Rule Of Equity News: Chinese buyers of U.S. real estate

Themes

Inequality, justice, equity--modern society struggles with these values, and the media, politicians, economists, and artists address income and inequality as if it's a new issue. Anyone who reads the Bible or even Charles Dickens knows these issues have been part of human society throughout recorded history. At common law, judges developed the concept of equity to do the right thing.

The elite propose income transfer schemes and government control designed to protect and insulate the elite and keep the poor indebted to them. Some of the worst abuses have been inflicted on Native Americans or American Indians.

Now the elite have incurred massive debts that leave entire nations (and their citizens) vulnerable to a different kind of rule of equity--domination by creditors, foreign and domestic.

Thursday, July 10, 2014

Chinese buyers of U.S. real estate

Now Chinese buyers are dominating the high-end of the U.S. residential market.

We'll watch what happens in the next few months as China attempts to close this loophole, but ZeroHedge reports the outlook isn't good.

http://www.zerohedge.com/news/2014-07-10/did-china-just-crush-us-housing-market

A few days ago we finally closed the door on any argument who the marginal buyer in the US luxury housing segment was - the answer: Chinese oligarchs, scrambling to launder their "hot" domestic money abroad (as we predicted first two years ago) and now that Switzerland is no longer a safe offshore venue where one can park cash, they picked US luxury housing as the best money laundering alternative.

This means that far from indicating a recovery, as the recent surge in the high end of the US housing segment had long been touted, all the relentless move higher in ultraluxury properties prices was simply a recycling of China's hot money, which unlike in the US, never made its way into the Chinese stock market (explaining why the Shanghai Composite has barely budged in years) and merely ended up in US real estate. If anything, this is simply another confirmation of the epic capital misallocation, and the complete lack of "trickle down" resulting from failed global central banking policies.

So now that the "who" has been answered, just one question remained: "how?"

How did millions of Chinese "buyers" manage to get tens of billions of yuan or dollars out of the mainland - a country which as is well-known has strict capital controls when it comes to individual and corporate offshore outflows? Under Chinese law, citizens are allowed take only the equivalent of US$50,000 out of the country each year: hardly enough to buy a storage closet in any of New York City's Central Park West duplexes.

Today we learn the answer and it has to do with officially sanctioned "money laundering" services by not one but two of China's largest banks: Bank of China and also Citic.

Lots more on this topic here: http://libertyblitzkrieg.com/2014/07/09/chinese-purchases-of-u-s-real-estate-jump-72-as-the-bank-of-china-facilitates-money-laundering/