Wall Street Financial Truth

Chapter 16 Who Emptied Your Wallet (7)
In recent years, although ordinary housing prices in North America have continued to decline all the way, the luxury housing market has been "surprisingly" hot. Doesn't it highlight the extremely uneven distribution of wealth?Looking at the world, the depth of the impact of the financial crisis on various countries is directly proportional to the disparity between the rich and the poor in the local area. Everyone should understand the trickiness of this.

The exact road map for the outbreak of the economic crisis is: excessive loosening of credit leads to financial bubbles, the bursting of financial bubbles becomes a financial tsunami, and the disparity between the rich and the poor makes the financial tsunami evolve into an economic crisis.At present, many economists (mostly employed by Wall Street) are putting the cart before the horse, saying that inflation is coming, fooling the government into loosening credit, and encouraging everyone to spend money quickly and "invest" to buy houses and gold.Isn't this the first step in the next economic crisis?

15. China must be wary of the United States transferring the crisis to the outside world

The world's worries about the U.S. debt crisis have been overshadowed by the ongoing European debt crisis. However, this does not mean that the U.S. debt crisis has passed.Although the United States passed the debt ceiling bill, it only postponed today's problems until tomorrow.

In fact, if you think about it carefully, the main content of the U.S. debt ceiling bill has the following three points: the debt ceiling will be raised in three steps, ranging from 2.1 trillion to 2.4 trillion U.S. dollars; the fiscal deficit must be reduced by 2.4 trillion U.S. dollars, also divided into three steps, and Raising the debt ceiling went hand in hand; there was no mention of raising taxes on the wealthy.It is very clear to see these three points clearly.

First of all, the largest Ponzi scheme ever - US Treasury bonds will continue to play.But one day we will bid farewell to this game. Now we can pass the first day of junior high school and cannot escape the fifteenth day. In Obama's words, "kick the problem of US bankruptcy like kicking a broken can until a year later."Clearly, the US debt problem has not been resolved at all.

Second, if the United States cuts spending and consumption, but does not increase taxes on the rich, and only saves money without raising money, the fear of deflation will immediately arise.Specifically, the U.S. government will massively cut social welfare, medical and military expenditures, which means that industries related to the military and armaments will need to lay off workers, and internal consumption will continue to shrink in the short term.The U.S. economy can only be driven by internal consumption and investment. When U.S. personal consumption declines due to government spending cuts, the desire for business investment will naturally decline. The unemployment rate will continue to deteriorate, and consumer spending, investment, and manufacturing will all be exhausted. In an unbearable state, the endless "falling and falling" property market is even more endless.If the U.S. economy cannot find the driving force for growth, there is no doubt that it will enter a recession again, and the recession may be worse than that in 2008.

In addition, the U.S. debt ceiling agreement did not increase taxes on the rich in terms of major tax increases, which actually sacrificed the interests of the middle and lower classes in the United States, further reducing the income of the huge middle and lower classes.The rich in the United States are the group with the largest number of U.S. debts. Instead of defaulting on U.S. debt, the upper limit has been raised, and the rich are not taxed, which has exacerbated the disparity between the rich and the poor in the United States.When wealth is more and more concentrated in the hands of a few people, productivity will greatly exceed the consumption capacity of the middle and lower class people, resulting in overcapacity and the inability to cash in goods, which is the root cause of the Great Depression in the United States in the 20th century.Unfortunately, this situation is now repeating itself.

However, we must be soberly aware that although the United States will face the Great Depression, it will still be the most powerful in the world:
First, the foundation of the United States is still solid. It is the richest country in the world. In addition to advanced high technology and powerful military power, the United States also has a large amount of oil, forests, and various resources, and their resources are basically undeveloped. Mining (hidden and use others first, he can still live if others fall);

Second, the wealth of the United States is in the hands of a few people. In fact, more than 70% of the US national debt is in the hands of rich Americans. As long as high taxes are imposed on the rich like in Northern Europe, there is no problem in repaying the debt;

Third, the U.S. remains the number one in the world in attracting talents such as science, technology and art, which makes the United States lead the world in technological innovation capabilities. Although the military expenditure is huge, its new military technology can be converted to civilian use soon; while Hollywood’s The cultural output is unmatched, and the impact is far from measurable by money;
Fourth, the ensuing economic deflation or even depression only needs to be adjusted moderately. In the long run, it will be a kind of adjustment for the United States, which can be called rest and recuperation.

