[Scarlett.]

Cities of empty skyscrapers in China

China could be the next country to go bust, if its headlong rush to build ever-taller skyscrapers is a guide to its future economic health.

According to a study by Barclays Capital, the mania for skyscrapers over the last 140 years is a sure indicator of an imminent crash.

It points out that the construction boom that threw up New York's Chrysler and Empire State buildings preceded the New York crash of 1929 and Great Depression.

More recently, Dubai built a forest of skyscraping offices, hotels and apartment buildings, including the world's tallest, the Burj Khalifa, before it got into terrible financial difficulties. In 2010 Dubai had to be bailed out by its neighbour, Abu Dhabi, to avoid going bankrupt.

Bar Cap's report said: "Thankfully for the world economy, there is not currently a skyscraper under construction that is planned to overtake the height of the Burj Khalifa."

However, BarCap said the "unhealthy correlation" between construction of the world's tallest buildings and economic crashes was likely to ensnare China, which is home to half of the world's skyscrapers currently under construction.

India, which has just two skyscrapers, sometimes defined as buildings over 240 metres (787ft) tall, is also on the radar after giving the go-ahead to its first skyscraper building boom, with 14 under way, including the world's second-tallest tower in the financial capital, Mumbai.

Andrew Lawrence, director of property research at Barclays Capital in Hong Kong, said: "Building booms are a sign of excess credit."

Lawrence said that historically, skyscraper construction had been characterised by bursts of sporadic, but intense activity that coincided with easy credit, rising land prices and excessive optimism, but often by the time the buildings were finished, the economy had slipped into recession.

China is already showing signs of fulfilling the prophecy. Its largest quarterly business survey showed that confidence among property developers had collapsed to a point where it was worse than the lowest point in the 2008 recession.

More worringly, the same survey revealed that confidence among construction firms, while a little down on the previous quarter, remained bouyant. Capital Economics, the independent analysts, said Beijing's decision to pump hundreds of billions of dollars into construction projects, bypassing private developers, has prolonged the building boom and potentially stored up a bigger crash.

Even funds pouring into residential schemes are at risk following years of high-rise developments near factories and businesses dependent on the west for trade. A recession in Europe that drags the rest of the world into a period of lower growth will hurt Chinese exporters, jobs and demand for property.

BarCap said signs of trouble were escalating in China and India. China had the dubious distinction of being the world's "biggest bubble builder," as it erected ever more and higher towers, it said.

Home to 53% of the 124 skyscrapers now under construction globally, China is primed to increase its stock of them by 87%. About 80% of new buildings are going up in cities away from developed coastal areas of the Pearl river delta and Yangtze river delta, which Barclays called "evidence of the expanding building bubble".

Lawrence, who was lead author of the report, said China's property market is already wobbling.

The number of residential property sales had decreased by 40-50% in Beijing and Shanghai and developers had slashed prices by 5-20%, he said.

India, which has just two skyscrapers but is building 14 more, takes top honours for hubris: The second tallest building in the world, the Tower of India, is now under construction in Mumbai.

Nonperforming loans in India — a substantial number of them to real estate ventures — grew by nearly a third in the first half of this fiscal year, more than triple the average annual growth rate since 2006, according to the Reserve Bank of India.

BarCap said: "If history proves to be right, this building boom in India and China could simply be a reflection of a misallocation of capital, which may result in an economic correction for two of Asia's largest economies in the next five years."

A branch of economics founded by followers of US economist Henry George has charted property collapses over the last 100 years and found that booms create the conditions for a downturn around every 18 years.

Fred Harrison, a Georgist and research director of the Land Research Trust, wrote in his 1997 book The Chaos Makers that "by 2007 Britain and most of the other industrially advanced economies will be in the throes of frenzied activity in the land market … Land prices will be near their 18-year peak … on the verge of the collapse that will presage the global depression of 2010."

A looming hard landing in China will bring the financial and economic crisis of the past five years to a climax in 2012, one of the City of London's leading analysts has warned.

Albert Edwards, head of strategy at Société Générale and one of the UK's leading "bears", said the next 12 months would be the "final year of pain and disappointment".

Predicting a sharp slowdown in activity in the world's fastest-growing emerging economy, Edwards said: "There is a likelihood of a China hard landing this year. It is hard to think 2013 and onwards will be any worse than this year if China hard-lands."

Although China emerged rapidly from the downturn of 2008-09, Edwards said the recovery had been the result of a massive reflationary package by the Chinese government. Beijing, he added, could not afford another big stimulus to offset a weakening of the economy. Falling imports have led to a widening of China's trade surplus, but Edwards said exports were set to slow and a trade deficit was looming.

He added that despite the recent run of more upbeat economic news from the United States, the risk of another recession in the world's biggest economy was "very high". Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the "stall speed" that historically led to recession. It was unlikely that the economy would muddle through, Edwards said.

