China mortgage boycott data erased by censors as crisis spreads • Hacker News Board

Re: China mortgage boycott data erased by censors as crisis spreads

#151

Post by atwood22 » Sun, Jul 17, 2022, 4:53 AM UTC

jpgvm wrote: post #144

marianatom wrote: post #12

I was one of those people that thought China would never collapse due to its iron grip on economy and population. But look at recent activities * Chinese GDP shrinks to 0.4% in Q2 2022. Which is still suspicious because Shanghai economic activities declined -40%, and real estate overall activities dropped -30% * Massive mortgage boycott. Also public protests against lost deposits and unable to access bank is being ai…

Same story has been foretold over and over for the last 30 years. I will believe it when I see it. The RE bubble is bad but substantially less bad than what the US was facing in 2008. There is a big difference between over-leveraged developers (the Chinese problem) and rotten Main street banks (which was the US problem). In China's case we are likely going to see a continued drop in housing prices for a little bit lo…

How are over-leveraged developers that different from what caused the 2008 global financial crisis? The cause of the GFC was that assets were labeled as safe but were in fact unsafe. So one day everyone woke up and had less money than they thought they had. The same thing can happen from over-leveraged developers. Banks lend money to people to buy real-estate. Everyone expects those units to exist, and if they suddenly don't exist en-masse, then that's going to be a major shock.

Re: China mortgage boycott data erased by censors as crisis spreads

#152

Post by chaostheory » Sun, Jul 17, 2022, 4:55 AM UTC

civilized wrote: post #114

dirtyid wrote: post #43

Earlier quoted context omitted.

Preconstruction sells at 30% discount, people gamble with their life savings considering PRC housing prices to income, but flip side is also massive speculative profit if things work out.

Ah, so this is just crypto and ICOs. But at least you get rights to real physical property instead of virtual Pokemon cards.

Well, the CCP owns the land. At best they only lease it for a max of about 75 years give or take.

Re: China mortgage boycott data erased by censors as crisis spreads

#153

Post by noisy_boy » Sun, Jul 17, 2022, 5:02 AM UTC

thriftwy wrote: post #78

cuteboy19 wrote: post #59

Earlier quoted context omitted.

>Externally, the US has been eager to strengthen its control over Canada, Mexico and Cuba, the 'backyard' of the US This is so true. China has either directly invaded or has bad relations with every one of its neighbours. Even the communist ones. Even those seperated by sea. Only reason why this bullying is tolearted is because they are rich now

It looks to me that China has decent relations with Russia, Mongolia, and even central asian Kazakhstan/Kirgisia/Tajikistan (of course there are some ethnic and economical tensions dragging this back, not to mention the issue of Uighurs who are related). China also has good relations with Pakistan.

China has mainly good relations with "asshole" countries. Rest of their "good" relations are based on their loan sharking practices.

Re: China mortgage boycott data erased by censors as crisis spreads

#154

Post by jollybean » Sun, Jul 17, 2022, 5:04 AM UTC

kevinventullo wrote: post #37

sbierwagen wrote: post #32

Earlier quoted context omitted.

>get it paid back in the NEXT 30 YEARS Why emphasize that? 30 year mortgages are common in the US. At current rates of 5.5%, the total paid in interest will be bigger than the original loan. Of course, most US mortgages are taken out on housing units that actually exist.

I agree with you, and just wanted to add that saying one pays “more” in interest than the original loan value is implicitly ignoring the time value of money, in particular equating 2022 currency with 2052 currency.

That's a valid point, but it's not hugely relevant to the situation, as all loans come with interest payments and loans over 30 years at ~6% or whatever will accumulate a lot of interest. It's something to talk about, but another thing altogether.

The mechanics of this are a bit scary, I wonder how much real data there is on it.

Paradoxically, if it were the US, it would be so bad it may wipe out the nation.

But Xi has the Central Banks politicized fully ... he can make currency worth whatever he wants. He has to reallocate/rebalance without causing a revolution.

And if it does get bad, they may try to start a war as a distraction. That sounds extremely cynical but it's a real thing that happens.

Re: China mortgage boycott data erased by censors as crisis spreads

#155

Post by jpgvm » Sun, Jul 17, 2022, 5:07 AM UTC

atwood22 wrote: post #151

jpgvm wrote: post #144

Earlier quoted context omitted.

Same story has been foretold over and over for the last 30 years. I will believe it when I see it. The RE bubble is bad but substantially less bad than what the US was facing in 2008. There is a big difference between over-leveraged developers (the Chinese problem) and rotten Main street banks (which was the US problem). In China's case we are likely going to see a continued drop in housing prices for a little bit lo…

How are over-leveraged developers that different from what caused the 2008 global financial crisis? The cause of the GFC was that assets were labeled as safe but were in fact unsafe. So one day everyone woke up and had less money than they thought they had. The same thing can happen from over-leveraged developers. Banks lend money to people to buy real-estate. Everyone expects those units to exist, and if they sudden…

It matters because of contagion. As it stands there are individuals at risk of being over-leveraged by having a loan on a asset that doesn't currently exist (but probably will, CCP has a way of compelling such things to happen) or has dropped in value compared to when they bought it (most likely). Developers and construction companies are also in hot water as their business models relied on continually pre-selling apartments to provide liquidity for their operations. This is where the similarities end vs 2008.

The main issue with 2008 wasn't the housing bubble itself, such bubbles are normal and happen all the time. The issue was the extent of the financial over-leveraging (due to deregulation) by the financial firms which threatened the solvency of Main st and Wall st banks alike and the incentives that came out of the synthetic financial products that were engineered over baskets of mortgages. Namely a reduction in qualification for sub-prime loans and increased incentives to offer variable rate mortgages with cliff clauses + continual refinancing + speculation + flipping etc.

