I am closely monitoring the property developer crisis in China. The big question for all of us is – will it implode and cause another financial crisis similar to what we saw in 2008.
I don’t think so, because American banks
do not have exposure to Chinese banks.
The very interesting thing is this is a deliberate act by Chinese regulators to cut down on property speculation in China. They don’t want their citizens speculating and the Shadow banking market has now been closed as a financing outlet for these
over leveraged developers.
It is just not Evergrande – it is almost all of the large developers in China. The greatest Ponzi scheme of the last few decades has been reflected in developers and their pre-sale of units before they build those units. Many times these funds have been used
on other projects and not for the project
the investor made the deposit on.
I think this way of doing business will change,
especially in countries with few regulations.
The much bigger crisis that will blow up and end the asset bubble in America will be under reported inflation by the Federal Reserve. Are they lying to us / or are they lying to us? – They are lying to us – in that inflation is calculated in such a way that the numbers are much lower than they should be.
The bottom line is that inflation is hugely under reported and the Fed will have no option but to raise interest rates. These are the two major issues that I see right now.
Please govern your portfolio accordingly.