In the final analysis, the "disease" in the United States is only a traumatic injury, and it is only a matter of time to recover. Once the rich are willing to make concessions, they can be cured, and they will recover soon.Of course, the rich in the United States are still refusing to give up an inch, and they have not yet reached the point of robbing the rich.

As far as the global economy is concerned, seeing the European debt crisis one after another, the governments of many European countries have been forced to drastically cut expenditures and reduce debts. For example, rich countries such as Germany and France seem to be overwhelmed, and their economic growth has not improved.In other words, the economic performance of many EU countries will be constrained by austerity spending for a period of time in the future. Even if they do not fall into recession, it is difficult to have a strong growth performance.

Due to the loss of the economic locomotive of the United States, the global economy will inevitably head towards low growth and recession, and the booming prosperity of emerging economies will be difficult to continue, especially for countries that rely on exports to drive economic growth.It should be noted that every crisis in the United States is ultimately passed on to the outside world.The last time it was passed on to Japan, now the target is obviously China.The most obvious sign is to force the appreciation of the renminbi, forcing China to repeat the mistakes of Japan.

China must be vigilant in order to prepare for the worst.

16. How Wall Street plays China's real estate market

On a Thursday in May 2011, Jim O'Neill, chairman of Goldman Sachs International Asset Management, met with reporters in Hong Kong and held a brief briefing. He affirmed that there is no real estate bubble in China.

O'Neill, who has always been acrimonious and fond of naming things, once served as the chief economist of Goldman Sachs, because he named the four fast-growing emerging economies of Brazil, Russia, India and China as the "BRIC" - BRIC (English acronyms for the four countries).As we all know, the basic value of stocks is obtained from the future profits of enterprises, while the basic value of housing is derived from the income generated by selling or renting out housing in the future.A bubble forms when the price of an asset deviates from its fundamental value.

At a time when the Chinese government is strictly controlling the real estate market (the central bank is tightening monetary policy, commercial banks have begun to refuse loans to real estate developers, and many cities have adopted restrictions on purchases, so real estate developers can only pay high interest rates to the private sector for financing), the former Goldman Sachs chief Economist O'Neill, why did he hold a press conference in Hong Kong, one of the global financial centers, and announce that there is no real estate bubble in China?There is only one answer - it has always been short and long. Goldman Sachs' purpose is to start selling Chinese real estate assets.Because the last madness of China's housing market has come, he must sing about China's housing market in a high-profile manner, and fool the last "fool" into the field to take over, so that Goldman Sachs can have a beautiful "victorious escape".

In the hearts of ordinary Chinese people, Wall Street is far away after all, and has no direct relationship with their lives.In fact, Wall Street is around every Chinese citizen and affects our lives all the time. They have a soft spot for China's real estate market just like ordinary people, and they always want to plunder it.

I remember that when I returned to China for the first time to visit relatives in 1997, I felt that the biggest change in China was that there were more commercial houses, and ordinary people could own their own houses. At that time, there were several high-rise apartments built by Hong Kong developers in Shanghai, with a cost of about RMB 100 million. One set, the annual rent is about 10 yuan, ten years of rent can buy an apartment.Whether it is buying or renting, such a price was an "astronomical figure" for ordinary people in China at that time.

Unexpectedly, domestic housing prices have soared like a rocket in recent years. In 2008, the housing prices of apartment buildings in Shanghai in the same location rose to 500 million yuan, or even tens of millions.As for a tens of millions of "luxury suites", three bedrooms, two living rooms and two bathrooms with complete furniture and electrical appliances, if the market price of ten years ago is followed, the rent should also increase at the same time, and tens of millions a year is also reasonable.What is surprising is that the monthly rent is only 7500 yuan, and long-term rentals can also be discounted.Whether there is a bubble in the housing market, I don't say you should figure it out.Think about it, the annual rent for a tens of millions of mansions is less than 9 yuan, if the interest is not calculated at 10 yuan per year, it can be rented for 100 years.If you buy it for 1000 million yuan, you will only have 70 years of property rights. Isn't the person who bought it a fool?It is enough to prove how serious the housing price bubble is!

