Here are a few highlights:
Nemo Incognito: "Tyler, you can buy CDS on Chinese real estate companies in reasonable size. Or, if you think RE will collapse then just short commodities - the commodities hit the wall shortly after China real estate did in 07-early 08.
Or, if you're really lazy (and like macro) just short asia itraxx High Yield. The beauty of shorting credit is that when the sh!t hits the fan the foreign creditors get paid peanuts if at all. Also, your downside is somewhat capped. Shorting equities is hard - lots of pump priming going on and i'd wait for the credit market to turn first."
Walkingshadow: "I am the author, and if I had to predict, I would bet that China will experience civil war within 5-10 years, not 25 years. Most likely closer to 5 years than 10. That's plenty of time to see things completely unravel there, for the Chinese to completely lose faith in their version of the "American Dream," and for the appearance of some charismatic leader who promises to right their many wrongs. The supreme irony of China today is that the Chinese Communist Party have conspired with the Chinese people, and together, this "Communist" country has somehow managed to create the very conditions that inspired Karl Marx to write the "Communist Manifesto" in the first place. If Lenin, Trotsky, and Marx were alive today, they would single out China as the most important place to foment a communist revolution."
Yes, aside from select residences in the best parts of Shanghai and Beijing and a very few other places, if most Americans saw the quality of "houses" that abound in China they would be appalled. Most of them look like ghettos, or worse. I don't think they have any idea what "paint" is. I can't recall ever seeing anybody paint anything in China, other than something that was being newly completed. But, I suppose they figure "why paint something that is crap in the first place?"
I've seen first-hand how the govt. "gently prods" peasants here and there. I was in Beijing when a few million were being summarily ejected from the city prior to the Olympics, so the Western press would not see what average Chinese people really look and act like, and wouldn't see how they are treated----worse than dogs, if you ask me.
CT: "This is one of the most ridiculous articles I've ever read. I really thought you had higher standards than this, Tyler. Might've seen this kind of analysis on a Yahoo board.
I can only hope the earlier poster is right, and the mention of Rogers as some sort of anonymous "hedge fund whiz" is just a poor joke.
This line is also representative of the very limited intelligence and insight shared by the author: "I think you’ll see people walking away from mortgages, just like you do everywhere else, except the scale will be massively increased because much of the property is unoccupied, and cannot be sold very easily, except perhaps at a deep discount."
Sounds like the author is unaware that:
- Chinese residential real estate has extremely tight standards on LTV (especially on second/third/investment homes), which are age dependent. A "typical" family that's purchased a home in the past 3-4 years will own 40-50% equity in the property.
- Chinese mortgages *are* recourse loans, and there is no Chinese law allowing personal bankruptcy (which would allow such mortgages to be discharged).
So, why doesn't the author take a shot at re-analyzing the situation with the two above facts in mind."