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

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

#191

Post by benjaminwootton » Sun, Jul 17, 2022, 7:04 AM UTC

viraptor wrote: post #109

robocat wrote: post #106

Earlier quoted context omitted.

You are confusing a “30 year mortgage” with a “30 year mortgage”. They sound the same, because they have the same term to repay the principal, but they are completely different because in the USA you usually know your repayments for the next 30 years, but in many other countries the repayments can go up a lot if interest rates rise. In the USA, the usual mortgage has a fixed interest rate for the term of the mortgage…

> confusing a “30 year mortgage” with a “30 year mortgage” No need for confusing naming. You're talking about fixed rate, variable rate and short period fixed rate mortgages.

It’s even weirder in the UK because you agree a mortgage did say 30 years on a “standard variable rate” but then take a mortgage for say 5 years on a fixed rate or discounted “variable rate” which might last for 2-5 years. People do usually take a new “mortgage” after each period.

Weird!

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

#192

Post by paganel » Sun, Jul 17, 2022, 7:07 AM UTC

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…

> incurring the wraths of normal folks in Europe and other allied countries.

We have our own issues here in Europe with incurring wrath on Russia, thank you, we can't take two at a time. Or at least I hope we won't f.ing take two at a time, the gas prices being what they are is bad enough.

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

#193

Post by manquer » Sun, Jul 17, 2022, 7:09 AM UTC

prox wrote: post #175

everybodyknows wrote: post #77

Earlier quoted context omitted.

Seems a punitive tax on the entrepreneurial middle class. Such fixed costs might be insignificant for a palatial home. At the other end, large-scale developers know all about negotiating discounts and otherwise offloading costs.

There was a great article on this system, basically to build a house you need to have so much skill to navigate the maze of red tape, rules and regulations and so on.

That is true for every field, the skills required to do anything is increasingly specialized.

My grandfather became a pharmacist by simply apprenticing to one and then later owning a pharmacy. My mom had to only do a 3-year course, today it would be lot more difficult than that.

You can call it red-tap or code, we have learnt a lot over the last centuries, we put these regulations to protect the average consumer. Sometimes it is overkill, but most regulations have been payed for in blood. Aviation is very visible example.

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

#194

Post by [deleted] » Sun, Jul 17, 2022, 7:09 AM UTC

tsimionescu wrote: post #174

chaostheory wrote: post #143

Earlier quoted context omitted.

Maybe Zhang Yiming and Colin Huang are better examples? If not, there are plenty more. The fact is that extreme centralized economic planning is the enemy of innovation.

This is a common legend, but it's hard to accept. China is way more innovative than much of Europe for example. The USSR was actually an extremely innovative place as well. Also, huge corporations are themselves extremely centrally planned, and that is where much of their strengths lie. There's a reason why Apple was able to capitalize on the smartphone, and it wasn't some market of suppliers. The problem with centra…

[deleted]

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

#195

Post by chii » Sun, Jul 17, 2022, 7:10 AM UTC

naveen99 wrote: post #141

dahdum wrote: post #139

Earlier quoted context omitted.

I think the main point was that these are not secured loans. The developers operate in a ponzi like fashion, so there is nothing to foreclose on and no cash to claw back by the bank. I’m not sure how big of a problem that really is, but I could see it toppling a number of local banks.

Typically banks release money as construction incurs expenses, not all at once before construction begins. Atleast in the usa.

i think this point is not clear to many people!

Construction companies in the USA (and the west typically) don't get paid up front 100% for the full amount, but is often paid "pro-rata" based on milestones or % completed.

The funds a released by an escrow (which the purchaser and the bank, if it's a mortgage, would choose).

The situation described in china is not like that above - the developers got paid 100% of the cost of the build upfront, by the purchaser. The bank loans the funds to the purchaser for this purpose (at 60% LVR for example).

The bank has the title as collateral - but since the property isn't built, there's no property to sell if it goes bad. It's just the land title. The reason the banks do this is because it's a politically driven mandate - the CCP in the past, wanted more construction, and this is one way to drive risk away from developers (so there'd be more developers!).

