More Concerns Out Of China?

The bad news continues to flow out of China. The Telegraph reports that: Tumbling Chinese yuan sets off 'carry trade' rout, triggers derivatives contract

China’s yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts.

The jitters come amid reports of fire-sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20pc for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570m of debts, the biggest property failure so far.

Meanwhile Hong Kong's The Standard, in an article titled Bankruptcy Looms, reports that in addition to the solar, coal and real-estate developer companies that are on everyone's radar as potential future bankruptcy candidates, one can also add steel makers to the list, with its report that Highsee Group, the largest private steel makers in Shanxi province has defaulted on CNY3 billion of debt, unable to repay its bonds on time.

Finally, a South China Futures Brokerage shuts down on "significant business risks"

Will the ripples be felt here?

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

China's Debt Addiction: "Plenty of tinder, lots of fuel, all it needs is a spark" - Financial Times

Many believe that when China's bubble bursts, Vancouver's housing bubble will well and truly implode. 

Until five years ago, China’s economy relied remarkably little on debt. But China lost its debt inhibition in late 2008 when the global financial crisis erupted. With growth slowing sharply and 20 million people losing their jobs overnight, the government unleashed a giant stimulus that was powered almost entirely by bank loans. The debt genie was out of the bottle – and it has been extremely difficult since then for China to stuff it back in. 

In this video from the Financial Times, Simon Rabinovitch reports from Guiyang.

(hat tip 'Best Place on Meth')

==================

Email: village_whisperer@live.ca Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Wed Post #1: China's Property Values continue to decline

Perhaps one of the most important stories for our little hamlet on the wet coast is the fact that China's property values continue to decline.

The chart above from ISI Research shows that the rate of decline is now similar to the lows in early 2009. And, as Pragmatic Capitalism notes, data from ISI tends to be more accurate than the official numbers coming out of China’s housing ministry.

As we have noted in earlier posts, much of this decline has been engineered by Beijing as China attempts to arrest their housing bubble.

And as Reuters notes, this policy will not be letting up soon. As an unnamed spokesman from the housing ministry was quoted as saying that “all localities must firmly implement various property tightening measures as required by the central government.”

Beijing is sending a stern message to local authorities to keep the measures place.

But, as China undergoes an economic slowdown, which may end up being more severe than the authorities had anticipated, will the tightening measures in the housing market be relaxed (particularly at the local level)?

Reuters notes that even if measures are relaxed, any rebound may be a ways off.

Vanke, China’s largest developer by sales, said earlier this month it would take about 11 months to sell down unsold stocks in key cities such as Beijing, Shanghai and Shenzhen should the market rebound.

Hui Jianqiang, head of research at the China Real Estate Association, told Reuters that he doesn't see a rebounding market.

“I’m not worried about a home price rebound as long as the government keeps its tightening stance.”

Presumably we shouldn't look to see a HAM rebound here in the foreseeable future either.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Mon Post #1: China's bubble is starting to break

Patrick Wolff, founder and chief executive officer of Grandmaster Capital Management LLC, was on Bloomberg Television's "Money Moves" talking about China.

In his words, China's bubble is starting to break.

The thing that is really striking about China is that there is an extraordinary double standard in the world today. You know, what you have in China is a state dominated, really state controlled, economy. It's, you know, it's not really capitalism by any stretch; it's something different. And it's very striking to me that the same people who would probably be apoplectic at the idea of the US government tightening regulations even a little bit in some area--that I know you were talking about the Volker Rule earlier where obviously there is a lot of debate on that as their should be--but the same people who would be really really upset about that, somehow come to believe that the fact that China's government controls everything in China is a good thing. I don't think it's a good thing; I think it's a bad thing.

I think there have been years and years of debt-fueled mal-investment. And it's come to a head. And when it breaks, as it seems to be breaking now, it's a long way down.

Another reason we shouldn't expect HAM (Hot Asian Money) to flood in and support the Vancouver Housing Market.

(hat tip World Housing Bubble)

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Are the swirling winds of change blowing towards a Nexus point?

