China – Print, Lend, Steal, Spend

“When the global financial crisis impacted China’s exports in 2008, Beijing ordered its banks to support a massive credit expansion to create jobs and stimulate growth. The banks eagerly went into action and in 2009 and 2010 made new loans amounting to a total of 20 trillion yuan ($3.1 trillion). Of these a significant amount went to local government borrowers.” – from ‘China’s Bank Reckoning Approaches’, Wall Street Journal, 19 Jun 2011

“Thousands of corrupt Chinese government officials have stolen more than US$120bn and fled overseas, mainly to the US, according to a report released by China’s central bank. Between 16,000 and 18,000 officials and employees of state-owned companies left China with the funds from the mid-1990s up until 2008.
The officials used offshore bank accounts to smuggle the funds, according to the study posted on the People’s Bank of China website this week but which has since been removed. It said the officials smuggled about 800 billion yuan into the US, Australia, Canada and Holland through offshore bank accounts or investments, like property or collectables.”
– from ‘Chinese officials stole $120 billion, fled mainly to US’, BBC, 17 Jun 2011

Perhaps Vancouver RE has ‘benefited’ from some of these funds.
Is this an effect that we can expect to continue? – vreaa

15 responses to “China – Print, Lend, Steal, Spend

  1. Well. It’s a little late for the ‘ol, “I told you so!” – ain’t it? Nevertheless, I couldn’t help but gloat when I did just that. Cleaning this one up isn’t going to be easy (see ‘Wolf’ in “Pulp Fiction”).

  2. Hopefully the CPC cracks down on this once they’ve understood the modus operandi of these corrupt officials… I have a feeling you’d see a lot less Chinese 21 year olds in Ferraris grinding their transmission down West Georgia Street…

  3. I think most of those kids driving ferraris are directly related to the CPC big-wigs, so don’t hold your breathe!

  4. When it stops it will stop all of a sudden.

  5. So my hatred of party westsiders is justified. im not kidding.

    just walk all over us, we’re suckers.

  6. Time for another cultural revolution I guess.

  7. CH: kudos to you, it’s true – they think we’re suckers.

  8. Pressure to “do something” will now come from:
    – those worried about bubble/crash/debt and it’s effect on the economy
    – those angry at being priced out
    – those affected by talent leaving due to high prices
    – defenders of local culture / xenophobes (a very wide spectrum)
    – the moral and/or jealousy camp (again a wide spectrum)

    … unless of course they care more about the price of their own house.

    • “… unless of course they care more about the price of their own house.”

      yep. That’s pretty much how it goes. And in the end the only people who win are the banksters, who are busy lending out insane amounts of cash to those who can’t afford it.

  9. blargh. that riot sure was retarded.

  10. Why is it that you can only *see* the money in Vancouver RE? With the majority of funds leaking into the US you would think it would register in price anomalies down there as well.

    Unless:

    It wasn’t the blackbird at the window
    but the colourless bird inside his sleep
    which he could hear. It was saying nothing
    about the world the blackbird praised
    and nothing about a God among the pillows.
    So it had an end-stopped beauty
    being sheer idea, however redundant
    to imagination. Something in him said
    there is no new knowledge of reality,
    just the idea of self still hovering
    above each thing, a halo borrowed from
    masters who believe in what they see.

    PETER PORTER (1992)

    • That was choice! Thank you, Blammo. In a more perfect world the poets would rule…

    • This is a guess – but I think that US cities like LA and San Fran are larger. Also I’m guessing the immigration flows are going to multiple US cities. In contrast, Vancouver is smaller population wise.

    • Point taken (and well made).

      It is likely that the US is far better equipped to absorb a large inflow of money relatively unseen. Size is one reason for this. Another is phase of market cycle… for instance, any money going into RE in the US since 2007 is relatively ‘invisible’ because prices have continued down with their great deleveraging.

      In contrast, as ‘Yank’ implies, a relatively small amount of money injected into just a few areas of Vancouver make a disproportionately large difference in prices. And that effect is then multiplied by locals chasing prices, a result of the phase of the market cycle we find ourselves in.

      Thus, perhaps in the US the effects are dampened; in Vancouver, magnified.

      • Agreed. The population of LA, for example is about 15 million including the suburbs. If you include the greater LA including Long Beach population is almost 18 Million. The poulation in LA is about half of all the people who live in Canada (about 35 Million).

        In contrast, the greater Vancouver area is about 3 million. You can see why the US can absorb that kind of money and population flow without it being noticably visible to the larger community.

        If thousands of immigrants choose just one smaller US city in which to buy a bunch of houses (Seattle – for example)– you’d see the same thing happening.

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