Economic Model Untenable: A. Gary Shilling

By
Mortgage and Lending with SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171)

A. Gary Shilling[The] "economic model, which leaves bureaucrats guessing about the market effects of their directives, is ultimately untenable."  A. Gary Shilling

Sounds like Shilling is talking about our current economy in the United States, doesn't it?  He's not talking about us.  He's talking about China--the country whose economy is tightly intertwined with our own.

Why should you care?

While macro views of the world economy don't get you listings or buyers, it's important to stay on top of events which can affect the earning of our daily bread.

Shilling's article this morning on Bloomberg.com paints a bleak picture of China's economy headed for recession following a period of amazing growth.

Inflation is the boogyman.  Imagine if you had to conduct your real estate business under the current constraints imposed by China's central government:

  1. Want to buy a second home?  Minimum downpayment: 60%.
  2. Want to buy a primary residence?  Minimum downpayment: 30%
  3. Are you a mortgage lender?  The central government sets annual limits on bank loans in advance.  If your bank loans the entire amount by the end of June, you'll have to wait until January 2012 for your next loan.

Government at any time, and in any country, is an experiment.  We're blessed in the United States to have a say in how our government works.  Especially in these economic times, that's not a blessing to be taken lightly. 

(photo courtesy Forbes.com)

_____________________

I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender.

NMLS #223495

SUNSTREET MORTGAGE LLC ~ Correspondent Mortgage Bank
Offices in Mesa, Tucson, Sierra Vista & Nogales

 

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Rainmaker
1,216,483
Jay Markanich
Home Inspector - servicing all Northern Virginia
Jay Markanich Real Estate Inspections, LLC

They are tightly controlled and growth cannot happen forever when markets cannot take ideas where the ideas want to go.  And the numbers coming out of there are never accurate!

June 29, 2011 02:02 PM
Rainmaker
547,040
Than Maynard
Broker - Licensed to List & Sell - 405-990-8862
Coldwell Banker Heart of Oklahoma

They have the "benefits" of total government control, ie communism. Something we seem to be working closer and closer to......we are getting periously close to socialism as it is.

June 29, 2011 02:37 PM
Rainer
63,700
Brett Reichel
MLO 210215
Pacific Residential Mtg., LLC - NMLS 1477 / WA CL-1477

Hmmm....does that sound like the Chinese version of QRM?  So, our QRM is not as draconian, but it will have the same effects....

June 29, 2011 02:51 PM
Rainer
126,403
Ron Brown
MLO-270845 VA/FHA Specialist, Alpine Mortgage Planning NMLS 81395
Division of Pinnacle Capital Mortgage Corp

Funny that Shilling would make these comments against Central planning/control about China when there is so much similarity with what we face here.

June 29, 2011 04:47 PM
Rainmaker
1,668,036
Lou Ludwig
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO
Ludwig & Associates

Mike

Very interesting post the over regulation in Washington is having a negative effect on the economy.

Good luck and success.

Lou Ludwig

June 29, 2011 05:34 PM
Rainmaker
713,607
Larry Brewer
Nashville Real Estate
Benchmark Realty LLc

Mike - I remember Japan in the 80's and how everybody was concerned that their economy would overrun ours and the chaos would begin. Then we started to tax them like they were taxing us. The next thing you know, they were building plants in the USA and hiring american workers because it was a better business decision than paying 25 percent import taxes. When will we do the same with China and Mexico? I don't think we have a fair trade agreement with either of those countries, they tax our goods and we don't tax theirs. Seems a little unbalanced.

June 29, 2011 11:06 PM
Rainmaker
881,459
Jane Peters
Connecting you to the L.A. real estate scene
Power Brokers Int'l

They were talking on the news today about manufacturing jobs coming back to the U.S. because pretty soon it will be the same or less expensive to do so.  Good news, I guess.

June 30, 2011 12:18 AM
Rainmaker
467,399
Cara Marcelle Mancuso
Call a Marana neighbor, I'm THERE!
Long Realty - Dove Mountain, Marana AZ

This is a very interesting post.  America probably doesn't realize how good we have it.

June 30, 2011 12:36 AM
Ambassador
716,652
Mike Jones
Mike Jones NMLS 223495
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171)

Cara,

Our society is more interested in being entertained...

Jane,

I don't know if that's a good trade-off for the devalued dollar.

Larry,

Good point!

Lou,

Good to see you.

Ron,

When I read between the lines, it's an indictment of our own direction.

Brett,

It may be.

Than,

Some benefit!

Jay,

Thanks for being the first to comment!

Mike in Tucson

June 30, 2011 08:47 AM
Rainer
213,039
Doreen McPherson
Phoenix Arizona Real Estate ~
Homesmart ~ Scottsdale ~ Tempe

Our society is more interested in being entertained...   <------  that's the truth.  Many (way too many) have no idea what is really going on...   meanwhile, China is setting up little cities right here in our country.

July 02, 2011 11:08 AM
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Ambassador
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Mike Jones

Mike Jones NMLS 223495
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