The Next Economic Earthquake

(Printed in The Desert Sun)

Why China Might Become Greece, and Why That Might be Good for California

The Chinese economic miracle has been growing for decades, since the government made private enterprise legal. No other economy has grown as much, and China is now the second largest economy in the world.

The banking system is a major component of the government’s ability to manage the economy. However, its lack of openness, and inflexibility, are major weaknesses. No one knows for sure how many loans in China are non-performing, and they could suddenly fail, one after another. Their banking system is living on borrowed time.

China may become another Greece, in that its loans, its currency, and its trade may suddenly shift unexpectedly. However, that may be good for the U.S., and good for California.

First of all, jobs would grow here, instead of China. Real estate here will be a better investment than property in China, much of which is sitting empty and too expensive for the average citizen. Finally, it might be “tough love” for the U.S. to get its own financial house and federal budget in order, without depending on the readiness of China to buy our debt.

This is a recent article from CNN regarding Chinese buyers of California homes:

http://money.cnn.com/2013/07/08/real_estate/chinese-homebuyers/index.html

This is a recent article about a change in policy to encourage foreign buyers of American real estate

http://www.realestateeconomywatch.com/2013/03/foreign-investors-could-be-freed-to-invest-in-us-real-estate/

This is a recent article regarding commercial real estate and Chinese buyers

http://www.nytimes.com/2013/06/26/business/global/chinese-investors-pursue-us-real-estate-deals.html?pagewanted=all&_r=0