The Wall Street Journal recently reported: “Canadian and Chinese agents say Chinese buyers are looking for longer-term investments to diversify their holdings outside of the mainland.”
And they’re right. The Chinese want to get their money out of China. And that’s the critical point that will affect you, me, and our financial futures.
A Value at Any Price
The Chinese are buying up international property largely because it’s the only way they can get money out of the country.
There are so many rules governing Chinese citizens and their money. They can’t have money in foreign bank accounts... They can only leave the country with a limited amount of cash... In short, they have very few options by which to shield their money from the Chinese government.
The only reasonable way for most wealthy people in China to get money out of the country is to buy property.
And it’s why they are willing to pay absolutely absurd prices. They may pay $3 million for a place that’s really worth $1 million because the real value is not in making money on the property or having a stable income from renters; it’s in having money out of China, the modern equivalent of an insurance policy on their own financial freedom.
The Chinese government may take their factories, homes, bank accounts, and everything they own on a bureaucrat’s whim. And they can do it for the “greater good” or any other sudden and unexpected reason. But the government can’t take their international property holdings.
The Chinese aren’t just buying a summer home. They’re buying a ticket to freedom if they ever need to exercise it.
And that’s why the Chinese are seeing a value at any price.
The Vancouver real estate bubble (http://howtze.blogspot.com/2011/09/how-to-spot-bubble.html) is a perfect example. If it weren’t for the Chinese trying to get one foot out of their own country, the prices would likely be half of what they are today.
Financial repression creates massive dislocations in markets around the world.
Fortunes will be made by those of us who can spot these dislocations and what’s really driving them...
And by being prepared for what’s coming and understanding what is going on around the world, you can ensure your fortune stays where it belongs — in your own hands.
Good Investing,
Andrew Mickey
And they’re right. The Chinese want to get their money out of China. And that’s the critical point that will affect you, me, and our financial futures.
The Chinese are buying up international property largely because it’s the only way they can get money out of the country.
There are so many rules governing Chinese citizens and their money. They can’t have money in foreign bank accounts... They can only leave the country with a limited amount of cash... In short, they have very few options by which to shield their money from the Chinese government.
The only reasonable way for most wealthy people in China to get money out of the country is to buy property.
And it’s why they are willing to pay absolutely absurd prices. They may pay $3 million for a place that’s really worth $1 million because the real value is not in making money on the property or having a stable income from renters; it’s in having money out of China, the modern equivalent of an insurance policy on their own financial freedom.
The Chinese government may take their factories, homes, bank accounts, and everything they own on a bureaucrat’s whim. And they can do it for the “greater good” or any other sudden and unexpected reason. But the government can’t take their international property holdings.
The Chinese aren’t just buying a summer home. They’re buying a ticket to freedom if they ever need to exercise it.
And that’s why the Chinese are seeing a value at any price.
The Vancouver real estate bubble (http://howtze.blogspot.com/2011/09/how-to-spot-bubble.html) is a perfect example. If it weren’t for the Chinese trying to get one foot out of their own country, the prices would likely be half of what they are today.
Financial repression creates massive dislocations in markets around the world.
Fortunes will be made by those of us who can spot these dislocations and what’s really driving them...
And by being prepared for what’s coming and understanding what is going on around the world, you can ensure your fortune stays where it belongs — in your own hands.
Good Investing,
Andrew Mickey
