The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Numbers Man on August 12, 2013, 11:20:06 AM
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I watched the 60 minutes piece on Chinese real estate yesterday and couldn't believe what I was watching (first ran in March, 2013). The Chinese have built cities that are empty. Build it and they will come mentality. I had two questions while watching this, could the eventual bubble impact my investments or way of life and how would one profit from this upcoming bubble. Here's the episode http://www.cbsnews.com/video/watch/?id=50142079n
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Also saw it and had some concerns. Then I realized that Chinese government will spend a lot of money, effort, etc to prevent political unrest (as discussed in the show).
So I think I probably won't change my investment strategy. I don't hold any exotic China ETFs or anything, just broad market index funds. And if there is a big collapse impacting US markets, it means we'll be able to buy shares cheaper!
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First time I saw/heard about it was 2009. It became big news in 2010.
http://money.cnn.com/2010/04/15/news/economy/china_bubble/
http://www.businessinsider.com/chinese-land-prices-2010-7?op=1
But it started in 2005. It's actually been deflating for the past two years, any news reports on it now are old news and actually mostly inaccurate.
https://en.wikipedia.org/wiki/Chinese_property_bubble_(2005%E2%80%9311)
I say they're smart - U.S. spends billions to bail out banks, trash cars that are still working, and generally get nothing for our printed money. They build infrastructure. May not be used now, but there's worse ways to blow the money...
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It will be very interesting to see the effects of the changing Chinese economy (possible bursting of the bubble) on the Vancouver RE market, and some other areas where there is a lot of foreign speculation (or simply getting money out of China) in real estate.
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I say they're smart - U.S. spends billions to bail out banks, trash cars that are still working, and generally get nothing for our printed money. They build infrastructure. May not be used now, but there's worse ways to blow the money...
Spain did something like this and it didn't end well for them. Sure it's a very different weight class, but still...