China Bubble

So we know that Japan, Greece, Portugal, Spain and Iceland have serious problems. We know that the USA is on an unsustainable path....but surely the economic power house of China is going to keep the world afloat in consumerism....as 1.2 billion people scramble for houses, cars, blenders, microwaves, shoes, etc...RIGHT??

Wrong. China has been repeating the same real estate mistakes the U.S. made but to an even larger extent. And when that bubble pops and millions of Chinese who only make $3000 per year are upside down on their homes.....they will have no money for cars, blenders and microwaves.

Even worse....the Chinese government may need to come to the USA and cash in some of it's $1 trillion of US Treasuries in an attempt to create it's own bailout of banks, businesses and consumers. If that happens it could be seriously NOT GOOD...because who is going to refinance that $1 trillion? Japan, Greece, Portugal or Spain?

Many (Chinese consumers) said commercial housing prices in the Chinese capital and other cities were sure to keep rising, perhaps after a brief dip, shrugging off government efforts to cool the market. The disheartened said prices already well beyond their grasp were unlikely to come down.

"Nobody is listening to the government leaders. There's this mentality that has set in that this is a no-loss market," Chen said, nodding at the crowds around miniature building displays in Beijing's China World Trade Center.

"It's like watching a suicidal man who won't listen to anyone. Whatever you tell him, it simply strengthens his notion that he's right and the rest are wrong," said Chen, a twenty-something investment analyst for Changjiang Securities, wearing thick glasses and a leather jacket.

See it here; http://www.reuters.com/article/idUSTRE63B3VJ20100412

If what I have been reading is correct...the China bubble could end up being 5 times worse than the U.S. bubble, that is still popping. Why? Because the bubble has gotten so large in China that it would be the equivalent of guy in the USA who makes $40,000 per year buying an $800,000 home. That's what the lenders are doing in China....up to 20 times your gross income!! At the height of our bubble....I don't think we had millions of folks who did that.

The bigger the bubble...the bigger the explosion when it pops.

When that happens....who will be there to save the world??