China’s Bubble – This could get ugly real fast

Posted by Jason | Posted in Economics | Posted on 27-04-2010

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Keep an eye on this. Because China, like the US, doesn’t have a free market when it comes to interest rates, there is a good chance they will pop their real estate bubble, and when they do, it’s going to set off round two of the global financial crisis. Of course, that will set off the Fed to print even more money, which will fuel inflation even more.

Should I go buy my wheel barrow now?

Asian stock markets traded mostly lower Tuesday, with markets in China and Hong Kong weighed by fears Beijing may introduce further tightening measures aimed at curbing the property sector.

via China Down on Tightening Fears – WSJ.com.

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Real estate bubble could pop setting off a global financial crisis. However, China’s economy does not rely solely on real estate. They do have a manufacturing capacity and are a creditor nation so they will be able to absorb short term and retool for a boom. It will hurt us much more than it hurts them.

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