Juggling Dynamite

All the money the west spent (wasted) buying consumer goods on credit piled up in China between 2001-11 and then flooded back into global property markets since. But after the credit bubble, flows are finite and their slowing signals downside for home prices that are now unaffordable for working families everywhere. We saw a similar capital boom and bust between Japan and the west in the 1980’s and ’90’s.

China’s escalating crackdown on capital outflows is sending shudders through property markets around the world.

In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower three months ago are now struggling to transfer their down payments. In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point.

“Everything changed’’ as it became more difficult to send money offshore, said Coco Tan, a broker associate at Keller Williams in Cupertino, California.Here is a direct video link.

Capital fleeing collapsing Japanese asset bubbles in the early 1990’s also drove up global property prices to unhealthy levels, followed by a decade of mean reversion thereafter. This Wiki summary is succinct. It is also foreboding for currently grossly inflated asset prices in many global markets.

The Japanese asset price bubble (バブル景気 baburu keiki?, lit. “bubble economy”) was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated. In early 1992, this price bubble collapsed. The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices had been closely associated with excessive monetary easing policy at the time.

By August 1990, the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the Bank of Japan (BOJ). By late 1991, asset prices began to fall. Even though asset prices had visibly collapsed by early 1992, the economy’s decline continued for more than a decade. This decline resulted in a huge accumulation of non-performing assets loans (NPL), causing difficulties for many financial institutions. The bursting of the Japanese asset price bubble contributed to what many call the Lost Decade.

“There’s activation in areas of the brain that are similar to what you see with an addiction to a drug abuse.” Diet and addiction expert Nicole Avena says sugar addiction is real and should be treated accordingly.  Here is a direct audio link.

The excellent BBC documentary series “Addicted to Pleasure” also did a worthwhile segment on sugar, which you can watch on line (at the moment at least) here.

Unfortunately some people are easily impressed by TV personalities.  But those of us who have seen Kevin O’Leary up close and in action, are not.  Further to the recent detailed recount of his antics:  The real (and shocking) story of Kevin O’Leary’s business career, also Kevin O’Leary: not a billionarie and not a money manager  and Investors pull half a billion out of O’Leary funds,  I explained some of my personal experience with him here:  CBC television degrades itself.

Now O’Leary’s fellow Shark Tank cast member has written a warning to Canadians in Why I wouldn’t vote for Kevin O’Leary and neither should you.  Here is a taste:

My first objection to Kevin’s candidacy is that the man I know is relentlessly self-interested and only pursues opportunities that further his fame, power or wealth.

This concern has since been confirmed when he was asked if he would leave the American show Shark Tank if he won the leadership. He said he wouldn’t, electing to commit half his energy to an American reality show.