The South China Morning Post’s Property section reports Hong Kong’s latest current biggest-since-the-last-one ‘mad scramble for flats’. By the standards of the mid-1990s, when triads dominated lines of purchasers and secretaries were scooping up four units at a time on 100% mortgages, this is a very subdued mad scramble. But the impressive thing is that anyone is choosing to buy at this time and at these price levels.
Their calculation must be that the Federal Reserve is simply never going to increase interest rates, and that there will never come a time when asset prices need to correspond with what end-users are willing and able to pay. Since Hong Kong property prices will go up and up for ever and ever, the concrete and steel they are made of will at some stage be worth more, per ounce, than gold. So, obviously, you buy.
Some 500 miles to our north in sunny swinging Hubei, a town with a population of 30,000 has built nearly 100,000 apartments and houses. The bad news is that if all the homes were sold and occupied, the surrounding region would run out of water. The good news is that – of course – no-one will ever move in, and the structures will stand empty for eternity. Phew.
Like Janet Yellen forever grandly not raising rates by an invisible-to-the-naked-eye 0.25 percentage points, China’s perpetual stimulus – by definition – continues. Someone tells Bloomberg: “In the short term, as long as it is invested, then it is GDP. But in the long term, if it is wasted investment, then they have to pay for that.”
But do they? With enough renewable and nuclear capacity in the pipeline to meet future energy needs, what better way to go than put another US$150 billion into coal-powered plants destined to never be fired up? You just keep doing it. Never stop. Every time some smart-ass foreigner says ‘financial Star Trek… we’ve left the solar system behind … end it must’, you just do it again. More credit = more collateral = more credit. It’s magic. (“Most borrowers and lenders are owned by the government”, it says – so all those unused bridges, malls and power stations spontaneously materialize out of nothing, at no cost, free of charge, with no wealth affected.)
The never-ending cycle extends beyond unburstable asset bubbles and unceasing lending and building into tightening the grip on people’s minds. Over the years, the Chinese government has placed more and more restrictions on the Internet, on newspapers, on TV and on thought in general. Even though the system can ensure that Wukan, for example, isn’t really happening, there is never enough control. Beijing is now demanding tougher measures to curb live-streaming.
As with Internet television, live-streaming will now require a licence – which only well-capitalized state-run companies can get…
There is still, as always, room for yet greater constraints. On-line videos in which teenage girls yack about cosmetics surely potentially deviate from socialist principles (like the seductive eating of bananas). Logically, if live-streaming is a danger, regulators should clamp down on the chaos of uncontrolled telephone conference calls, which could be spreading all sorts of spiritual pollution. And we are still eons from sewing everyone’s lips shut.
Thanks to infinite increases in everything, I am able to expand time itself and declare the three-day weekend open a whole day early. I also award Slightly Disconcerting-if-not-Creepy Photo Caption of the Week to the SCMP’s Property section…