Raoul's China Saloon (V5.0) Beta
The Bar Room => The BS-Wrestling Pit => Topic started by: Calach Pfeffer on April 14, 2017, 01:34:18 PM
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This is probably a tone deaf analysis, but material development is messy. The same way a factory will kill you sooner than a forest, material development fucks up the landscape, shortens people's live wholescale, enriches some, provides lots of material goods for most, and basically just lurches so far ahead of extant social institutions that people end up doing, saying, and living weirdly stressed out, messed up lives. You'd think, maybe, eventually, enough would be enough. But no, nations bubble up out of the mud and surround themselves with skyscrapers and black haze. wtf?
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Which in turn, provides the society with enough resources and efficiency to achieve goals, so it boils down to human value systems in the end.
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Well I hope not because that makes China look like ass. Broadly, and without much insight into actual historical conditions, China's "development" is so much more acquisitive than it is innovative. This ain't no Industrial Revolution here. Science and technology is not going through any kind of shakeup. The whole process is so very like simple materials transfer (on a tremendous scale) that, like, what drives it? Getting stuff so you can... have stuff?
Is there any sophistication to Chinese development? Because if there isn't, there's no really good reason for thinking the extant value systems will meld anything less than uncomfortably with the level of actual material content. (And frankly, I think that is what we do see - peasants in cars, cookie cutter cities, "parks" that can't sustain even grass... the people who make these things have all the big tools and none of the little ones.)
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To answer your question simply; "MONEY"!
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ahahahahah probably true.
At least in terms of the very small amount of history I know, the Industrial revolution was about money and some idealism. Industrialisation allowed some owners to become very rich; and a burgeoning idealised scientific method allowed industrialisation to proceed, both in terms of technology and organization (because of things like studying factory workers and trying to determine optimum conditions for production).
China's "development" thought... there's money in controlling (ie importing and deploying) the technological means of production, and there's idealism in... the Party?
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Here in China, the government told the banks to lend money to developers and they did... billions and billions... and continue to. When I moved here there were no high rise apartments/condos. Now, from the campus I can see hundreds of them. Probably 70% are bought on spec and will remain empty... as they fall apart. The question is when will the bubble burst?
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A while back I discovered there'd been a building boom in this little burg. In the city center, obviously, but on the outskirts as well. Rows and ranks and whole parks of apartment buildings, ten and more stories high. And by the look of them, largely empty. (Occupied apartments stood out because of obvious wear, like bars on the windows, actual windows, and of course, hanging laundry.) I decided to start counting. Ballpark figure right now? I'd say 10,000 unoccupied apartments. For a while I considered this to be urban development, as in people were going to move in to these areas, they'd become more like suburbs, and businesses that supported such lifestyles would start to appear. (I even said as much to students, imagining I was letting them in on a secret that would help them choose how to work.) I suppose it could still happen like that, but the scale, man...
The other thing is it's kind of bizarre to be putting up high intensity urban living buildings in vastly vacant areas. Why plan pack people in like that? (I know, I know - there was no plan, but still....)
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The other thing is it's kind of bizarre to be putting up high intensity urban living buildings in vastly vacant areas. Why plan pack people in like that? (I know, I know - there was no plan, but still....)
Granny Mae told you - Money!
People are getting rich... on paper. But, it's only a matter of time until it all goes 'Poof'... and they have nothing.
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It's the same pattern which has been repeated in many countries. Industrialized development creates much larger amounts of wealth than agriculture. Those who want to move off the farm are pleased and will give up anything (including clean air) to get it. Eventually, people realize that no amount of money can compensate for the damage the pollution is causing, so things slowly get cleaned up.
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So... the people drive development?
First stage: the robber barons; Second stage: the middle classes who might riot if they can't breath any more?
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My observations are that "things get cleaned up", so that people can continue to live and make money to afford to eat etc. After the basics are met, people then look to their perceptions of a "better" lifestyle which requires money in the final analysis. bjbjbjbjbj
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So... the people drive development?
First stage: the robber barons; Second stage: the middle classes who might riot if they can't breath any more?
First stage - to various degrees. ahahahahah
Second stage - middle and upper class demand better environment. Complaints usually start lower down (lower middle class quite often), but move up over the span of a few years.
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Building high rises keeps unemployment low, provides an outlet for the country's over-capacity of concrete and steel, thus boosts GDP. This is the main driver of that vaunted "6.X%" growth. Keynesian economics 101. It's either a) the only way to grow an economy or b) follows the same pattern as an alcoholic - just keep going. Depends on your priors.
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And when those highrises are full of empty apartments and offices being saved as investments and the money spent to buy them goes to building more buildings which will be purchased only to remain empty, just remember - despite years of unprecedented real-estate price increases, there is no bubble. Prices can only go up. Put all your money in as soon as possible. uuuuuuuuuu
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Right.
People's beliefs influence aggregate demand - the trick is to get out 1 minute before the collapse and not a moment sooner. Financial chicken, or perhaps musical chairs. Gotta get while the getting is good.
However, the Chinese ability to undertake massive unilateral policies may help them absorb some of the damage - an option not available in the west. Just gotta find something to do with all those unemployed people. Methinks huge green energy infrastructure projects can help soften the blow, and we are seeing the beginning of that now.
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People's beliefs influence aggregate demand - the trick is to get out 1 minute before the collapse and not a moment sooner. Financial chicken, or perhaps musical chairs. Gotta get while the getting is good.
Like today's stock market. With low interest rates you should be putting any cash into stocks... which are going to exponentially increase in value until the next big crash in one to one-and-a-half years. The trouble is... you will watch your money growing... faster and faster... as more and more people jump on the bandwagon to get rich... and be unable to bring yourself to 'sell'... until, suddenly with no warning - CRASH! Welcome to the poorhouse.
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I read once that a Chinese real-estate bubble can't exist because bubbles need someone to pop them - to no longer believe - but Chinese will never not believe in "land". They'd have to, for instance, have somewhere, anywhere, else to put their money that's not a bank.
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This is what has been on my mind a lot
In my time in China, it's so interesting how in 2009 when I arrived it was still this miracle how many people had parents who grew up hungry who now lives modern cities and have interesting jobs etc
Of course most of the population is still poor, but they felt involved because they were also working in a society moving forward
But now in the rich bits they just keep building malls and office buildings. its like with iPhones, it isn't new anymore and they can't just keep making the same thing again and again
the guys who build the luxury apartments are classed as migrants and have to live in temporary houses all year except when they go back to their village
Why are they not having them build cool stuff for themselves instead of these rich people who don't exist
That would be the advantage of having such an authoritarian government, they could actually make huge things because they are good ideas, and not have to justify it to everyone.
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I read once that a Chinese real-estate bubble can't exist because bubbles need someone to pop them - to no longer believe - but Chinese will never not believe in "land". They'd have to, for instance, have somewhere, anywhere, else to put their money that's not a bank.
And when an apartment sells for 100,000 per square meter, it won't matter what they believe - only the richest of the rich will be able to afford apartments and rents won't even cover the interest on a housing loan. As more people decide to rent out their investments, that will reduce rental rates even more. Demand will fall behind supply, and prices will have only one direction to go.
China's stock market has had a number of "corrections" despite everyone wanting to believe. All it takes to trigger a bubble popping is a small price pullback and someone bringing up all the numerous real estate bubbles that popped around the world.
Bubbles have happened before. Bubbles are happening now. Bubbles will surely happen again. The problem is figuring out when to buy, when to hold, and when to pull the ripcord. If prices have already gone into a steep dive, then it's too late.