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Economists: China Mirrors U.S. on Eve of Financial Crisis
Keywords:
Renewed warnings about the bubble in housing prices in China. Earlier warnings came from Krugman, Lardy, John Taylor. This one comes from Nomura economists Zhiwei Zhang and Wendy Chen. Could the government's action to curb rising housing prices not be adequate leading to a financial crisis as early as 2014, is the question posed by Zhang and Chen. They cite the rise of housing prices by 84% from 2001 to 2006, before the financial crisis of 2008 in the U.S., using the Case-Shiller housing price index. One problem- the government statistics may have underestimated the extent of the bubble. China's official index shows housing prices rising 113% in major cities from 2004 to 2012. Zhang and Chen say this is much smaller than the actual rise because it includes older, lower quality housing property. They cite an academic paper that adjusts for this and finds prices jumping by 250% in the period 2004 to 2009. Another problem is that China's housing prices growth slows after government action but then resumes the growth, leaving the risk exposure at the high level as before. Because the local governments are tied up in the housing bubble the problem would hit the banking system. About 14.1% of the outstanding bank loans are to local government financing vehicles, and 6.2% to property developers, according to Nomura economists. The declining potential growth rate in China means there is less room for bad loans to be absorbed by hyper growth levels than in the past. Errors in policy can magnify the risk including loosening monetary policy and exacerbating the bubble at the wrong time. In the absence of errors the risks still remain requiring the sale of public assets to bail out local governments and banks. The argument made by Krugman and other economists has been that China is not immune to the risks of a housing bubble going bad, in any way less than Sweden, the U.S., Spain and other countries, requiring bailouts of banks.
Bubbles developing in many countries in 2010-2013
01/17/2009
China being the largest bubble developing in mid 2010. The other bubbles developing in Brazil, Canada, India, and Australia.
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The bubble symptoms of the first decade of the twentyfirst century extends from tech, to real estate to tea! The bubble effects of the U.S. real estate bubble extended to little towns in the north of Norway.
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Huaxi Journal: Sharing the Wealth in a Tiny Chinese Village
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A County in China Sees Its Fortunes in Tea Leaves Until a Bubble Bursts
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Economists: China Mirrors U.S. on Eve of Financial Crisis
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New York Times 12/18/2011
We all have a stake in China’s real estate bubble - The Washington Post
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China's real estate bubble and risks of a hard landing in 2012-2014
01/14/2010
Decline in housing prices in China and the impact on retail sales and the economy.
Grouped Articles
Global property markets: Boom and gloom
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China’s Economic Problems Unlike Those Elsewhere
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Buyers Dodge Homeowner Limits in China
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Central Bankers Hone Tools to Pop Bubbles
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I.M.F. Tells China of Urgent Need for Economic Change
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China's looming asset price bubble in late 2009.
01/17/2009
The role of the yuan pegged to the dollar in all this. The need for action to let the currency appreciate now rather than later.
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Economist 10/08/2009
Economist 10/08/2009
Three Hurdles for China in the Year of the Tiger
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China's IPO's in 2010-2011 and Fears of a Bubble
12/12/2010
Grouped Articles
Beijing Plans to Loosen Control Over IPO System
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China's IPO Frenzy Raises Talk of a Bubble
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Fears Mount That China Is Headed for a Slowdown
New York Times 12/12/2010
Wall Street Journal 12/27/2010
The Granddaddy of All Bubbles?
BusinessWeek 04/14/2011
Silicon Valley and the technology industry: The new tech bubble
Economist 05/14/2011
Krugman on economic policy and prospects for China in 2012-2013
09/30/2010
Grouped Articles
The Slowing of Two Economic Giants
New York Times 07/14/2013
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Chinese debt: The great hole of China
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A Warning on China Seems Prescient
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China's Debt: You'll Grow Out of It
Wall Street Journal 01/25/2012
China Speeds Economic 'Transformation'
Wall Street Journal 03/06/2012
2010 high Inflation and asset price bubbles in in India and China, and low or no inflation in Europe, Japan and the USA.
01/14/2010
Wide divergence in conditions and the prospects of tightening credit in Asia affecting export prospects of the USA which depends on exports for half the growth generated in 2009 and early 2010 according to Commerce Department figures.
