This article below from William Smead is perhaps the best one we have read recently about the real estate bubble in China. He makes a brilliant point: the current China bubble should NOT be put into the context of the US mortgage bubble of 2005, but to the Bank and Savings & Loan debacle of the late 80’s. His final veredict:

“China’s housing bubble is huge. In our opinion, it will cripple their financial system in several ways. The negative wealth effect, as their bubble gets unwound, will contribute to a deep recession/depression. For the most part, the impact of unwinding China’s real estate bubble will be felt in China, in the emerging markets surrounding it and the countries which have benefited the most by selling them the inputs to massively over-build in the major cities.”

You can read the whole article here. It makes for a great weekend read…

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