China's real estate bubble began to lose heart after house prices soaring up over the years. Housing prices started to decline in some major cities. Facing such situation, people can not help asking that "whether there is a problem of excessive lending in China's economy; will China's real estate bubble burst or not in recent years; and if burst, how it will affect other countries?" The following video will be a good explanation for these questions.
http://video.allthingsd.com/video/china-risks-property-bubble-burst/4797F073-AF8D-4371-87F9-E86C055FA490
2012-03-03
How to prevent the real estate bubbles?
Government to carry out a full range of monitoring the macroeconomic situation, the development of appropriate policies, the primary measure to prevent the real estate bubble. The real estate both the dual nature of the assets and consumer goods, precisely because of such investment in the real estate market is very active and prone to the real estate bubble, we must strengthen the management of the real estate market.
Establish a unified national real estate market early warning and forecasting system to strengthen and improve macro-control system should be adopted on the national real estate market information, timely collection, collation and analysis of market situation to make the assessment and prediction, regularly published market analysis report, a reasonable guide the market to make the General Staff, the government's macro decision-making. The state should speed up the establishment and improvement of real estate macro control system, the necessary intervention and regulation of land supply, taxes and improve the pre-sale management and other means, to effectively prevent the generation of real estate "bubble".
To strengthen the management of land resources -- the government should adjust the supply of land resources, to control the real estate unreasonable price increases. Is necessary to check the blind development of high-end residential and large-scale construction, to prevent the emergence of new backlog, caused by the structural surplus bubble. To clean up the land market, and resolutely crack down on developers enclosure and scrambled to act, to prevent unhealthy practices in the field of land leased from the source and corruption.
Strengthen financial supervision, a reasonable guide capital flows. Funds to promote the real estate bubble, the vast majority of outflow from the bank. Therefore, to strengthen banking supervision and control of speculative capital from the source.
Establish a unified national real estate market early warning and forecasting system to strengthen and improve macro-control system should be adopted on the national real estate market information, timely collection, collation and analysis of market situation to make the assessment and prediction, regularly published market analysis report, a reasonable guide the market to make the General Staff, the government's macro decision-making. The state should speed up the establishment and improvement of real estate macro control system, the necessary intervention and regulation of land supply, taxes and improve the pre-sale management and other means, to effectively prevent the generation of real estate "bubble".
To strengthen the management of land resources -- the government should adjust the supply of land resources, to control the real estate unreasonable price increases. Is necessary to check the blind development of high-end residential and large-scale construction, to prevent the emergence of new backlog, caused by the structural surplus bubble. To clean up the land market, and resolutely crack down on developers enclosure and scrambled to act, to prevent unhealthy practices in the field of land leased from the source and corruption.
Strengthen financial supervision, a reasonable guide capital flows. Funds to promote the real estate bubble, the vast majority of outflow from the bank. Therefore, to strengthen banking supervision and control of speculative capital from the source.
2012-02-22
Decrypt the real estate bubble
The real estate industry is the pillar industry of national economy, it is not only an important source of national capital accumulation, and its development can lead to the development of other related industries, but it is also most likely to lead to one of the foam industry.In recent years, the rapid development of China real estate, real estate market continues to heat up, some cities rapid price rise, more controversial for the Chinese real estate market is a bubble, then, what is the real estate bubble? How it is formed? What should we do to improve the system of government and a variety of market mechanisms, so as to achieve the purpose of control bubble, the real estate industry to maintain a healthy development? The following analysis and discussion on these issues.
(1). What's the essence of the real estate bubble?
Definition of the bubble in the real economics of the two real estate bubble, the generally accepted point of view of the famous American economist Charles P. Jindeboge, he believes the bubble is an asset or a series of asset prices in a a sharp rise in the continuous process, the initial prices gives rise to expectations that prices will rise further, thereby attracting new buyers. These people are generally based on the sale of assets of a profit-making speculators, and the ability to use and profitability of the assets not interested in that as prices rise, often to the expected reversal and prices plummeted, and finally ended in a financial crisis. "In his view, the real estate bubble may be understood in a continuous process for the real estate prices continued to rise such prices gives rise to expectations that prices will rise further, and continue to attract new buyers - With the rising prices and the continued increase of speculative capital, real estate prices far higher than the corresponding the real price, the resulting real estate bubble. The consequences of over-expansion of the bubble is expected reversal of the high vacancy rate and the price plummeted, the bubble burst, it is the nature of unsustainability.
(2).The causes of the real estate bubble.
a. Excessive speculation. On the one hand, land transactions, the system is not perfect, inadequate industrial management, to some extent, fueled the speculation, resulting in a large number of speculative bubbles. The other hand, the excessive growth of the real estate investment makes the growth rate of real estate investment far more than the city the speed of the process is likely to cause a serious imbalance of market supply and market demand, the housing vacancy rate, will cause real estate prices fell sharply, the bubble burst.
b. Consumers and investors' expectations of future prices. With the increase in population and urban development, land prices there is potential appreciation trend, real estate prices in the people's future expectations and will continue to rise. Caused investors to the idea of the future high-return real estate investment, real estate price of non-rational expectations, excessive monetary capital to the limited sale of land, to promote the rising of premium, so that real estate prices rising; the bubble burst, real estate prices, the prices of consumer expectations also fell, real estate agents have to sell its holdings of real estate, so increasing the supply of, and no one willing to take over buying leaving the reduced demand for, and thus exacerbated the prices.
c. Bank credit irrational expansion. As the real estate industry is capital-intensive industries, real estate development must have strong capital, with the constant expansion of real estate development, the developer of its own funds alone is not enough, developed the main source of funds is bank loans. High return on real estate, so that many banks in the actual operation of the loan, in violation of the relevant provisions of the payment of a large number of loans to developers, so that the barriers to entry reduced, resulting in over-development, financial risks continue to accumulate, so that the bubble may increased.
