$2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL • Hacker News Board

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#121

Post by rbg246 » Mon, Jan 02, 2017, 10:24 AM UTC

jussij wrote: post #55

a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

In the long term, the bubble is going to pop and then you have dead cities with empty high rises falling apart (but then again, people have been saying for at least 10 years that the bubble is going to pop any day now and it's still inflating) The reason that bubble has not yet popped is because over the last 10 years Oz has generally seen below average GDP growth and year on year deflation, not unlike the rest of th…

I'm sorry to rain on your parade but Australia has had decent levels of GDP growth for the past decade. It hasn't been the lost decade that some OECD countries has experienced. Australia has experienced a mining boom not unlike Canada.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#122

Post by tajen » Mon, Jan 02, 2017, 10:24 AM UTC

non_repro_blue wrote: post #28

That's a big number, way too large for anyone to take personally in an emotional sense. But it's definitely big enough for a purge. Jailing, disappearances and more. This is a pretty large economic tide. Almost twice the size of California's economy, all at once. Ranking it The Fifth Largest Economy, worldwide, if it's worth thinking in those terms. Given that an approximate number of participating Chinese nationals…

Can you rephrase the question? If a tide of $2T suddenly stops (but doesn't reverse), would the worldwide economy tank? Well, every change in flows can be seen as "a crisis", the question is where the money belongs in the first place. At worst, it has made the city of Vancouver (or rather the former landlords who exited by selling) richer for a while, and they will learn to come back to their previous richness levels. Which is still better than never having seen the tide of money at all.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#123

Post by rbg246 » Mon, Jan 02, 2017, 10:38 AM UTC

wycx wrote: post #114

a13xb wrote: post #82

Earlier quoted context omitted.

Negative gearing is only one piece of the puzzle. There is also a 50% CGT discount if you hold an investment for more than a year. And yes, it applies to shares too, but it's not possible to get this amount of debt leverage for buying shares. There is also 100% CGT exemption if the property is owner-occupied. The worst part is that it extends up to 6 years after you move out (e.g. to rent somewhere cheaper). So you c…

Centrelink has been speculatively invoicing people to recover undeserved welfare payments based on crude data matching with income tax datasets. How nice it would be if they did some data matching to determine who was actually living in a property as their primary residence, vs. changed their mailing address to that of their residential property to pretend it was their primary dwelling, and issued invoices for unpaid…

They most certainly do chase property investors who do claim incorrect primary residence. Remember primary place of residence is only while you live there so if you change it one month before selling it only offsets one month of profits and what if you have multiple properties you can't hide it all with that.

However the bigger problem remains that capital is taxed at half the rate of labour and this matched with tax free pensions has meant people with built up capital have gotten extraordinarily rich in the past decade and a half at the expense generally of the younger generation.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#124

Post by rphlx » Mon, Jan 02, 2017, 10:46 AM UTC

misja111 wrote: post #115

cmurf wrote: post #106

Earlier quoted context omitted.

OK but not all asset prices are going up, it's pretty much just real estate and in particular residential real estate. Commericial real estate is doing well, but it's lagging compared to residential. Bank loans are roughly 1/3 real estate mortgages, 1/3 commercial, and 1/3 consumer. QE affects all of these. So why is QE not resulting in growth elsewhere in the economy, being narrowly focused on real estate mortgages?

QE is not resulting in enough growth in the Western world, because there are just not enough profitable businesses for investors to pour their cheap money into. Supplying cheap money is only one half of the equation to get investors to sponsor businesses: the other half that is needed is businesses with profitable business plans. And there the Western world has a problem: globalisation is moving mainstream business a…

Another factor is that employee productivity growth has been very low in developed markets since 2008, as the dividends of the computer & internet revolutions have tailed off.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#125

Post by adaml_623 » Mon, Jan 02, 2017, 11:01 AM UTC

rbg246 wrote: post #121

jussij wrote: post #55

Earlier quoted context omitted.

In the long term, the bubble is going to pop and then you have dead cities with empty high rises falling apart (but then again, people have been saying for at least 10 years that the bubble is going to pop any day now and it's still inflating) The reason that bubble has not yet popped is because over the last 10 years Oz has generally seen below average GDP growth and year on year deflation, not unlike the rest of th…

I'm sorry to rain on your parade but Australia has had decent levels of GDP growth for the past decade. It hasn't been the lost decade that some OECD countries has experienced. Australia has experienced a mining boom not unlike Canada.

I don't think you've actually done your research. I can see lower than average GDP growth which is what the OP said. [0]

In addition it's undeniable that the RBA has been cutting the cash rate and that just like the OP said a rise in the cash rate might pop the bubble. [1]

I don't know the sources of your opinions/information but you should consider whether they are slightly biased for some reason.

[0] - http://www.tradingeconomics.com/australia/gdp-growth-annual [1] - http://www.rba.gov.au/statistics/cash-rate/

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#126

Post by adaml_623 » Mon, Jan 02, 2017, 11:04 AM UTC

spoonie wrote: post #32

a_bonobo wrote: post #17

Earlier quoted context omitted.

