Post by jeffolie on Mar 4, 2013 12:19:57 GMT -6
China Real Estate bubble, Housing Slaves
China's middle class now faces a real estate bubble that continues to grow. Thier middle class wealth is trapped in housing much like the same in the whole world.
The Type 1, upper 20% of incomes/wealth do not trap their wealth in real estate beyond maintaining wealth homes ... instead the rich own financial assets such as stocks, bonds, etc as their primary concentration of wealth.
Real Estate bubble collapses do not always result in violence or revolutions. For example the bust of Spain's real estate destroyed its middle class, banks, etc but not Spain's super rich billionaire who focused on corporations including one dealing with rags.
America's real estate bust similarly hurt only the middle class while many new billionaires reached into Forbes List of the rich in the last 3 months as stocks regained their secular bear market high levels of DJIA 14000 and S&P 5500 Index level of 1500.
===========================================
"60 Minutes" segment on China about 12 minutes includes commercials
www.cbsnews.com/video/watch/?id=50142079n
[from: Jesse's Café Américain site]
"The mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining in the different States, and which are employed altogether for their benefit...you will in the end find that the most important powers of Government have been given or bartered away." Andrew Jackson, Farewell Address
04 March 2013
China's Extreme Real Estate Bubble: Globalization Is a Fraud, a Castle Built On Sand
Quite a few people know about this, but they really do not understand it. It is a fraud that surpasses by far any in history, including the South Sea and Mississippi bubbles.
China is an extreme bubble fueled by artificially low wages and an autocratic industrial policy that is distorting the economy of the entire world.
The monied interests of the West have been riding the trend of deregulation and globalization to their personal enrichment and benefit. But it is an empire of illusion, with a foundation of sand, held in place by the corrupting power of money.
There are some ways out of this that the Chinese leadership might take, but I suspect that their powerful oligarchs will be caught in the same credibility trap that has kept Western leaders from taking the appropriate policy actions for the good of their own people.
This is a story of betrayal, powers and principalities, of the rulers of darkness in this world, and evil in high places. And the Anglo-American establishment has played a key part in it.
Sorry for the commercials, but the video is worth watching because it carries a visual impact that words alone do not quite capture.
China's richest woman says in a related interview not included on the aired program that the 'Chinese people are craving for democracy.'
So are the Arabic people, and the people of Europe and the Americas, who often have the illusion of choice, from amongst a series of choices allowed by technocrats acting for a ruling elite.
www.jessescrossroadscafe.blogspot.com/2013/03/chinas-extreme-real-estate-bubble.html
======================================
Real Estate
China's Legions of 'Housing Slaves'
By Bonnie Cao and Zhang Dingmin on February 28, 2013
Sherry Sheng permitted herself one final splurge before joining China’s swelling ranks of homeowners: a 4,000 yuan ($642) black fur jacket. “I could never afford such a luxury after I start repaying my housing loans next month,” says the Shanghai policewoman. Servicing the two mortgages on the 1.1 million yuan one-bedroom Sheng bought on the city’s western outskirts will eat up about 70 percent of her salary.
Sheng is a fang nu, or housing slave, the popular name for a generation of middle-class Chinese who will need to work a lifetime to pay off their debts. A 1,076-square-foot apartment in one of China’s most affluent cities today costs about 40 years’ annual income, according to data supplied by the government and SouFun Holdings, a company that operates a popular real estate website. “The ‘housing slaves’ term is quite reasonable because it will put a lot of burden on home buyers if housing payments are more than half their incomes,” says Liu Li-Gang, an economist at Australia & New Zealand Banking Group.
Property prices on the mainland have almost tripled since China’s leadership began a push to encourage homeownership in 1998. That’s when Premier Zhu Rongji allowed residents in state-owned housing developments in urban centers to purchase their dwellings. The idea of buying a property with borrowed money didn’t become popular until several years later, when prices in major cities began to skyrocket.
Sheng, 29, is better off than most. Her 540-square-foot apartment cost only 16 times her annual salary. To buy it, she borrowed a combined 770,000 yuan, getting a 20-year mortgage from Agricultural Bank of China and a 15-year loan from a provident fund for city workers. Her parents helped with the 30 percent down payment. Sheng’s monthly payments will add up to 4,000 yuan—exactly what she paid for her fur jacket.
In the U.S. on average slightly less than 9 percent of a borrower’s monthly disposable income goes toward mortgage payments, according to Federal Reserve data. In China the proportion is 30 percent to 50 percent, says Wu Hao, a manager at the loan brokerage division of Bacic & 5i5j Group, a Beijing realtor. The general guideline among Chinese banks is that a borrower’s monthly salary should be at least twice her monthly payment, she says; otherwise she’ll be asked to submit proof of assets (such as property, cars, or insurance) to prove her ability to service the debt. Mortgages have maturities of 5 to 30 years. The People’s Bank of China benchmark lending rate for loans longer than five years is now 6.55 percent.
Unlike the U.S., where millions of home borrowers fell behind on their payments or stopped paying their loans altogether when the economy slumped, mainland banks report no such problems. At China Construction Bank, the nation’s biggest housing lender, the bad-loan ratio on personal mortgages stood at 0.2 percent as of June 30, unchanged from the end of 2011. That may be because Chinese buyers typically make large down payments and so are less likely to risk foreclosure. In Shanghai, Beijing, and Guangzhou, down payments average 50 percent of a home’s value, according to Centaline Property Agency, China’s biggest real estate brokerage.