(1). What's the essence of the real estate bubble?
Definition of the bubble in the real economics of the two real estate bubble, the generally accepted point of view of the famous American economist Charles P. Jindeboge, he believes the bubble is an asset or a series of asset prices in a a sharp rise in the continuous process, the initial prices gives rise to expectations that prices will rise further, thereby attracting new buyers. These people are generally based on the sale of assets of a profit-making speculators, and the ability to use and profitability of the assets not interested in that as prices rise, often to the expected reversal and prices plummeted, and finally ended in a financial crisis. "In his view, the real estate bubble may be understood in a continuous process for the real estate prices continued to rise such prices gives rise to expectations that prices will rise further, and continue to attract new buyers - With the rising prices and the continued increase of speculative capital, real estate prices far higher than the corresponding the real price, the resulting real estate bubble. The consequences of over-expansion of the bubble is expected reversal of the high vacancy rate and the price plummeted, the bubble burst, it is the nature of unsustainability.
(2).The causes of the real estate bubble.
a. Excessive speculation. On the one hand, land transactions, the system is not perfect, inadequate industrial management, to some extent, fueled the speculation, resulting in a large number of speculative bubbles. The other hand, the excessive growth of the real estate investment makes the growth rate of real estate investment far more than the city the speed of the process is likely to cause a serious imbalance of market supply and market demand, the housing vacancy rate, will cause real estate prices fell sharply, the bubble burst.
b. Consumers and investors' expectations of future prices. With the increase in population and urban development, land prices there is potential appreciation trend, real estate prices in the people's future expectations and will continue to rise. Caused investors to the idea of the future high-return real estate investment, real estate price of non-rational expectations, excessive monetary capital to the limited sale of land, to promote the rising of premium, so that real estate prices rising; the bubble burst, real estate prices, the prices of consumer expectations also fell, real estate agents have to sell its holdings of real estate, so increasing the supply of, and no one willing to take over buying leaving the reduced demand for, and thus exacerbated the prices.
c. Bank credit irrational expansion. As the real estate industry is capital-intensive industries, real estate development must have strong capital, with the constant expansion of real estate development, the developer of its own funds alone is not enough, developed the main source of funds is bank loans. High return on real estate, so that many banks in the actual operation of the loan, in violation of the relevant provisions of the payment of a large number of loans to developers, so that the barriers to entry reduced, resulting in over-development, financial risks continue to accumulate, so that the bubble may increased.
2012-02-19
Basic conditions generated by the global bubble economy.
There are four basic conditions generated by the global bubble economy.
(1). Due to the economic and financial globalization, financial bubbles transcend borders.
(2). As the economic and financial open policy making the financial markets openness, financial bubbles penetrate into major markets.
(3). A large number of cross-border currency flows have been generated by the increasing degree of freely convertible currency. Most of them enter into financial economy, especially dummy financial economy.
(4).Recently, the U.S. dollars are playing a significant role in the dummy financial economy which result in $ virtualization. The U.S. dollar beyond the functions of the services for economic entities.
Basic conditions for the development of the global bubble economy have been possessed roughly. From financial native products to financial derivative products, then to the other financial products, financial bubbles have penetrated into all aspects of financial activities. Moreover, it showing an independent development tendency. At last, global financial bubble economy break out.
(1). Due to the economic and financial globalization, financial bubbles transcend borders.
(2). As the economic and financial open policy making the financial markets openness, financial bubbles penetrate into major markets.
(3). A large number of cross-border currency flows have been generated by the increasing degree of freely convertible currency. Most of them enter into financial economy, especially dummy financial economy.
(4).Recently, the U.S. dollars are playing a significant role in the dummy financial economy which result in $ virtualization. The U.S. dollar beyond the functions of the services for economic entities.
Basic conditions for the development of the global bubble economy have been possessed roughly. From financial native products to financial derivative products, then to the other financial products, financial bubbles have penetrated into all aspects of financial activities. Moreover, it showing an independent development tendency. At last, global financial bubble economy break out.
2012-02-10
What is the meaning of bubble economy?
'Bubble economy' can be used to describe an ups and downs variation which an economy entity has a rapid prosperity in a period of time, but declines dramatically after that period. There are five financial and economic bubbles in bubble economy. These five bubbles are real estate, bonds, commodities, stocks and debts bubble.The nature of the bubble occurs quickly, and it bursts promptly as well. For example, you can blow a dazzling bubble by using a drop of soapy water in a breath. However, not good long, the bigger bubbles will burst faster. Under normal circumstances, bubble economy might be considerate as a synonym of false prosperity. Like a soap bubble, it looks colorful, but has nothing content in it. Once the bubble burst, prosperity will disappear immediately just like a dream. Bubble economy usually accompanied by the dramatic fluctuation of commodity prices. Nevertheless, bubble economy is not the general sense of the commodity price fluctuation, it refers specifically the prices of the goods surge after the first plummet which caused by excessive speculation are deviate seriously from the value of the goods. It is the inevitable result of the social capital is too concentrated on a department and the same commodity resale repeatably which would led to the department expand distorted in the short term but the production sector decline in the long term due to lack of sufficient funds.
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