This means that, after the Chinese bubble pops, the visible credit market (aka banks) will lose a lot of money, constraining the money supply. This is in addition to the shadow credit market I talked of last week. So there is going to be a full recession, as opposed to a stagnation.
Monday, December 21, 2009
China: A Real Real Estate Bubble?
The Atlantic has some analysis on the Chinese housing market on Friday. It contains a bad piece of news: That the Chinese banks are now financing consumer home purchase mortgages, in adddition to the more traditional financing of housing developments.