The bottom line: In China’s affluent cities, it’s not uncommon for people to spend 40 times their annual income on an apartment
www.businessweek.com/articles/2013-02-28/chinas-legions-of-housing-slaves
China's middle class now faces a real estate bubble that continues to grow. Thier middle class wealth is trapped in housing much like the same in the whole world.
The Type 1, upper 20% of incomes/wealth do not trap their wealth in real estate beyond maintaining wealth homes ... instead the rich own financial assets such as stocks, bonds, etc as their primary concentration of wealth.
Real Estate bubble collapses do not always result in violence or revolutions. For example the bust of Spain's real estate destroyed its middle class, banks, etc but not Spain's super rich billionaire who focused on corporations including one dealing with rags.
America's real estate bust similarly hurt only the middle class while many new billionaires reached into Forbes List of the rich in the last 3 months as stocks regained their secular bear market high levels of DJIA 14000 and S&P 5500 Index level of 1500.
===========================================
"60 Minutes" segment on China about 12 minutes includes commercials
www.cbsnews.com/video/watch/?id=50142079n
[from: Jesse's Café Américain site]
"The mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining in the different States, and which are employed altogether for their benefit...you will in the end find that the most important powers of Government have been given or bartered away." Andrew Jackson, Farewell Address
04 March 2013
China's Extreme Real Estate Bubble: Globalization Is a Fraud, a Castle Built On Sand
Quite a few people know about this, but they really do not understand it. It is a fraud that surpasses by far any in history, including the South Sea and Mississippi bubbles.
China is an extreme bubble fueled by artificially low wages and an autocratic industrial policy that is distorting the economy of the entire world.
The monied interests of the West have been riding the trend of deregulation and globalization to their personal enrichment and benefit. But it is an empire of illusion, with a foundation of sand, held in place by the corrupting power of money.
There are some ways out of this that the Chinese leadership might take, but I suspect that their powerful oligarchs will be caught in the same credibility trap that has kept Western leaders from taking the appropriate policy actions for the good of their own people.
This is a story of betrayal, powers and principalities, of the rulers of darkness in this world, and evil in high places. And the Anglo-American establishment has played a key part in it.
Sorry for the commercials, but the video is worth watching because it carries a visual impact that words alone do not quite capture.
China's richest woman says in a related interview not included on the aired program that the 'Chinese people are craving for democracy.'
So are the Arabic people, and the people of Europe and the Americas, who often have the illusion of choice, from amongst a series of choices allowed by technocrats acting for a ruling elite.
www.jessescrossroadscafe.blogspot.com/2013/03/chinas-extreme-real-estate-bubble.html
======================================
Real Estate
China's Legions of 'Housing Slaves'
By Bonnie Cao and Zhang Dingmin on February 28, 2013
Sherry Sheng permitted herself one final splurge before joining China’s swelling ranks of homeowners: a 4,000 yuan ($642) black fur jacket. “I could never afford such a luxury after I start repaying my housing loans next month,” says the Shanghai policewoman. Servicing the two mortgages on the 1.1 million yuan one-bedroom Sheng bought on the city’s western outskirts will eat up about 70 percent of her salary.
Sheng is a fang nu, or housing slave, the popular name for a generation of middle-class Chinese who will need to work a lifetime to pay off their debts. A 1,076-square-foot apartment in one of China’s most affluent cities today costs about 40 years’ annual income, according to data supplied by the government and SouFun Holdings, a company that operates a popular real estate website. “The ‘housing slaves’ term is quite reasonable because it will put a lot of burden on home buyers if housing payments are more than half their incomes,” says Liu Li-Gang, an economist at Australia & New Zealand Banking Group.
Property prices on the mainland have almost tripled since China’s leadership began a push to encourage homeownership in 1998. That’s when Premier Zhu Rongji allowed residents in state-owned housing developments in urban centers to purchase their dwellings. The idea of buying a property with borrowed money didn’t become popular until several years later, when prices in major cities began to skyrocket.
Sheng, 29, is better off than most. Her 540-square-foot apartment cost only 16 times her annual salary. To buy it, she borrowed a combined 770,000 yuan, getting a 20-year mortgage from Agricultural Bank of China and a 15-year loan from a provident fund for city workers. Her parents helped with the 30 percent down payment. Sheng’s monthly payments will add up to 4,000 yuan—exactly what she paid for her fur jacket.
In the U.S. on average slightly less than 9 percent of a borrower’s monthly disposable income goes toward mortgage payments, according to Federal Reserve data. In China the proportion is 30 percent to 50 percent, says Wu Hao, a manager at the loan brokerage division of Bacic & 5i5j Group, a Beijing realtor. The general guideline among Chinese banks is that a borrower’s monthly salary should be at least twice her monthly payment, she says; otherwise she’ll be asked to submit proof of assets (such as property, cars, or insurance) to prove her ability to service the debt. Mortgages have maturities of 5 to 30 years. The People’s Bank of China benchmark lending rate for loans longer than five years is now 6.55 percent.
Unlike the U.S., where millions of home borrowers fell behind on their payments or stopped paying their loans altogether when the economy slumped, mainland banks report no such problems. At China Construction Bank, the nation’s biggest housing lender, the bad-loan ratio on personal mortgages stood at 0.2 percent as of June 30, unchanged from the end of 2011. That may be because Chinese buyers typically make large down payments and so are less likely to risk foreclosure. In Shanghai, Beijing, and Guangzhou, down payments average 50 percent of a home’s value, according to Centaline Property Agency, China’s biggest real estate brokerage.
The bottom line: In China’s affluent cities, it’s not uncommon for people to spend 40 times their annual income on an apartment
www.businessweek.com/articles/2013-02-28/chinas-legions-of-housing-slaves