Mish has a trio of articles yesterday, all getting to credit and real estate, and he quotes another writer;
But this lending credit, unbacked credit, is precisely what the USA taught the world when after 1971, slowly at first, and then with acceleration, banks began lending their credit after they lent out all of their money.
I've been blogging on this, but anyone who thinks the China situation is different, or worse, is missing the fact that the Chinese are not bailing out (much) this process. In fact, as China arrests malefactors, that credit is flowing into USA making China the #1 foreign buyer of USA real estate.
And Mish finishes up with a story about France taxing empty office spaces hoping to fore the owners to convert to housing...
China is tottering and will probably "crash" first, but not fall as far as USA. But we all need a real estate bubble bust so small business can find cheap rent from which to grow.
Feel free to forward this by email to three of your friends.
Credit guarantees played a role in fraudulent borrowing. These borrowers then open their own credit guarantee firms and either aid others in fraudulent borrowing, or use the credit guarantee firm as a way to earn a high rate of interest on their fraudulently obtained money. Much of this credit may be tied up in the real estate market. Low income borrowers can borrow their down payment from a credit guarantee firm. Real estate speculators can obtain capital through credit guarantee firms.These "credit guarantee" firms are the boogeyman in the story. In essence, they are asset-less guarantees a loan will be paid back. And if not, up goes the interest. That China has whole empty cities based on this practice is a stark version of a "false economy."
But this lending credit, unbacked credit, is precisely what the USA taught the world when after 1971, slowly at first, and then with acceleration, banks began lending their credit after they lent out all of their money.
I've been blogging on this, but anyone who thinks the China situation is different, or worse, is missing the fact that the Chinese are not bailing out (much) this process. In fact, as China arrests malefactors, that credit is flowing into USA making China the #1 foreign buyer of USA real estate.
Foreign purchases jumped to 35 percent last year, and Chinese customers led the way with $22 billion out of the $92.2 billion total spent by foreign buyers in the US real estate market, according to a report by the National Association of Realtors (NAR).It ain't money, it is credit. They own the house free and clear, paid for it by US Dollars... but those dollars do not represent money. Full faith and credit.... hope and a prayer.
And Mish finishes up with a story about France taxing empty office spaces hoping to fore the owners to convert to housing...
China is tottering and will probably "crash" first, but not fall as far as USA. But we all need a real estate bubble bust so small business can find cheap rent from which to grow.
Feel free to forward this by email to three of your friends.
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