Friday, May 21, 2010

Brace Yourselves...

Chinese RE melts down

This is what happens when a government decides to burst a speculative bubble.

Of course our governments can never do that. There would be too much of a back-lash from all those who would lose much better to do whatever they can to keep bubbles inflated.

Yes, that's a much better policy. Pass that hot potato along and hopefully it will burn the next administration.

The problem is we never know what the fair value for an asset is when policy makers have decided that the asset needs to be supported at all cost (and future liability via the CMHC)