Jason Douglass
Infowars.com
December 20, 2010
Reports of Chinese ghost cities have been trickling in for over a year. Previously, these reports were nothing more than abstract statistics but new images put a very real face on those figures.
Images of Chinese ghost cities. Hover cursor over image for brief description or click to view larger.
Like a cheesy sci-fi flick where the human population has mysteriously vanished, these ghost cities sit eerily vacant while dead leaves collect in unswept and unused foyers. This is not Hollywood’s latest blockbuster but a stark reality.
Finance Asia reports that about 64 million apartments and houses have remained empty over the last 6 months. A truly shocking statistic considering that this figure represents potential housing for roughly 200 million people or almost two-thirds of the population of The United States.
- A d v e r t i s e m e n t
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Using the excuse that Chinese prefer buying to renting, Asian financial analysts are shaking off these insane figures as long-term investments. The idea is savvy investors recently flush with capital but fearful of a fickle stock market invest in property even though there are limited renters available to occupy them. But it is not beyond reason to suspect a financial bubble is forming or something far worse.
Al-Jazeera TV spoke with Patrick Chovanec of Tsinghua University who explained the situation in over-simplified terms, “Who wants to be the mayor who reports that he didn’t get 8% GDP growth this year? Nobody wants to come forward with that. So the incentives in the system are to build. And if that’s the easiest way to achieve that growth, then you build.” However an 8% growth does not begin to touch the 15% housing excess reported in these figures.
The truth of this situation is that these new cities and developments are money pits. Even though the properties sit completely vacant and ready to be lived in, occupation is not fiscally possible because they are in fact still born cities; created without the possibility of sustaining themselves. And so a bubble in the economy is formed. Like a cancer, that bubble will infect and corrupt any markets with which it comes in contact. These ‘investments’ are like ‘roach motels’ – your money goes in but it does not come out.
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Looking to the future, it is obvious that this situation will further complicate. How long can investments sit around without generating revenue? We are familiar with concepts like junk bonds and derivatives, abstract markets that have created similar bubbles in our economy. But these ghost cities are actual physical manifestations of junk economics. These are fully realized projects representing billions in investment dollars and they are simply collecting dust!
One cannot help to question who gave the green light for these billion dollar projects and what is in fact the endgame for a prospectus with this scope.
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