HAM... or Hot Asian Money... has been a prominent feature of our real estate bubble.

As China pumped more stimulus money, per capita, than the Americans into their economy a huge bubble has been blowing.

One of the benefits has been China's real estate.

Buoyed by inflated real estate values, wealthy Chinese have extracted equity and utilized equity to leverage real estate purchases overseas. And Vancouver has been a primary beneficiary.

But what happens when the bubble begins to burst?

One of the first consequences is the access to easy money disappears... and with it the free flow of money to locales such as the Village on the Edge of the Rainforest.

HAM is basically AWOL in the Vancouver Spring Real Estate market and all indications are the situation in China is worsening.

Mish Shedlock noted on his blog yesterday that the Real Estate Crash in China is Underway.

Citing an excellent report (China Real Estate Unravels) by Patrick Chovanec, a professor at Tsinghua University's School of Economics and Management in Beijing, Mish notes that Chinese developers, burdened by 70% leverage ratios and loans threatening to come due, rushed to complete projects already in their pipeline, to put those units onto the market and raise cash.

That rush to complete inflated real estate investments, investments that were allegedly up 23.5% in the first quarter.

But other statistics from the report tell the real story.

• Year-on-year sales in Q1, for all real estate, was down 14.6%.
• Residential property sales were down 17.5%
• Office sales were down -10.2%
• Sales in January-February were a disaster, falling 20.9% overall, compared to the first two months of 2011, -24.7% for residential.
• Total amount of floor space “for sale” was up 35.5%, compared to the same date last year
• Floor space of residential units “for sale” grew 47.4%.
• At the end of 2011, total floor space “under construction” was roughly 4.6 times the floor space sold
• A year and a half worth of excess inventory is hidden somewhere in the pipeline
• New starts in April fell 14.6% year-on-year and 27.0% month-on-month, for property as a whole
• Housing starts fell -14.4% year-on-year and -23.4% month-on-month
• Office starts fell -21.0% year-on-year in April, and -45.1% compared to March
• Retail property starts fell -18.7% year-on-year, and -36.8% compared to March
• Land sale revenues in April (RMB 27 billion) were down -54.7% compared to April last year
• Foreign funding for property development was down -91.4% in March and -80.8% in April, compared to the same months last year.

Chovanec notes:

"Clearly a crash is underway and the Chinese soft-landing thesis is collapsing.

The “resilient” growth in real estate investment that seemed to promise a “soft landing” is not very resilient at all. It’s more like the last gasp of a market that’s running out of steam. Once the surge in completions plays out, the declining number of new starts will become the pipeline, and growth in property investment will flatten or go negative.

Property investment accounts for roughly a quarter of gross Fixed Asset Investment (FAI), and net FAI accounts for over half of China’s GDP growth. As I noted in January, in a back-of-the-envelope thought exercise, if property investment plateaus (growth falls to zero), it could shave as much as 2.6 percentage points off of real GDP growth. If it fell 10% (in real, not nominal terms) it could bring GDP growth down to 5.3%.

At the time I first saw this dynamic in the data, when the Q1 numbers came out, I figured it would take several months to begin playing out. But the April numbers suggest it is already happening.

Chovanec notes if real estate investment drops by 10%, GDP will come in at 5.3%. But what if real estate investment falls by 20% or 25%?

Moreover, why shouldn't it?

The real estate crash in China has arrived and is underway.  The GDP crash will follow shortly.

What comes after that?

After that comes the second consequence for the Village on the Edge of the Rainforest... the panic sale of overseas assets to meet financial demands at home.

All of which is shaping up to hit us just as the OFSI rule changes come into effect.

The swirling winds of change are blowing towards a convergence point that can only be described as the perfect storm combining the Boomer Trigger, the China Trigger and the Speculator Trigger with upcoming mortgage rule changes.

People email me and say my prediction of a collapse in real estate values here of 70-85% is completely unrealistic and they just can't see how it could possibly come to pass.