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

#196

Post by manquer » Sun, Jul 17, 2022, 7:12 AM UTC

chii wrote: post #181

ganyu wrote: post #49

Earlier quoted context omitted.

Legislation states that the lease is automatically renewed (40yrs, 50yrs or 70yrs depending on how the land was purchased) for residential housing, but there have been rumours saying that related laws will change so the property will be taxed during renewal. Considering that commercial housing started in PRC in the 1980s and the first batch of houses aren't technically expired yet, I think it's pretty hard to say wha…

by deliberately leaving the regulation vague, the CCP is able to use this regulation as a form of control over the populous. Come the 70 yr renewal, if there are citizenry who are attempting to disrupt the power structure of the CCP, they will be the first to lose their lease (or some other method such as a high tax which is equivalent to losing the lease). Mark my words. Regulation that is not fully well specified,…

"Well specified" regulation is also a weapon. No law is fully unambiguous, clear and without conflicts with other laws for a specific situation, more well specified a regulation is, more you need professional expertise to decode, understand, implement and certify it.

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

#197

Post by manquer » Sun, Jul 17, 2022, 7:15 AM UTC

jollybean wrote: post #156

autokad wrote: post #133

Earlier quoted context omitted.

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.

When Chinese firms cannot get financing for manufacturing at all or cheap enough, because Chinese banks are hemorrhaging money from real estate, it will create problems for everyone.

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

#198

Post by petre » Sun, Jul 17, 2022, 7:18 AM UTC

holografix wrote: post #118

rr808 wrote: post #82

Earlier quoted context omitted.

I know this is supposed to be about China, but is true of Russia and many poorer countries. The elite of the country can siphon money of simple industries like oil and primary industries, but they can't control high tech. Kamil Galeev writes some great threads on this https://twitter.com/kamilkazani/status/1501360272442896388

I guess you haven’t heard about what happened to Jack Ma recently

Jack Ma is just one example. The CCP went after celebrities more recently. No individual or organisation in China should be allowed to be more popular (or powerful) than the CCP in their view. That's why they went after Falun Gong decades ago - it had more practitioners than the CCP had members.

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

#199

Post by jollybean » Sun, Jul 17, 2022, 7:19 AM UTC

JumpCrisscross wrote: post #162

jollybean wrote: post #160

Earlier quoted context omitted.

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 balan…

> taking toxic loan assets of banks balance sheet and absorbing it onto the fed balance sheet This is not what happened. (The Fed never bought the toxic assets. It bought Treasuries and super-safe nontraditional assets off owners of toxic assets so they had the liquidity to resolve themselves. But the toxic stuff ended up in other places.)

No, the Central Banks give banks cash in return for garbage mortgages.

Look at the giant bump in 2008 in Fed assets. Most of that is mortgages.

And then in 2019 an even bigger calamity.

Those massive jumps represent the finantialization of the USA, a massive form of economic shift.

[1] https://wallstreetonparade.com/2022/06/fed-data-shows-a-half...

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

#200

Post by petre » Sun, Jul 17, 2022, 7:29 AM UTC

tsimionescu wrote: post #174

chaostheory wrote: post #143

Earlier quoted context omitted.

Maybe Zhang Yiming and Colin Huang are better examples? If not, there are plenty more. The fact is that extreme centralized economic planning is the enemy of innovation.

This is a common legend, but it's hard to accept. China is way more innovative than much of Europe for example. The USSR was actually an extremely innovative place as well. Also, huge corporations are themselves extremely centrally planned, and that is where much of their strengths lie. There's a reason why Apple was able to capitalize on the smartphone, and it wasn't some market of suppliers. The problem with centra…

> China is way more innovative than much of Europe for example

Of course they are, having built upon stolen EU and US tech and having trained their people in the West. But they learn fast and incrementally improve those designs. The difference is the Russians had their very own designs. Even in electronics, their concepts are fundamentally different from western concepts.