Cheap money and when things fall apart
China’s Towers and U.S. McMansions: When Things Fall Apart (Literally)
Shoddy construction throughout the world, but especially in China and the U.S., is a type of malinvestment, and it will have consequences.
Everybody seems to know about China’s real estate bubble and brand new empty cities, but few seem to understand that maintenance is essentially non-existent.
Build it new, and when it gets “old” (say, 20 years), then tear it down and rebuild it in grand style. That has been the Chinese mindset since the Great Transformation launched in 1978 (“To get rich is glorious”).
But when real estate development becomes half of the economy, and literally thousands of highrise buildings have been thrown up, along with glitzy malls, U.S.-style suburban develpments, grand civic plazas, etc., then at some point there won’t be enough money in the Universe to tear them all down and rebuild them in a yet grander fashion.
If you have spent some time in China, then you already know building maintenance is not a priority, a recognized trade or even a concept which has a toehold in the mindshare of frenzied development and the pursuit of glorious riches.
Here is the U.S., a similar frenzy of get-rich-quick construction took hold in the bubble decade 2000-2007, and tens of thousands of McMansions were tossed together by inexperienced builders and crews. While the defective Chinese drywall installed in thousands of homes has recently made headlines, that is merely the tip of the iceberg in terms of defective, shoddy construction put in place in the go-go housing bubble years. </em>
Sobering look at the rise of crap. So you got a loan you probably shouldn’t have, that you can’t afford now, for a house that will either fall down around your ears, or poison you from the fumes in the walls.
Not a rosy future, is it?
