Yes, our share markets are reacting to goings on in China: the decline of her stock market; the devaluation of the yuan. But if I hear one more absolutely sanctimonious western financial commentator try to blame China for our current economic woe, I’ll explode! I must have seen four or five of them today!
It’s our impossible level of debt, guys! You can’t blame China for that! Yes, China has her own massive real estate-based debt, too.
But each of the world’s nations has set itself up nicely for a collapse of her own land and share markets. China didn’t twist our arms to pay these ridiculously high prices for our real estate, and send all our asset prices up to nosebleed heights. Get real and put the blame where it properly lies – with us!
China, of course, may well be the catalyst for our “correction”.
That’s right, Michael – and there was indeed a percentage of Chinese adding to our land prices. At a conference in Chengdu late in 2013, I spoke to a couple of economists about these overseas investments. Their explanations were pretty hard-nosed. They admitted China had an enormous real estate bubble, and who knew what the Chinese government would eventually do? Therefore, they needed to ‘bolt-hole’ some of their assets into the UK, USA, Canada (then) and Australia – wherever it was relatively stable and permissible. We in the west won’t even admit to our bubbles (until they burst). They did.
Mind you, the China story provided a great sales pitch for our property spruikers.
All those billionaires from Beijing tripping over themselves at Sydney and Melbpurne airports in the rush to buy our properties no matter what the cost.