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Originally Posted by jayeff
It's odd to see a thread about property prices with no mention of China in it...
The US currently borrows about $2 billion a day to stay in business. 40% of those loans are currently held by China, Taiwan and Japan. China in particular is responsible for keeping mortgage rates in the US low, because doing so has kept the US as a major market for Chinese exports. The fly in the ointment is that China pegged its currency to the US dollar about 20 years ago and as a result its currency is grossly undervalued. China is under a lot of pressure - now even from the US itself - to correct that situation.
It's not a very smart idea to try to second-guess the Chinese. Asians generally think in terms of much longer timescales than westerners and there are several aspects of the Chinese economy which have existed for years despite the gurus claiming they are unsustainable. Yet trillions of dollars have been shifted out of the US economy over the last two or three years - notably funds from Arab countries, Japan and Russia - into China, in anticipation of a revaluation and as a reflection of fading confidence in the US. If/when the Chinese currency is revalued, it will have a major effect on the US economy and on the housing market in particular. Mortgage rates will rise sharply and new mortgages will be much harder to come by. This will have an across-the-board impact, although the effects will be strongest where prices have surged furthest.
Lots of people are writing as if everyone in the housing market is a speculator, but that is true of relatively few people. Most don't even benefit from increasing prices, because their new houses soak up all the "profit" they made on their old homes and then some. Many people take on mortgages they can barely afford when the market is climbing and that will mean a lot of foreclosures if the economy dips. Combine those "bargain" sales with people looking to sell to get out from under as mortgage rates rise, a shortage of mortages, etc., all combining to push prices downwards, and the "adjustments" could be very dramatic indeed.
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Once again Jayeff proves why he's such a trusted guy. He knows his shit!
China is always referred to as a sleeping giant. " Oh, the Chinese are going to take over the world! " or "Oh, the Chinese market will dominate us all! Woe!".
Yeah that's all well and good except for one thing history has proven:
The mainland Chinese will fuck up a fuck up if it could be fucked up.
The ONLY thing it has is family ties. That's what makes China superior. No matter what government they have or dynasty, they all rise and fall and family is what survives. They should just change the name of the country to 'Kinfolk' and leave it at that. If they did they would be unbeatable. As long as they run some pseudo class system backed by strongarm terrorism in disguise as government they'll continue to be a wobbly power at best.
The top people in their government are just as greedy and vindictive as our own. Check out their bank accounts in Switzerland.
That region of Asia is highly unstable. I wouldn't invest in Asia if you paid me. Why? Because the proliferation of nuclear weapons and waste is far more abundant than the press has been telling you. N. Korea, China, Taiwan, Japan are all one remark away from some disaster of unspeakable magnitude.
When that shit jumps off you can kiss Asia's ass goodbye.
The Muslims who live on mainland China are no-fucking-joke. Their ability to access ex-Soviet weapons and materials is easier than we think.
Asia is a prime target for terrorism. It will be terrorism cloaked in the veneer of religious uprising, but it will be terrorism borne of frustration to the ruling class.
China can't fall, but it can be fucked up so bad that it could take a century to get back to normal.
When that happens, you'll see where the U.S. stands.
Yes, Jayeff is right. China and Asia own an unforgivealble amount of U.S. debt. There is an EVIL market called 'Viaticals'. That's an insurance secondary market that is EVIL. Basically if you're gonna kick the bucket and have a $1,000,000 life insurance policy, you can sell it for like $500,000 CASH and sign it over to the buyer and when you bite the big one, they collect a hefty profit.
Thailand holds the majority of billions of dollars worth of U.S. viaticals and it's kicking their asses.
The U.S. has been pimped to a new level of pimpin' and soon the johns are gonna find out they've been tranny-tricked.