An increasing number of analysts and investors are concerned over how quickly and high Chinese real estate prices have risen, and according to Citigroup (NYSE:C), there a correction in the Chinese property market is inevitable, and prices could plunge by as much as 20 percent.
Couple this with the feel of things coming out of Europe, specifically with the Greek sovereign debt crisis, where it’s increasingly felt the amount set aside to bail out the country won’t be enough, and that Germany barely signed onto that as it was.
The thought from Europe is the possibility of agreeing to more bailouts for Greece or for other debt-ridden countries in the region like Portugal, Spain, Ireland and Italy is almost zero, and you can see from that and other things, the enormous economic problems continuing to face the world.
The factor still being hidden or masked by governments and central banks around the world is they’re the ones who are responsible for the economic crisis, as the endless printing of money by the central banks, which creates the illusion of wealth without consequences, and the resultant spending of money by politicians to curry favor with their people, has brought all of this to the brink.
What happens in the midst of all of this if there is a major correction in Chinese real estate and there is an even larger pullback by the Chinese in spending? Even now they’re working on slowing down their seemingly endless, surging economy.
Canada, Brazil and Australia, which have been hailed for not being devastated by the recession have only enjoyed that status, not necessarily because they were so much better at managing their economic house, but more than likely for no other reason than the extraordinary demand for raw materials from China, and to a lesser degree – other emerging nations.
So while the Western governments attempt to look for scapegoats like Goldman Sachs (NYSE:GS) to keep in the media eye in order to keep attention off of the real reasons behind the global economic crisis, we continue to hear we’re in this economic recovery which is supposedly gaining steam.
This is why you hear about a jobless recovery from the American market, because in reality there isn’t one. Even all the numbers in the reports on earnings are suspect, because they’re largely compared with numbers last year, which were horrid. Anything looks good after that, and most analysts and business leaders know this, which is why the majority of them caution shareholders after the report in order to manage expectations going forward.
Not only are we not really in a recovery, we have so many economic mines lying around waiting to be triggered, that it would be almost impossible for some of them not to explode.
The bottom line is we need to stop listening to the mainstream media noise and look at what is really happening out there. It’s still extremely difficult, and once the stimulus money runs through the system and businesses are finished replenishing, there is really very little out there to justify an optimistic economic outlook over the next couple of years. We need to live, invest and run our businesses accordingly.
