Author: Kafka is very busy Source: Outlander’s Perspective (ID: hooyar_380097485)
Recently, my circle of friends has been almost bombed by Wu Xiaobo’s “Saving the Real Estate Market to Save Domestic Demand”. Heroes from all walks of life have reposted it in turns, accompanied by their seemingly concerned interpretations of the country and the people.
Hehe, the bottom determines the head. That’s right. There are too many people in my circle who are engaged in the real estate industry, or they are in the industry’s interest chain. Seeing the good days that have been going on for decades, there is no need to worry, as the interests are related?
I don’t know how to save the real estate industry, or should we save the “entrepreneurs” first?
Wang Shoufu, the first person to save himself and land in 2017, has recently had another accident. Wanda has received a lot of news, not to mention spreading gossip. Looking at the information released by legitimate news media, everyone can see that the company’s cash flow has gone wrong again.
Is this caused by the bank’s tightening of funds?
Let’s take a look at the recent policies on the real estate industry, which are indeed quite lenient. Whether it’s for real estate companies or homebuyers, Economist Wu is probably aware that the measures he proposed are just random and confusing, and even if used, they will not achieve the desired effect.
In fact, there is only one way to save real estate, or as they hope, to stir up housing prices again.
Under what circumstances do you become so anxious and rush to buy something?
There is only one situation, if we delay further, we will inevitably have to pay a higher price to buy this item.
Just like a few days ago, when a luxury house in Shanghai was opened, the huge number of people rushed to subscribe, not because of how good the house was and how many people were short of houses, but because the price of the new market was cheaper than the market value, the so-called purchase could earn tens of millions. This intense and impulsive rush to buy, of course, could save the real estate, but do you think this game can really last?
In fact, this is the same reason as when everyone was holding back and rushing to buy new stocks. The liquidity of real estate is poor, so there wouldn’t be the evil energy of new stocks. However, over time, all the evil new stocks will eventually return to a relatively reasonable price.
We don’t have leverage in the new deal, we move quickly, and the market can evenly share this risk. But when you incorporate it into real estate transactions, who can afford such ups and downs?
The big rise has plunged most newly needed people into despair of emptying their family savings and making it impossible for them to work hard all their lives to be able to buy a house. Therefore, they should simply lie flat in the Buddhist system and not struggle until they get married or become infertile. Because they have been struggling for a lifetime and cannot even touch a place to live, why are you joking about me lying flat?
The result is a cliff like decline in fertility rates.
Continuing to play, of course, will temporarily save a group of vested interest groups in real estate, but remember, this is only temporary.
In 2015, our housing prices also experienced a wave of rise, so many frequently facing desperate real estate developers miraculously survived, but they quickly fell into a more serious crisis.
Did Evergrande have debts as high as 2 trillion yuan in 2015?
In 2015, we were also discussing the issue of local bonds, and there were also economists who pretended to be confused and called for raising asset prices to solve the problem. After a wave of real estate inflation, have local bonds decreased or increased?
It’s a bit out of place to talk about Evergrande here, let’s talk about Wanda. Isn’t Wanda short of money in 2014? By 2015, the real estate prices had skyrocketed, and many problems had been disguised, which had given Mr. Wang a boost. In 2017, he had encountered some problems with debt expansion and immediately had to break his back to survive. It’s easy to slow down, but in 2023, we can’t cover the mouth of the debt crisis again.
So do you think Wanda’s problem really only exists in 2023? After real estate has been leveraged and highly financialized, the credit of real estate companies has become very important. Who will let the public see their wounds unless it is absolutely necessary?
I’m not here to ridicule Mr. Wang for his incompetence in management. In fact, the problem is not with Wanda itself, but with the industry it belongs to. The financialized real estate naturally carries high leverage. If combined with the high-speed expansion required by the capital market, it is to add leverage and run wild all the way. If you encounter some bumps on the way, you will immediately overturn the car.
So it’s an accident that Wanda doesn’t have any problems, and it’s perfectly normal to have problems.
