From Pine View Farm

Try the Chinese: It’s Bubblelicious 1

At Asia Times, Mike Davis theorizes that the economies of the European Union, the United States, and China are headed for a collision (he also makes a side trip to the hot rod tales of Henry Felsen, many of which I read). Like almost everything in Asia Times, it’s worth a look.

What caught my eye particularly is this:

In addition to making everything else, China now seems to making its own homegrown banksters, who are adopting the tactics of our own U. S. variant and feeding-frenzying a real estate bubble:

In effect, a shadow banking system has arisen with big banks moving loans off their balance sheets into phony trust companies and thus evading official caps on total lending. Last week, Moody’s Business Service reported that the Chinese banking system was concealing one-half-trillion dollars in problematic loans, mainly for municipal vanity projects. Another rating service warned that non-performing loans could constitute as much as 30% of bank portfolios.

Real-estate speculation, meanwhile, is vacuuming up domestic savings as urban families, faced with soaring home values, rush to invest in property before they are priced out of the market. (Sound familiar?) According to Business Week, residential housing investment now accounts for 9% of the gross domestic product, up from only 3.4% in 2003.

It sounds a lot like the U. S. real estate market, circa 2005.

This can’t be good.


1 comment

  1. Dick Destiny » Old Mr. Urban Slum

    July 29, 2011 at 11:34 am

    […] Pine View Farm again points out a diverting read, this one in the Asia Times by old Mr. Urban Slum himself, Mike Davis. Ever since DD has been in southern California, Davis has been semi-famous for his role as the teller of the stories on how everything will slowly collapse. (From the perspective of someone monitoring urban decay in SoCal.) […]