That's true, the Australian system of superannuation is actually pretty great, your job pays a portion of your income into your super which gets invested for you, you have some choice as to where it gets invested (high risk vs. low risk etc.) However what I fear is that if the super isn't managed well, inflation hits, or you just don't build up a large enough investment the high rental prices in Australia will eat up…

But you don't fear buying a house that depreciates in value, or doesn't appreciate enough to cover mortgage interest, property tax, house insurance, and maintenance costs?

People don't fear buying housing because we always (as a general rule) need a roof over our heads.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#127

Post by zigzigzag » Mon, Jan 02, 2017, 11:33 AM UTC

cmurf wrote: post #106

jussij wrote: post #98

Earlier quoted context omitted.

If the GDP remains low and inflation remains low then property prices will continue to rise. In fact if this happens the rate of rise may well increase over the short term. To fight low inflation and low GDP central banks around the world have all been singing from the same song sheet by adopting the policy of Quantitative Easing (QE). QE is basically a policy of printing money and it was designed to grow inflation,…

OK but not all asset prices are going up, it's pretty much just real estate and in particular residential real estate. Commericial real estate is doing well, but it's lagging compared to residential. Bank loans are roughly 1/3 real estate mortgages, 1/3 commercial, and 1/3 consumer. QE affects all of these. So why is QE not resulting in growth elsewhere in the economy, being narrowly focused on real estate mortgages?

It is, at least sometimes, like in the UK car market:

https://www.ft.com/content/9b727552-b48e-11e5-8358-9a82b43f6...

Car sales growing constantly, 80% of all purchases via borrowing. Prices are up too, but not radically so.

The assumption that money printing/QE leads to increased prices is based on the assumption of relatively limited supply for all things: certainly true in the past when mass manufacturing was relatively new and constrained, but given the huge drop in capacity utilisation after the Great Recession it seems you can grow consumption in some markets quite radically without driving up prices.

So if you print tons of money and it ends up in circulation via loans for cars, it may simply result in lots more cars being made and sold but not really big price increases. It may still reflect misallocation of resources, however.

House prices are a huge problem because supply is heavily constrained by building codes, the desire to live in cities, etc and people got it in their heads that a house is an investment whose price always goes up, so they're willing to pay an almost unlimited amount for one if they can get the credit. This isn't true for most other markets.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#128

Post by [deleted] » Mon, Jan 02, 2017, 11:37 AM UTC

prklmn wrote: post #92

sanswork wrote: post #69

Earlier quoted context omitted.

You seem to think that 90c is going straight to equity when for many years it will be going straight to interest payments. So for the first 5-10 years your $1 is going down the drain vs the renters 10c going into investments.

At any point over those 5-10 you can turn around and sell the property and collect the full gain - it's entirely irrelevant to the mortgage payments being dedicated to interest. My $1 gets my name on the title, your 90¢ gets your name on the lease. Think about what your net investment is. So maybe my maintainance/tax/interest costs equate to 50¢. I'm still investing 50¢ compared to your 10¢. Also, I get incredible le…

[deleted]

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#129

Post by Hondor » Mon, Jan 02, 2017, 11:41 AM UTC

jacobolus wrote: post #110

jmspring wrote: post #79

Earlier quoted context omitted.

There are groups of people that seem to think that sacrificing local experience should be shoved aside solely on the basis to add more Housing should be the most important thing.

The “local experience” of every young person being priced out of their hometowns and needing to move >50 miles away from home to afford a shared room in a small apartment. The “local experience” of 35-year-old couples who can’t afford to start families because they have a tiny rent-controlled studio apartment they got 10 years ago and now can’t afford to move. The “local experience” of all the artists and musicians w…

That's unavoidable anywhere population is growing. We don't have a right to buy a house where we grew up. Or maybe those kids can ask their parents to sell their house to them at far below market value. You're asking someone to do that, why not their own parents?

The opposite effect happens in small/shrinking towns. Kids who grow up there and move out for a career can afford to buy a house where they grew up but don't want to. Should these people be forced to move back to their small town so they don't displace the "rightful" residents of the booming city?

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#130

Post by Hondor » Mon, Jan 02, 2017, 11:57 AM UTC

prklmn wrote: post #67

aianus wrote: post #40

Earlier quoted context omitted.

This. I did the math when I rented an apartment in downtown Toronto and the rent was less than mortgage interest + condo fees + property tax + maintenance.

So let's say you save 10¢ on every dollar by renting in your scenario. You'd have to have a hell of a return on that 10¢ you saved to beat the 90¢ you would have invested in the property but instead flushed down the drain in the form of rent....

You can't predict the property market. It's kind of financially risky to put your entire investment into not just a single sector of the economy or a single industry but a single property! What if you'd bought your house in Detroit? What if you bought at the peak of a bubble? Even if it's not such an obvious disaster, it can still easily perform worse than other investments.