- 27 Oct 2021 15:32
#15196054
Krugman would disagree.
The FT article I linked just above goes over that nicely. I went back a second time for this post, and was locked out by the paywall. But you can read it if you haven't been there recently.
Bottom line, China is in an economic crisis, but how bad it will get when the bubble pops is not clear for a number of reasons.
What I think is that this bubble will continue to grow until it pops itself. If they wait that long, you could be looking at a major crisis, a depression or something close to it.
B0ycey wrote:
Actually this is pretty much spot on. In the West and particularly in the UK given Ingliz brought it up, the price is due to demand and low supply. The bubble won't burst whilst people want homes because they will just pay what they can afford. In China people were buying home, not to live but in invest so you cannot even compare the two. One has low stock high demand, the other has too much stock and not enough demand. Even the stupidest user should understand this but clearly not. So completely different situations.
But even so that doesn't effect China directly and as long as people assume their property is worth what they paid for and continue paying off their mortgages, it wouldn't even effect their economy then. This isn't a financial timebomb in the sense China will go broke, but those who have invested in Chinese property will struggle to sell their assets and lose money. In other words, it is a domestic bubble and not a national bubble hence why the Chinese government wants to control the prices of their real estate right now. Stop people being priced out in high demand areas and make sure people buy homes at the assumed price in low demand areas.
Krugman would disagree.
The FT article I linked just above goes over that nicely. I went back a second time for this post, and was locked out by the paywall. But you can read it if you haven't been there recently.
Bottom line, China is in an economic crisis, but how bad it will get when the bubble pops is not clear for a number of reasons.
What I think is that this bubble will continue to grow until it pops itself. If they wait that long, you could be looking at a major crisis, a depression or something close to it.
Facts have a well known liberal bias