Not only do I think it is very easy to see... I sometimes think my estimate may be underestimating the full extent of what may play out.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Mon Post #2: The shifting sands in China spells bad news for those in real estate relying on HAM

One of the arguments you hear from locals who dismiss concerns that our real estate prices have surpassed what local incomes can support is that Vancouver is in high demand and endless streams of wealthy Asian investors will buy what locals cannot afford to purchase.

As we have noted here before, China's history is replete with boom and bust cycles. In addition, the policies of the US Federal Reserve have been exporting inflation to the far east.  At some point China is going to react and begin focusing their economy inward.

Few people believe this is going to happen. Fewer still fully understand the repercussions this will have on the world economy.

Evidence that this trend is starting in earnest comes today from Reuters who report that Chinese Premier Wen Jiabao has cut his nation's 2012 growth target to an eight-year low of 7.5%. Wen Jiabo has made boosting consumer demand the year's first priority as Beijing looks to wean the economy off its reliance on external demand and foreign capital.

"We will improve policies that encourage consumption," Wen told nearly 3,000 delegates of the Communist Party-controlled legislature.

China has vowed to wean the economy off dependence on exports, smoke-stack industries and government-backed infrastructure, and promote balanced growth that will elevate the incomes and spending of farmers and workers.

The lower growth numbers just reflect the reality that growth is going to be slower because the rest of the world is going to be weaker. China is in for some rough times ahead. And rough times means less money for entrepreneurs to spend overseas.

China could be headed for its slowest full-year of growth in the last ten years. The economy ended 2011 with its slackest quarter of growth in 2-1/2-years at 8.9% as it felt the chill of the euro area debt crisis and a sluggish U.S. economy.

The outlook for the real economy remains cloudy, according to the latest surveys of China's vast factory sector and the burgeoning services industries that are key to rebalancing growth and generating more stable domestic-driven demand.

The Premier also pledged to curb speculative demand in the property market. The government will continue to defuse rising local government debt, regarded by many investors as the key risk to fiscal sustainability (and the source of the liquidity for the exploding Chinese real estate market). Government figures show about 10.7 trillion yuan ($1.7 trillion) was owed by local governments at the end of 2010.

Chinese investors (who have been spending money like drunken sailors on Vancouver Real Estate) are about to experience huge cash flow issues. Somehow I suspect what money is available for investments, that money isn't going to be spent in a real estate market that EVERYONE can clearly see is overvalued and ripe for a major correction.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

"Residential property prices are in freefall in China" - Forbes

On Saturday we talked about how the Real Estate in China appears to be starting the process of bursting.

Coverage of this issue has been growing since early summertime.

In mid June the UK newspaper the Daily Mail ran a story titled 'China's ghost towns: New satellite pictures show massive skyscraper cities which are STILL completely empty'.

Recently we had this TV news story reporting the fact that property values in Shanghai are crashing:

And, as Forbes reported yesterday, the problem is not just limited to Shanghai but is spreading throughout China:

"Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market."

Forbes is reporting that China's largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing.

In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. 

Property Consultant Alan ChiangSheung-lai told the South China Morning Post that:

“The price war has begun.”

What started slowly at the end of summer has now turned into a rout. The middle of October is normally a good time for sales, but Shanghai developers started to slash asking prices instead.

Analysts expected falling property values to move China's Premier, Wen Jiabao, to relax tightening measures intended to cool the market. China has increased mortgage rates and put prohibitions on second-home purchases.

So far Wen Jiabao is unmoved.

After a State Council meeting on October 29, 2011 Mr. Wen affirmed the policy, stating that local authorities should continue to:

“strictly implement the central government’s real estate policies in the coming months to let citizens see the results of the curbs.”

The announcement turned an escalating drop in prices in mid-October into an earnest spree of panic selling over the past 15 days as desperate developers begin competing among themselves to unload inventory.

Over the past week and a half stunning price cuts are turning up everywhere. One builder — Excellence Group — even said it would sell flats in Huizhou at its development cost.

Citi’s Oscar Choi believes prices will decline another 10% next year, but that’s a conservative estimate. State-funded experts are far more pessimistic. For example, Cao Jianhai of the prestigious Chinese Academy of Social Sciences sees price cuts of 50% on homes if the government continues its cooling measures.