Everyone knows in their hearts that the bigger the bubble in the real estate market, the bigger the profits that speculators who entered the market at low prices will get after selling.But who can copy to the end, who can guarantee to sell at the highest point?Please rest assured that those who make low income and high output cannot be ordinary people who follow blindly.Ordinary people often can only watch others make money, and when they step in, it is polite to not lose their skin.why?Because your capital is not as strong as others.

Because the Chinese people have a special complex about houses, families without houses want to buy a house, it seems that they can’t live without owning a house; while those who already own a house want to own more, so they can speculate and profit from it.It can be seen that the inflated real estate prices in China are purely speculation, and the money ends up in the pockets of a few wealthy people.So who are these hype armies?

Many people think of Wenzhou people first. In fact, China’s real estate bubble was created by Wall Street to a greater extent. Wenzhou people are working for Wall Street at most.Wall Street uses all available tools to sing bad news and extol it all for one purpose—to make a profit.Bad-mouthing is a signal to "enter", while praise is a signal to "leave" after earning enough votes.The bigger the bubble, the richer their Chinese assets will be.

Take Goldman Sachs, for example.Goldman Sachs was one of the first Wall Street investment banks to enter China. It also made a lot of money in the Chinese real estate market and then escaped smoothly.In April 2007, Goldman Sachs acquired the "Shanghai Garden Plaza" in Hongqiao for US$4 million (about 1.9 billion yuan at the time), with a total construction area of ​​16 square meters, including 9.78 villas for leasing, and 53 serviced apartments. Just after the New Year in 9, Goldman Sachs changed hands of "Shanghai Garden Plaza" to a Chinese-funded enterprise at an average transaction price of 2010 yuan per square meter, and the transaction price was as high as 2.5 billion yuan.Goldman Sachs has taken over "Shanghai Garden Plaza" for less than three years. Even ignoring its three-year rental income (calculated after taking into account the appreciation of RMB and converting it into US dollars), Goldman Sachs' book income is still considerable.

Prior to this, Goldman Sachs purchased the "Gao Teng Building" on Fuzhou Road in a prime location in Shanghai from CapitaLand in 2005.At that time, the acquisition price was US$1.076 million, the highest acquisition amount ever recorded.After Goldman Sachs held the "Gao Teng Building" for two years, it changed hands for US$1.5 million, obtaining a 40% "appreciation" return.You may not remember that it was 2005 when Wall Street "bad-mouthed" China's real estate market. Only after "bad-mouthing" and "entering" at a low price can you "leave" at a high price to make a profit.

Now Wall Street and other financial institutions have begun to use various public opinions to claim that there is no bubble in China's real estate market and try their best to sing the praises of China's real estate market.The purpose is very clear, they will flee en masse after earning enough votes, who will take their plate if they don't create a bubble-free public opinion?How to escape?This is a trick commonly used by Wall Street, which is why O'Neill's high-profile appearance in Hong Kong!
17. Why are prices in the US the lowest in the world?
A piece of popular news on the Internet shocked the Chinese people!In China, the price of 500ml of Moutai has risen to 1200 yuan; while in Chinatown, New York, the price of 1000ml of Moutai with the same strength is between 220 and 300 US dollars, which is equivalent to 500 yuan for 670ml. , almost half cheaper than domestic ones.Because the quality of Moutai exported from China to the United States is guaranteed and the price is relatively cheap, Chinese Americans are rushing to buy it and send it back to China.

In fact, all kinds of commodities made in China over the years, ranging from jeans, knives, and glassware to large TVs, computers, and cars, are cheaper to buy in the United States than in China. This phenomenon is nothing new.For example, the snowshoes that North Americans often wear, an identical pair of snowshoes, is priced at US$60 at Wal-Mart in the United States, and the maximum discount is US$40, but it costs RMB 500 in China; another example is Levi's 505 jeans, the production base In Dongguan, Guangdong, a pair of pants in China is worth 899 yuan, while on the Amazon website in the United States, a pair of pants only costs $24.42, or 166 yuan, a price difference of 5.4 times!
(End of this chapter)