Discussion in 'Markets & Economies' started by valuecreator, Sep 20, 2014.
Debt is NOT wealth!
What happens when the Chinese property bubble collapses?
ramen noodles for dinner.
Debt is slavery. Chinese household debt is slavery with instant noodles.
The Chinese Debt Problem
You can see how China's private-sector debt has surged past everyone, nearing 200% of GDP
This has become one of China's primary policy concerns. Leadership is concerned (probably rightly) about the sustainability of an economy that's built so much on debt. It's also why the first-ever corporate default, which happened earlier this month, is so worrisome (how many more will there be?).
Bigger picture, it's why more and more people are talking about China having a "Minsky Moment" when all of this debt build-up will end up in some kind of big, bang crash.
When paper becomes worthless, it can serve as fuel for heating, or something to clean your dot with. If the "paper" is electronic, you'll be cold with a dirty dot.
When land becomes worthless, you can still live on it, grow food on it etc.
Limited to the two choices, assuming no debt and a collapse of either, I'd go with property.
Everybody is in debt to their eyeballs
China-Russia have zero external debt.
That's a big difference.
And ads pushing people to buy gold, every 20 min. on Chinese prime time TV.
"Assuming no debt" is the key.
how can you assume no debt when the price is going up almost every year.
you always have to get into debt to acquire those property, and slowly paid it off.
next time round.. you still wonder whether you want to go into debt.. as it is getting riskier everytime you sign the dotted line. (price goes up higher, bigger deposit, if everything fall down, you have to sell all of your asset you accumulated to pay the bank).
No, you don't. It might be the way things tend to be done, but it is not the only option.
Work hard, live frugally, save your money, invest it wisely on what is within your means. Repeat until you can buy a humble property outright at under market value by patiently watching and waiting.
Or you can take out a loan a large as the bank is willing to give you, spend it on a McMansion, and use the next 30 years contemplating if it was the right choice.
I understand there is a strategy to using debt to offset tax, and that policies exist that tend to promote increasing property value. If you have the knowledge and discipline, this might be the right way for you. But... will these policies exist for the lifespan of your debt? Is it possible that you may find yourself unable to continue the original strategy, in possession of a devalued asset, and still in debt?
buzz that spicy beef, do you take credit card :lol:
UnionPay? No problem. That will be $4.4m less 50 cents for the noodles. How would you like your change, sir? How about in Australian dollars transferred to your Bank of China account in Melbourne to cover that property purchase?
What about empty buildings? Most of the Chinese real estate is in buildings not land.
I'll assume the empty building is on land. If it's a houseboat, go fishing. If it's an apartment, its a defensible position; if it has windows its a watchtower. It it has a roof, grow food on it.
Is ANY of the Chinese debt number including ther total Australian RE debt? Which is increasing week by week as far as I can gather?
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