike our market driven economy, in China it's the government that has spent some $2 trillion to get these cities built - as a way of keeping the economy growing. The assumption is "if you build it, they'll come." But no one's coming.

(Watch)

If this massive bubble bursts in China, how may it impact you?  Good question.  

If you are in one of these nine U.S. cities selling the most goods and services to China, you may see the ripple effects.  Even if you are not in one of these nine cities, the ripple impact could be global, as large multinationals - which have made huge bets on China and institutional investors get caught holding the bag on enormous investments.   

It's wise to be aware.

Until Next Time,

Craig Turley

H/T:  24/7 Wall Street

You may not be planning to purchase a new home in Beijing, or refinancing a home in Shanghai - but if you live in Arizona or California - feel free to contact me for a professional mortgage consultation.

At Least the USA is not Greece, yet.

A boy aged 14 wrote: "The present is uncertain, the future looks nonexistent. When a country dies, so do its inhabitants.

As the the fiscal follies of the USA continue to mount, there is a shining example of a country which may have let things get past the point of no return. 

(excerpt from Greece:  A debt colony, shackled to its lenders)

In order to impose austerity measures, the government is already using undemocratic methods like legislative ordinances that bypass parliamentary control. But even that is not enough for Greece's saviours, who demand a further narrowing of democracy.

The Greek government has agreed not only to transfer all of the revenues from privatising public assets to a special account for servicing its debt. It has also agreed to transfer all of its budget surpluses up to 4.5 percent of GDP, and an additional 30 percent of any surplus beyond that! So even in the best-case scenario, in which Greece would have the fiscal resources to raise pensions and boost funding for the public healthcare system and public education, it will simply not be permitted to do so. There is no room for political decisions anymore.

It is not an exaggeration to claim that Greece is a debt colony now, shackled to its lenders. It is subservient to a trust of bankers, bureaucrats and neo-liberal fundamentalist politicians in northern Europe (and within Greece, too) who aim to impose their doctrine regardless of its apparent failure and the will of the Greek people.

Entire Story

Personally, you or I probably will not change the path of fiscal chaos engaged in by the folks in Congress.  However, we can take charge of our own personal debt load and not be shackled to our lenders.  Please feel free to contact me for an overall mortgage analysis including term reduction, debt consolidation and lower interest costs in your life.

Craig Turley is a mortgage banker with 20 years finance experience based in Scottsdale, Arizona.  He is licensed to conduct business in Arizona and California.  Contact Craig.