Grouped Articles
Japanese Economic Data Give Abe a Lift
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Staying Away from Indian Bonds
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Corrosive Inflation Eats at Developing World
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Japan and China: Edging closer
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China's efforts to control the bubble in housing prices 2011-2014 and homebuyer efforts to evade restrictions
04/14/2010
Grouped Articles
China’s Economic Problems Unlike Those Elsewhere
New York Times 05/28/2013
Buyers Dodge Homeowner Limits in China
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Central Bankers Hone Tools to Pop Bubbles
Wall Street Journal 07/08/2013
BusinessWeek 04/14/2010
Compelling Signs the Chinese Property Boom Is Over
Wall Street Journal 03/19/2014
Hard to Construct a Case for China Property Rebuild
Wall Street Journal 04/04/2014
Off-balance sheet shadow lending by Chinese banks.
01/12/2010
Even after the efforts to restrain lending in 2010 in China following heightened stimulus lending in 2009, the level of bank lending has exceeded 10.5 trillion yuan and is at the same level as 2009. This includes the lending through trusts and other mechanisms according to Fitch Ratings. This explains the inflationary pressures and property bubble.
Grouped Articles
Asia Goes on a Debt Binge as Much of World Sobers Up
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China's 'Shadow Banks' Fan Debt-Bubble Fears
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China's Silver Linings Playbook
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Wall Street Journal 06/25/2013
China Central Bank Warns Banks on Liquidity
Wall Street Journal 06/25/2013
Credit Warnings Offer World a Peek Into Chinaâs Secretive Banks
New York Times 06/24/2013
Signals such as the wine price bubble and the bubble developing in China
01/17/2009
Grouped Articles
China Can't Slake Its Thirst for Costly Wine
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Fears Mount That China Is Headed for a Slowdown
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Wall Street Journal 12/27/2010
Cooking Oil's Surge Shows How Inflation Hits Chinese
Wall Street Journal 01/01/2011
China Alters Measure of Credit Growth
Wall Street Journal 03/06/2011
The Granddaddy of All Bubbles?
BusinessWeek 04/14/2011
Growing Risks for the Chinese Economy going into 2010-2014
01/14/2010
One is a concern that China may like Japan in the 1980's is getting into a property and asset price bubble after aperiod of rapid industrialization and shifting of rural population to the cities. The risks of an overheating economy were growing with a 22% jump in a broad measure of money supply in March 2010.
Grouped Articles
Wall Street Journal 07/01/2013
I.M.F. Tells China of Urgent Need for Economic Change
New York Times 07/17/2013
Economist 01/14/2010
BusinessWeek 04/14/2010
Fear Pervades China's Stocks As Market's Gains Disappear
Wall Street Journal 05/13/2010
Europeâs Debt Crisis Is Casting a Shadow Over China
New York Times 05/17/2010
Chimerica as economic monster and the 10-10 deal, 10% growth in China and 10% unemployment in the USA.
11/16/2009
Niall Ferguson at Harvard and Moritz Schularick of the Free University of Berlin say giving a peaceful death to this monster is long overdue. Krugman also calls this a world out of balance on the pages of the NYT, November 16, 2009.
Grouped Articles
China Will Keep Growing. Just Ask the Soviets.
New York Times 10/24/2014
Apple Says App Store Sales Rose 50% in 2014
Wall Street Journal 01/09/2015
New York Times 11/16/2009
New York Times 11/16/2009
China and the American Jobs Machine
Wall Street Journal 11/17/2009
Why the Chinese don’t spend : The New Yorker
New Yorker 01/04/2010
Renewed warnings in 2013-2014 for the housing price bubble in China (1)- Krugman, Nomura's Zhang and Chen
12/18/2011
Linked Articles
New York Times 12/18/2011
Economists: China Mirrors U.S. on Eve of Financial Crisis
Wall Street Journal 03/18/2013
Renewed warnings in 2013-2014 for the housing price bubble in China (3)- Jia Yang and Nicholas Lardy of the Peterson Institute of International Economics
10/03/2012
Linked Articles
As China’s economy slows, real estate bubble looms - The Washington Post
Washington Post 10/03/2012
Economists: China Mirrors U.S. on Eve of Financial Crisis
Wall Street Journal 03/18/2013
John Taylor on how U.S. monetary policy adds to the risk of a financial crisis from the housing price bubble in China
07/04/2012
Linked Articles
John B. Taylor: Monetary Policy and the Next Crisis
Wall Street Journal 07/04/2012
Economists: China Mirrors U.S. on Eve of Financial Crisis
Wall Street Journal 03/18/2013
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