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

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

#151

Post by angry_octet »

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…

Remember, there are no Chinese 401k plans. There is no retirement plan except for what you save and your children provide.

Hang on, you only have one child. And the stock market is just smoke and mirrors and you can't actually own land in China...

This is just a trickle of the money that needs to be invested for retirement or a rainy day. Western economies were left totally flat-footed by this, a combination of greed and incompetence.

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

#152

Post by angry_octet »

tehlike wrote: post #63

I wonder what ways US could prevent Chinese money buying real estate in the US? 1. Do what Vancouver did, add tax for foreign property ownership. 2. Tighten the checks on origin of money? How exactly, especially when it's coming as all cash? Maybe forcing it to go through a bank, where more thorough check is mandatory per IRS? But then again, banks are not the most trustworthy in this country. 3. Other ideas?

Force them to invest in property trusts that build subsidised housing. Capped rental rates and penalties for non occupancy. Also allow other infrastructure bonds (rail, road, ports). It's the Zh retail investors who are screwing it up while baby boomers make windfall gains and the economy gets distorted.

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

#153

Post by angry_octet »

sytelus wrote: post #109

Simple question: when some invests his corruption money in US, doesn't it automatically become "public" and hence traceable? For example, if you buy a house for X dollars in US then shouldn't Chinese government be able to easily trace you down? My understanding was that so called "black" money stays black only as long as you use it in form of cash, not investments.

No, money is frangible. The money might be sitting in a US bank account seemingly unspent, but the company may have incurred a 'debt' for which that sum is locked as a security for a loan another party had. Or the company may have rental or production expenses that siphon money to another entity. Any number of ways.

Also, the US government wouldn't normally exchange taxation (transfer taxes) with the Chinese, so it wouldn't be public.

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

#154

Post by stephen_g »

cmurf wrote: post #87
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…

OK and what's the failure mode if broad GDP growth remains stagnant, but the narrow real estate market continue to grow and increasingly unobtainable? Does it fail or does it in effect behave as two economies?

The failure mode is one most economists ignore, but was the key for the few who predicted the GFC - private debt. In Australia we have some of the largest private/household debt in the world. There tends to be a point where it becomes unsustainable, and the creation of debt (credit) starts to slow. What was observed elsewhere in the world was that if it slows down and goes negative (that is, the private sector of the economy starts deleveraging), unemployment tends to start to rise. (This is in line with some non-mainstream theories that beleive credit is a major driver of demand in the economy. Mainstream (neoclassical) economic models ignore debt because they assume that it's just a transfer of funds from a more patient person to a less patient person, but that's not actually how modern banks work).

If unemployment rises, people start to not be able to pay their debts. The default rate rises, banks sell up properties, and the prices tumble.

Recently we were reassured by the Government that the private debt level wasn't a problem because the assets (mostly housing) is very valuable and rising, but I saw a quote from the US in 2005 or 2006 saying exactly the same thing...

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

#155

Post by angry_octet »

webmaven wrote: post #147
eternalban wrote: post #7

Earlier quoted context omitted.

How is it "held"? I've seen reports of raids where they find houses stuffed full of cash, but how do you get $2T in cash to Canada? At some point this is getting converted to electronic funds and that is where the "laundering" is happening. As to why they are buying hard assets in Anglo-sphere, possibly because they are worried that the said Anglos may pull the plug on the fiat currency in a Great Reset at some point…

> how do you get $2T in cash to Canada? Shipping containers?

Try wire transfers.

Eg Their factory needed a container full of Danish ball bearings. They paid the overseas supplier. Maybe there was an actual container (in which case it was re-sold overseas) and maybe there wasn't. May e an actual container of bearings arrived in China.

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

#156

Post by stephen_g »

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…

That's a very plausible theory, but I don't think it's the problem at all. It's more that pretty much all QE so far has just gone into financial assets, and extremely little of it has flowed down into the real economy. Hence we see asset prices rising (i.e. share prices and house prices), but little growth or inflation.

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

#157

Post by stephen_g »

a13xb wrote: post #34
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…

People like to rag on Chinese investors, but I think the main reasons are insane tax breaks and limited supply.

Insane tax breaks yes, but in general there is not limited supply. Rental vacancy rates are rising, rental yields are dropping, which would indicate that we have more than enough housing for the number of people in the country.

Further, a group called LF economics did a study on this - some graphs on page 22 here - http://www.aph.gov.au/DocumentStore.ashx?id=cafe7b04-e06c-4e... (PDF warning - it's a submission to the recent enquiry on house prices). Turns out that they found most Australian markets are in oversupply at the moment. They also found no correlation between supply and prices over the last 30 years, and have some points in there for why that would be the case.

In the end, it's more the availability of credit that determines the prices, not supply and demand.

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

#158

Post by stephen_g »

petecox wrote: post #111
sanswork wrote: post #91

Earlier quoted context omitted.

10 years ago things were very much not normal in housing prices and 8 years ago a lot of people lost everything because they counted on prices increasing at way above historic norms. Much like you're doing here.

pundits have been predicting the bubble bursting here since the GFC. But the 'economic miracle' of the housing boom keeps rolling on in Sydney and Melbourne. With Australian interest rates at record lows, property investors keep borrowing unperturbed.

That's extremely illogical thinking though. If the pundits have good reasons for thinking the market will crash (and I believe they do), and the fact that it hasn't yet doesn't make it less likely, or mean it won't happen. It just means that it's likely to happen sooner rather than later!

It's not an economic miracle, it's a huge amount of asset speculation built on one of the largest levels of household debt in the world, just like in the US and many other countries before the GFC. All it will take is a rise in unemployment, or a shock from China, and it will go (of course interest rates won't rise, the RBA would have to be insane).

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

#159

Post by djrogers »

pjc50 wrote: post #120
djrogers wrote: post #78

Earlier quoted context omitted.

> I bought a house for cash in Las Vegas after the crash and the bank never once asked where I got the funds to do so. I'm pretty sure they were supposed to. Umm, no. It only. I, but that's frightening. You have a right to privacy in a private transaction like that. Where you will run in to a ton of questions is when you use a big chunk of money for a down payment on a mortgage. In that case the bank wants to make su…

The US has no general right to privacy, and all large transactions are potentially notifiable to the anti-money-laundering authorities. This is what HSBC got in a lot of trouble for not doing.

Any notification would go as far as that - simple notification of a transaction. There's no requirement for the bank to investigate the source of your funds as part of a private transaction.

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

#160

Post by prklmn »

raverbashing wrote: post #117
prklmn wrote: post #67

Earlier quoted context omitted.

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....

"flushed down the drain" Oh not this crap again https://www.youtube.com/watch?v=KAMeI4uHAFE

"But practically speaking, ownership has worked out better for most people over the long run."

As I said before, as long as you don't buy high and sell low, your money has effectively been flushed down the drain in the form of rent.

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