China has grown by around 10% a year on average over the past two decades, making it the world's second-biggest economy, but the threat of a double-dip recession in the west, coupled with signs of over-heating in the Chinese property market, have caused some analysts to predict severe problems ahead.

Edwards's view was supported by the historian Edward Chancellor, who said China's recent economic performance conformed to the pattern of previous manias and bubbles in history. These included an uncritically assumed growth story, easy money and credit expansion, investment booms and the misallocation of capital, and conspicuous consumption.

The warning of fresh trouble ahead came as the World Economic Forum said rising youth unemployment, pressure on pensions and a growing gulf between rich and poor were sowing the "seeds of dystopia" that were putting at risk the gains from globalisation.

In its annual assessment of the outlook for the global economy before its meeting in Davos later this month, the WEF expressed concern at the possibility of economic and social upheaval caused by the inability of the young to find work and the dependency of elderly people on states deeply in debt.

"For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs," said Lee Howell, the WEF managing director responsible for the report. "This new malaise is particularly acute in the industrialised countries that historically have been a source of great confidence and bold ideas."

The survey of 469 global experts identified chronic problems with government finances and severe income inequality as the most prevalent risks over the next decade.

"These risks in tandem threaten global growth as they are drivers of nationalism, populism and protectionism at a time when the world remains vulnerable to systemic financial shocks, as well as possible food and water crises," the report said.

The study said early hopes that closer global integration would inevitably lead to higher living standards for all were at risk of being dashed by trends that left large numbers of people fearful about the future.

"Individuals are increasingly being asked to bear risks previously assumed by governments and companies to obtain a secure retirement and access to quality healthcare. This report is a wake-up call to both the public and private sectors to come up with constructive ways to realign the expectations of an increasingly anxious global community," said John Drzik, chief executive of management consultants the Oliver Wyman Group .

The study said the policies and institutions of the 20th century no longer offered protection in a more complex and integrated global economy. "The weakness of existing safeguards is exposed by risks related to emerging technologies, financial interdependence, resource depletion and climate change, leaving society vulnerable."

It also warned that there was a "dark side of connectivity", with societies vulnerable to "malicious" and "devastating" cyber attacks.

"The Arab spring demonstrated the power of interconnected communications services to drive personal freedom, yet the same technology facilitated riots in London. Governments, societies and businesses need to better understand the interconnectivity of risk in today's technologies if we are truly to reap the benefits they offer," said Steve Wilson, chief risk officer for general insurance at Zurich.

http://www.guardian.co.uk/business/2...ndia-recession
http://www.guardian.co.uk/business/2...-global-crisis

[Ramsay]

Ragin..ah well..welcome to the club!

[Scarlett.]

It was bound to happen with the rate they've been building at, I hope they have a softer fall, but the amount of easy money that has been flowing over there is not a good sign at all.

[King Gizzard]

Mark/James..let's purchase a building

[arista]

Yes Chewy


South Korea is doing well, though.

For some years China has gone Down
The Fights over USA Money Trading and them changing their money in a slight
illegal fashion has back fired.

But many Products still come fron China
so its not that bad.


Property Market is Never Safe - Any Place

[arista]

Originally Posted by Nathan

Mark/James..let's purchase a building

One Bloke out there is alone in a New City
no one else is buying. (he was on Ch4News & SkyNewsHD report)


The Toxic Damage the Yanks banks started
is not over.


A World War,
however, would correct it all back ,after it.
For Those that come out of our Bunkers.



Feel The Force

[arista]

Originally Posted by Chewy

It was bound to happen with the rate they've been building at, I hope they have a softer fall, but the amount of easy money that has been flowing over there is not a good sign at all.

Yes that why those at the Top like Tesco
are going to Die, at some point

[lostalex]

Well the only reason their economy was even improving was because they were using their own people as slave labour. The only reason the Chinese economy made so many gains is because American and European companies have been using Chinese people as slaves, and the Chinese government is perfectly happy to let it happen.

There needs to be an International Minimum wage. No worker should be paid less than the US federal minimum wage any where in the world. That would solve a lot of problems right away.

Until there is an international minimum wage, there will be no such thing as "free" trade.

[Patrick]

Because I'm gonna read all that, like.

[MTVN]

Originally Posted by lostalex

Well the only reason their economy was even improving was because they were using their own people as slave labour. The only reason the Chinese economy made so many gains is because American and European companies have been using Chinese people as slaves, and the Chinese government is perfectly happy to let it happen.

There needs to be an International Minimum wage. No worker should be paid less than the US federal minimum wage any where in the world. That would solve a lot of problems right away.

Until there is an international minimum wage, there will be no "free" trade.

Well that wouldn't work considering the huge variation in price levels, currency values and general wage levels, it'd be impossible to implement

[lostalex]

Originally Posted by MTVN

Well that wouldn't work considering the huge variation in price levels, currency values and general wage levels, it'd be impossible to implement

if every country was required to go back to gold standard, then it wouldn't me impossible to impliment.