The United States, and really the world is facing a threat to our economic stability and solvency. This threat comes from China. Despite how strong our military is it is no match for this threat. We could very well be blindsided and left with no recourse.
Unfortunately for China though, they are threatened even more than we are. We here in the US have been inoculated to the threat at least to the point of having experienced it before. The threat? A housing bubble. Even today China continues to build massive swaths of property that is getting bought up like hotcakes by speculators. So despite entire cities sitting mostly uninhabited for years they continue to build and the speculators continue to buy.
Now, if these speculators were just newly rich Chinese fat cats it might not be a big deal. However, these speculators are common every day Chinese people. Not just a few of them though. Basically everyone who has any money is investing it all in the housing market. So despite the high vacancy rates prices continue to rise, reinforcing the belief that this is a sure thing. So much so that they are getting into extensive personal debt en mass to cash in.
The government periodically implements new policies to try to slow things down or even things out, but China's entire economy is built on this development and there is only so much they can do.
I don't know how long this will last, but I am positive that it won't be forever. Someday, and probably sooner than later, the Chinese housing market is going to collapse. When it does China will crash harder than the US did by a long shot. And given how tightly we are connected to China that will hurt us. That will hurt the world economy overall. We almost tanked our economy in 2008 and the world along with it. China has that same potential now.
I don't know what, if anything, can be done to resolve this, but I can at least talk about it, and warn people it is coming. We got caught flat footed last time, let's not have that happen again.
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