Originally published at: http://boingboing.net/2016/09/29/chinese-real-estate-bubble-is.html
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Color me surprised
Why do people continue to think that building without demand is a good idea. It is dumb.
I’m sure some economist can come in and tell me how this is perfectly reasonable and these market “fluctations” are normal.
But, IMHO, that line of reasoning merely exists to hold up the class of people doing this stuff.
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Free market!! Supply and demand!! The invisible hand!!
That’s why people still do stupid stuff like this. At one time in my life, I wanted a big house. Now, a 2 to 3 bedroom place with two bathrooms would be just fine for me.
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Can anyone brief me on what will happen to the American Economy
once China goes bust?
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The US economy will experience even stronger deflationary pressures. Not necessarily a problem but prices will be under downward pressure and those carrying debt burdens will find them harder to service. But unless there is an appropriate response we will probably find that there are further losses of manufacturing jobs (any of those left)?
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We have the best bubble! The biggest bubble!
Make America great again!
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They’re stealing our bubble!
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Debt, bubbles, imaginary thinking. Maybe we aren’t so different after all.
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They’ve been automated away, to a large degree. Contrary to popular opinion, the US is actually manufacturing more stuff than it ever has in its history. It’s just not employing a lot of people to do so. But because the manufacturing is going on, the US can still take an economic hit when demand goes down, even if it doesn’t impact employment all that much.
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We’re YUGE!!!
I’m sure “some” economist can do that, but such an economist wouldn’t be representative of the profession as a whole. Do a search of papers and you’ll find that the majority talk of concern about high price-to-income ratios and price-to-rent ratios, zombie banks, bad debt, etc.
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actually quite a lot. just not the manufacturing of tiny plastic gizmos. however we have automated the process quite a bit so if it can be done by a robot it is done by a robot so even if those jobs ‘come back’ they probably won’t be done by people.
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What could go wong?
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Thanks to the several of you who took the time to reply.
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If you made cars, you’d think buying cars was a good idea. In fact, if I asked you when is the best time to buy a car, the answer would be now. Always.
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Sometimes, when you’re first to market, you can make a lot of money. I suppose that many of these investors think that they are well positioned to take advantage of any recovery.
And who could go wrong by building such attractive boxes. Every rat who ever loved a Skinner Box would want to be in line to live in such a soulless maze.
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i live in Vancouver Canada we just won the title of most dangerous real estate bubble in the world! beat that china!
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It is frequently a very bad idea, but…
…demand for things that take a long time to make (like buildings) changes far faster then the supply can catch up. If you happen to have some of those things when demand shifts up you can sell them for far far more then it cost you to make them.
Unfortunately if demand doesn’t shift up you can be stuck with things that nobody will pay you enough to clear your costs for.
Some people taking a risk is normal, and it helps smooth things over if demand shifts up, and it isn’t too bad if demand stays flat (or shifts down). It becomes bad when lots of people do it (both because that many failure at once stress things, and because they contribute to the over supply which prevents the price from going up even if demand does go up!).
Curious what that “recovery” might look like in China.
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