Even if housing prices can be maintained, real estate companies are very prone to accidents. Don’t ask, just try high leverage stock trading in a normal and balanced market to see if your mentality can stabilize for a few days.
We haven’t mentioned the risk of a big drop yet.
The above picture shows the trend of housing prices in Tokyo. Have you seen it? It looks like a long-term bull market, but the downturn in the middle of the 1990s caused the Japanese economy to fall into an irreversible situation. It has been 30 years since I called it “lost ten years” when I had the impression.
Because of high leverage, any pullback will inevitably lead to a debt crisis for the entire social system.
The debt borrowed always needs to be repaid, and in the process of debt repayment, the entire society will fall into a deflationary quagmire and cannot escape.
If you don’t understand, let’s make an analogy. When you start trading stocks with your own funds and encounter a bull market, you feel like a stock god. Add leverage, adding three times leverage can still make money, and soon you have the courage to add ten times leverage. Guess what, it fell by 10%, the capital was cleared, and it fell by 20%. You owe all the principal to financial institutions.
Because you were exposed to debt, your assets have run out when dealing with debt issues. As a result, you have become a person with nothing and a lot of debt. Will your life have to bid farewell to consumerism and fall into a state of frugality in debt repayment?
Come out and mess around, you’ll have to pay it back sooner or later!
We have experienced leverage bulls and know that anyone with leverage will rise very quickly as long as they rise, and even if they fall, they will fall very sharply.
So not speculating on housing and housing is not an obstacle to your wealth, curbing the rapid rise of housing prices is not against your country, but to continue playing like this is the true collapse of the economy.
When I was mixed up in the real estate industry before, economists also had a lot of exposure, counting with their fingers. How many people were raised by real estate developers? Why do vested interests in the real estate industry pretend to be concerned about the country and the people?
I am too lazy to say that a certain economist surnamed Ren called on everyone to take over the market last year when new energy was at a high level. He jumped from Evergrande at the first time, took high wages that many people could not earn in their lifetimes, and stood on the shore shouting his innocence.
We are not economists, we only discuss common sense and ask ourselves, is it necessary to let housing prices soar in order to save real estate? Or you can let the income of the common people skyrocket, make everyone rich, and enhance their housing consumption ability. If the latter can achieve this, why should economists shout loudly?
Some people shamelessly use the broken window theory to explain the benefits of driving real estate.
Hehe, we are not fools. Your glass was smashed by a bear child, and you took the money to repair it. Originally, this money could have been used to buy something delicious. In fact, your family did not pay an extra amount of money because the window was smashed, but instead lost a piece of glass, resulting in a decrease in total assets.
So why can’t consumption start? Is it because the housing price is not high enough?
On the contrary, housing prices are too high, and many young people are troubled by the high consumption caused by high housing prices. This may be beneficial for property owners like economists who have been buying a house every year since 20 years ago, as high housing prices are beneficial and rising housing prices are beneficial for buyers. But young people have to endure pain from the moment they enter society, except for a few so-called high class individuals. High housing prices are the real shackles that hinder the rise of social classes.
This inability to break the oppressive sense of class hinders the development of the entire society.
Think about it, why were people able to start businesses without hesitation before? Why did jokes about why buying a house is better than starting a business fly around in the future?
What are the consequences? It is Japan next door to us, where society is oppressive to the point of suffocation. From then on, no new great enterprises are born, and the old ones are declining day by day. Then the country decays at a visible rate to the naked eye.
The soft landing of this wave of real estate will certainly come with pain, debt clearance will inevitably be accompanied by structural deflation, and economic data will not be as good.
This is like treating a disease, avoiding medical treatment and pretending to be okay by taking painkillers to continue bouncing around in KTV cannot solve the problem. Honest hospitalization for medical treatment is definitely not as satisfying as in KTV, but at least you don’t have to worry about jumping too high and sudden death.
We have been saving real estate all along, but our understanding of saving real estate is not the same as what economists want to save real estate.
The elites always like to say that there are not so many people on Earth, but they don’t understand that if there are no more people, the elites will naturally disappear.