If China's 'approved' analysts are saying prices could halve in a few months; you can be rest assured they believe the eventual sell-off will be worse.

Legendary investor Jim Chanos has long been bearish on the China Real Estate market and has said that China will be “Dubai times 1,000—or worse”. He has said that what will play out is the unwinding of “the biggest housing bubble ever created”.

Anyone who thinks this will not be felt in North America is simply deluding themselves. As Time has noted:

"if the bubble pops, it will have serious consequences in the U.S. America sold $92 billion in goods and services to China last year. If China succeeds in moving away from its model of cheap land and cheap capital and makes a smooth transition to an economy based more on domestic demand, hallelujah. But if Chinese land prices plummet, there will be less demand for raw materials and a steep decline in world commodity markets and global trade in general."

And as this blog wrote on Saturday - when China's Real Estate values collapse, many of China's investors will have serious credit problems. As those credit problems mount, assets will have to be liquidated to pay debts. Given the choice between liquidating assets at home and liquidating assets abroad... assets abroad will most often be liquidated first.

Does anyone seriously believe that Vancouver won't be significantly affected by a rash of Asian owned property liquidations in our city?

Anyone, besides Ozzie Jurock, that is.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Meanwhile... on the topic of Real Estate in China

We continue to monitor the chatter on the move by the CME to increase margins to 100% for all commodities; a move many believe that will lead to widespread margin calls for small and medium investors on Monday and widespread liquidations after that. We will update when we have more to contribute.

Meanwhile the blog World Housing Bubble has brought our attention to another excellent article on Real Estate in Beijing, China.

Titled "Home price-cuts get steeper, more extensive in China", China's news agencies are telling us that there is now a stunning 22 months of inventory available for sale in Beijing.

• "According to the Centaline Property Agency, a supply of 9,152 new homes in October has added Beijing's total house supply to 118,000 units, a new high since June 2009. It would take 22 months to consume the inventory even if there were no new supply, said the agency."

Zhang Yue, chief analyst with Home Link China, a leading real estate agency, said with large trading volume and strict government curbs, Beijing is seen as bellwether for the market. He says price-cuts will get stronger in the fourth quarter and that in Beijing, 53 of this year's 90 new residential projects have already started to offer discounts.

As if that wasn't enough, Zhang Dawei, an analyst from the Centaline Property Agency, said the first-tier cities have come very close to the house price turning point.

• "If the government continues to maintain firm curbs on the real estate market, house prices will reach a turning point in March next year."

Chang Zhi, chief analyst of Century 21 China Real Estate, said he expects more real estate companies in the second- and third- tier cities to follow large firms' steps to cut house prices under the current policy.

• "A new round of home-price declines may come in one or two months."

China is no different from anywhere else.

As Real Estate values collapse people run into credit problems.  As credit problems mount, assets have to be liquidated to pay bank loans.

Given the choice between liquidating assets at home and liquidating assets abroad... assets abroad will most often be liquidated first.

The question is: how will Vancouver be affected by a rash of Asian owned property liquidations in our city?

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

If China goes bust, will Vancouver go Ka-Boom?

If China goes bust, will Vancouver go Ka-Boom? This is the $64,000 question.

Or, given that we're talking about Vancouver Real Estate, the $64,000,000 question.

HAM, or Hot Asian Money, has been one of the factors attributed to driving our irrational real estate market.  And many have openly wondered, if China falters will Vancouver whither?

We may soon find out.

Simon Black, who writes the blog Sovereign Man, recently reported that the stresses of the housing bubble in China are starting to become evident.

As faithful readers know, we have talked about the fact that China has poured more stimulus per capita into their economy than have the Americans.

And Black reports of the effects of Chinese backpedalling.

After dumping trillions of dollars into the economy to ward off the effects of the global financial crisis, Black notes the Chinese government is now pressuring banks to reduce loans. A move which is bringing much of China's credit-intensive economy to a screeching halt.

