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Justme, The communist structure gives them more dominance over the people. The leaders of China have been supremely on top of the people. That dominance is eroding.
Economic reforms give power to more people - diluting the concentrated power of the party elite. It is also creating a small but growing middle class.
Clearly China could consume more of their own output, but not enough to keep their factories running at their current rate. If the export market declines for them their unemployment will skyrocket. The lack of freedom in China has unrest already boiling under the surface. A rise in unemployment would be a disaster for the rulers.
We have become accustomed to cheap goods from China. But removal of that source would mean we pay more to buy those goods elsewhere. Our quantity of unnecessary stuff would decline somewhat. Americans would be annoyed by the reduced purchasing power.
However, the impact on China would be soaring unemployment, rising poverty, civil unrest and violence in the streets in protest against the government. There are already thousands of such protests each year. The Chinese rulers cannot afford to inspire greater dissatisfaction. They are sitting on a powder keg.
Paul,
My two year currency forecasts:
Euro $1.00 (if the Euro survives at all)
Pound $1.30
Canadian $0.70
Clearly China could consume more of their own output...
I think they know better than to eat their own dog food...
Patrick, that kind of loan actually pays 12% or more. There are hard money brokers I have told you about who do these loans. Yes, it is risky, you have to be very careful about the appraisal and working with a broker you trust. That is not meant to be a joke, you have to find someone reputable to work with. Also, realize that someone's residence is different than say a commercial project. I have seen people get very protective of their home and threatened to sue for such things as usury. Even if the claim is bogus it still scares people. If you have money burning a hole in your pocket and want to lend or invest in real estate get in touch with me and I'll show you how. I am working on some things on foreclosures back east that you will find interesting. You could get in with less than $15,000.
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With CD's paying 4%, and Wells Fargo charging 8.8% for a jumbo 30-year fixed, maybe I should finance someone's jumbo mortgage -- but only for a house that I'd actually want to live in. Either I get direct interest payments up around 8%, or, if the user defaults, I get the house. The trick would be to lend only the amount that I'd be willing to pay for the house in the first place.
Is it evil? Is it risky?
#housing