STOCK MARKET WATCH -- Thursday, 20 August 2015

[Demeter]

7. Don’t Worry About China’s Stocks—Worry About Its Housing By Charles Hugh Smith

http://www.theamericanconservative.com/articles/chinas-looming-housing-crash/

When the real estate bubble that enriched households and local governments alike soon bursts, the whole world may pay...It’s becoming increasingly clear that China’s economy is slowing and the authorities’ fixes are not turning it around. That means the engine that pulled the global economy out of the 2009 recession has stalled.

Many people see China’s present slowdown as a possible source of the next global recession, but few seem to realize the extreme vulnerability of China’s vast housing market and the many knock-on consequences of that market grinding to a halt. I’ve just completed a comprehensive review of China’s housing market, and I now realize it’s much worse than the consensus understands.

The consensus view is: sure, China’s housing prices are falling modestly outside of Beijing and Shanghai, but since Chinese households buy homes with cash or large down payments, this decline won’t trigger a banking crisis like America’s housing bubble did in 2008.

The problem isn’t a banking crisis, however: it’s a loss of household wealth, the reversal of the wealth effect, and the decimation of local government budgets and the construction sector. China is uniquely dependent on housing and real estate development. This makes it uniquely vulnerable to any slowdown in construction and sales of new housing.

About 15 percent of China’s GDP is housing-related. This is extraordinarily high. In the 2003-08 housing bubble, housing’s share of U.S. GDP barely cracked 5 percent...

AND A MASSIVE BANK-FRAUD! MORE