Recent reports from China's National Bureau of Statistics show that home prices have fallen up to 50% in many parts of the country in the period from July to September.

And the reality of those statistics are evident to Black who notes the reaction of Chinese citizens:

• Stunned. That probably best describes the mood of China's vast pool of property owners. For the last few years, anyone with as much as a taxi driver's salary has been speculating in the real estate market, scooping up off-plan properties at terms that would make a Countrywide mortgage broker blush.
  
  And why not? Chinese culture has almost universally adopted the attitude that property prices never go down. Minor fluctuations and corrections over the last several months have been written off as statistical error. Well, reality has now uncomfortably set in.

In Shanghai that uncomfortableness manifested itself in rage as nearly 300 angry customers stormed a sales office of Longfor Properties Co Ltd after finding out that the developer had slashed prices on one of its projects by nearly 25%... practically overnight.

Another angry mob in Shanghai assembled outside the sales office of China Overseas Property Group Co after that company made similar price concessions for new buyers. These were obviously the poor suckers who bought in months (or years) ago at a much higher price... and they're not especially happy about a property crash.

Black notes the troubles are not just in real estate. Auto dealers are having the same issues, with many luxury brands ranging from BMW to Mercedes offering steep discounts up to 20% to lure buyers onto the showroom floor.

Growth has definitely slowed dramatically, and the tightening of credit is having widespread effect across the economy.

This article notes that a Chinese banking collapse is brewing and that in Hong Kong September sales to the United States and Mainland China fell 8.9% and 7.3% respectively. Shipments of electronics are off 16%, while outflow of T-shirts, undies, and the like fell 8%.

The HK government has described the situation as "bleak."

Will it be long before the effects are felt in Vancouver?

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Thur Post #2: Is China nearing the tipping point? And whither Vancouver?

We have covered the flip floping of local Real Estate industry representatives who now claim 'hot asian money' is not the factor in the Vancouver Real Estate market that it has been made out to be.

Whether or not it is true, there is no denying a definite Asian influence that has transformed Vancouver since the early 1990s.

Asian money is most certainly present in Vancouver and it plays a role in our resilient housing bubble.

Some observers of our Real Estate scene believe the real tipping point for the implosion of our massive bubble will begin in earnest when the China juggernaut begins to slip.

China is renown for its boom/bust cycles and many critics content the latest 'China miracle' is simply an extension of that trend.

China, on a per capita basis, has pumped more stimulus into their economy than America has during this financial crisis. Their housing bubble is believed to be larger than the one the that built up in the United States.

Mike Shedlock, author of the blog Mish's Global Economic Trend Analysis has done a number of posts about the China situation.  You can see them by following the links at the bottom of this post in which he looks at news that China's shadow loan market is crashing and that scores of business owners, unable to pay back their loans, have disappeared or have committed suicide.

The collapse of the shadow loan market (and the rash of suicides) is the latest in a series of troublesome news out of China.

Back on April 17, 2011 we noted how the fourth ncrease in China's banking reserve requirements this year had triggered a plunge in Chinese real estate:

• “Prices of new homes in China’s capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city’s Housing and Urban-Rural Development Commission... Home purchases fell 50.9% year over year and 41.5% month over month the newspaper said… For all intents and purposes a drop of this magnitude levered even 2 times (assuming 50% or so equity down) means that China is on the verge of a complete bubble implosion.”

The China situation deserves close scrutiny. 

If the China Real Estate bubble is indeed starting to unwind, at some point wealthy Asian property owners will be forced to liquidate assets they own in other parts of the world in order to cover debt payments.

And given the current situation in the Vancouver market, an emergency selloff in the high end of our market could be the trigger that starts a cascade of selling.

As we have said, it's a situation that continue to watch with interest.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Coming Into Focus

In the last post I wrote, "As I have repeated ad nausem, the interest in precious metals is simply an extension of the interest in the housing bubble in Real Estate that has been our primary focus these past two years."

And, as if on cue, weekend reading reinforces the theme.