Essentially normal people losing their house == expected (though sad still) and would have caused a moderate recession (again, expected). However because of how overleveraged the banks themselves were they collapsed, this spread (contagion) to pension funds, equities, everywhere essentially and because these assets and positions in the funds and banks were held across the world it resulted in the -global- financial crisis rather than a contained RE bubble popping.

Re: China mortgage boycott data erased by censors as crisis spreads

#156

Post by jollybean » Sun, Jul 17, 2022, 5:10 AM UTC

autokad wrote: post #133

strawhatguy wrote: post #131

Earlier quoted context omitted.

The problem’s fairly serious. As I understand it, real estate is really the only form of investment open to the Chinese people, and often, the property is bought and sold under the ‘greater fool theory’: no one actually lives in these buildings. Many don’t have working utilities. It is, (or was) an appreciating asset, handed from one to another until you can actually buy a livable place, or just make a ton of money o…

if you are right and this is a 2008 style real estate bust in China, I wonder if there will be global contagion.

Probably not. The world depends on US banks and have a lot invested there, not so with China.

It will hurt, but the sideshow is that a lot of the stuff they make in China may get cheaper for us.

Re: China mortgage boycott data erased by censors as crisis spreads

#157

Post by civilized » Sun, Jul 17, 2022, 5:13 AM UTC

chaostheory wrote: post #152

civilized wrote: post #114

Earlier quoted context omitted.

Ah, so this is just crypto and ICOs. But at least you get rights to real physical property instead of virtual Pokemon cards.

Well, the CCP owns the land. At best they only lease it for a max of about 75 years give or take.

Somebody else posted that they tried to make renewal of the lease conditional on payments but backed down in the face of protests.

Re: China mortgage boycott data erased by censors as crisis spreads

#158

Post by TMWNN » Sun, Jul 17, 2022, 5:13 AM UTC

mensetmanusman wrote: post #64

schleck8 wrote: post #47

Earlier quoted context omitted.

> Have faith in the party and the government. The party and the government will definitely give the people a satisfactory explanation, here is only for statistics, do not have excessive remarks! Then a link to a Mao speech. Weird

The protesting citizens do this as a plea for help from the national government. They know that the true believers in the national government need to be kowtowed to. It is a risk to your life to protest the national government, but the national government allows protest to local governments as a means to reduce steam buildup. This results in over the top worship of Mao during local government protests as a hedge, bec…

>The protesting citizens do this as a plea for help from the national government. They know that the true believers in the national government need to be kowtowed to.

Could the plea for help from the national government be sincere? My understanding is that in early Soviet history, many people were sure that if Lenin/Stalin knew about the awful things local commissars were doing, the great leader would surely order such acts to stop.

Obviously by the Brezhnev/Andropov years very, very few people would be so gullible as to believe such, and I suppose that it's awfully late in the history of the PRC and CCP to expect otherwise of the Chinese, but the thought at least came to mind.

Another way to interpret this would be a (much, much more serious) counterpart, in the US and the West, during the past half decade of the de facto necessity in most parts of online discourse of prefixing anything that is not left of center-adherent with "I hate Trump, but".

Re: China mortgage boycott data erased by censors as crisis spreads

#159

Post by thriftwy » Sun, Jul 17, 2022, 5:18 AM UTC

noisy_boy wrote: post #153

thriftwy wrote: post #78

Earlier quoted context omitted.

It looks to me that China has decent relations with Russia, Mongolia, and even central asian Kazakhstan/Kirgisia/Tajikistan (of course there are some ethnic and economical tensions dragging this back, not to mention the issue of Uighurs who are related). China also has good relations with Pakistan.

China has mainly good relations with "asshole" countries. Rest of their "good" relations are based on their loan sharking practices.

This sounds like a line from Team America: World Police but unironically.

Re: China mortgage boycott data erased by censors as crisis spreads

#160

Post by jollybean » Sun, Jul 17, 2022, 5:18 AM UTC

jpgvm wrote: post #155

atwood22 wrote: post #151

Earlier quoted context omitted.

How are over-leveraged developers that different from what caused the 2008 global financial crisis? The cause of the GFC was that assets were labeled as safe but were in fact unsafe. So one day everyone woke up and had less money than they thought they had. The same thing can happen from over-leveraged developers. Banks lend money to people to buy real-estate. Everyone expects those units to exist, and if they sudden…

It matters because of contagion. As it stands there are individuals at risk of being over-leveraged by having a loan on a asset that doesn't currently exist (but probably will, CCP has a way of compelling such things to happen) or has dropped in value compared to when they bought it (most likely). Developers and construction companies are also in hot water as their business models relied on continually pre-selling ap…

Yeah, dude, the number of 'normal people losing their homes' will create a revolution, and/or, consumer spending will crash, combined with the fact that a 'major component of GDP has crashed' (i.e. construction), that's 'extremely bad'.

The US was able to 'rebalance' by propping up some banks - but in reality they saved 'consumers' by taking toxic loan assets of banks balance sheet and absorbing it onto the fed balance sheet.

CCP can't really do that for houses that are not built.

The other issue is the size of that part of the economy in relative terms.

This is is not going to 'blow over' - everything, including Xi's totalitarian takeover, increased control and repression, issue of age, diminishing marginal returns to growth ...

... this adds up to a 'major shift' in what China is. We saw a different China in the 1990s (quietly building), 2000's (onto the world stage), 2010 trying to be a global superpower, threatening Taiwan, occupying S. China Sea etc, and now 2020's 'reckoning /rebalancing'.