Following news that Chinese inflation in March hit 5.4%, the PBoC has once again decided to intervene, enacting its fourth Reserve Requirement Ratio hike of 2011. The move, taking the requirement to 20.5% for the nation’s biggest lenders, came less than two weeks after the central bank boosted benchmark interest rates.

“Tightening will continue until there are signs that inflation has been effectively brought under control,” Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd.

The increase in reserve requirements was the fourth this year and has been triggering  a  plunge in Chinese real estate, as noted by a number of blogs earlier last week including our friends over at VREAA and at Zero Hedge.

“Prices of new homes in China’s capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city’s Housing and Urban-Rural Development Commission... Home purchases fell 50.9% year over year and  41.5% month over month the newspaper said…  For all intents and purposes a drop of this magnitude levered even 2 times (assuming 50% or so equity down) means that China is on the verge of a complete bubble implosion.”

And as China's capital suffers it's biggest drop in real estate prices in 5 years and the nation suffers a 7% countrywide plunge, JP Morgan's Jing Ulrich has come out and said what we all know is already happening. 

Ulrich says it all means that real estate is no longer an attractive asset bubble and that the "mass affluent" Chinese will be forced to invest in gold and alternative property investments.

From Dow Jones: This group "has seen its investment options sharply affected by restrictive housing measures" such as property taxes, increases in down-payment requirements, and raised interest rates, "since these households possess sufficient capital to purchase investment property, but do not have the same degree of access to investment vehicles such as private equity funds and retail property as the super-rich,  equities, gold and alternative property investments become the key beneficiaries."

It is important you appreciate what is going on. 

The worldwide rush into Gold and Silver is only just starting. Back on  April 7th I posted this chart from Sprott Asset Management which shows how small the current investment in gold and gold mining shares is compared to large the investment has been during the previous bull market era's in Gold. 

As a % of global assets, investment in Gold in 2009 was less than 1%.

What you are going to witness over the next few years is a massive rush into precious metals.

And concrete evidence of this trend surfaced this weekend as it was revealed that the University of Texas has taken delivery of  $1 Billion in physical Gold.

With an entity as large as the University of Texas moving so solidly into Gold what have concrete proof that what you are seeing is the start of hedge funds making the move - just like they did in the years leading up to 1981, 1948, 1932 and 1921.

As this moves intensifies, the supply/demand equation for Gold/Silver will be squeezed hard... and the price will soar.

Meanwhile as the China real estate bubble collapses, the prognosis for the Vancouver market is that we will not escape the same destiny of the United States, England, Ireland, Iceland, Spain, Portugal, Greece, Italy, etc.

Foreign investors are always the last to pile into a bubble.  As the Chinese super-rich rush to join the precious metals stampede, they will dump their Vancouver real estate holdings to avoid loosing capital on real estate in the same fashion that is now playing out in China.

The writing has been on the wall for several years and it's clearly visible now to anyone who wants to see it.

If you have real estate in Vancouver, sell it and cash in on the equity at the height of the bubble while you can.  If you are in debt, get out of it ASAP. And if you have money to invest, take advantage of what are now extremely low prices for precious metals... especially silver.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

The Chinese Bubble

Is there any doubt China is in a bubble? (click on all images to enlarge)

As we have mentioned in the past China has pumped more money into their economy, on a per capita basis, than has the United States. To anyone who lives in the Village on the Edge of the Rainforest, the physical manifestation plays out in outlandish real estate purchases on the West Side of Vancouver and in the suburb community of Richmond as homes sell, in some cases, for more than $500,000 over asking price.

How crazy is this liquidity?

Check out this MSNBC story about a Lamborghini owner in China who hired a crew on World Consumer Rights Day to smash his $289,000 Lamborghini Gallardo L140 in protest after allegedly having a dispute with the company over maintenance and engine issues.

The protest was made to provoke public support and goad the manufacturer to respect his 'consumer rights'.

Such is the extent of liquidty pumping in China that a credit billionaire could care less about a $289,000 Lamborghini Gallardo in the pursuit of making a point.

Is there any doubt that this is not going to end well?

==================

Email: village_whisperer@live.ca

Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.