Oil Crash

[Y-QUERK]

Surely as chinese get credit cards they will start to consume more and more of thier own goods.

[VedantaTrader]

"China has the purchasing power of the Iberian penisula."

tut tut MD trying to mislead us again

the Iberian penisula has a Gdp of only half of China in 07

no doubt this year it will be considerably worse

http://en.wikipedia.org/wiki/List_of_count...y_GDP_(nominal)

added to the fact that while Spain and Portugall are drowning in debt

China has cash reserves in excess of 1.6 trillon!

maybe we should take a leaf out of Chinas book

where minimum amount reqiured for a morgage deposit is 30%

what would that leave house prices here?

Rock on!

China have been buying oil and resource companies, they have the 1.8 trillion USD in reserves. The Yuan has a great future. I think potentially next reserve currency. It is backed by great fundamentals. The USD is backed by subprime and debt that can't be paid. Same for sterling. The Uk bonds and US treasuries are no better than junk bonds.

[Rock-n-Roll]

China have been buying oil and resource companies, they have the 1.8 trillion USD in reserves. The Yuan has a great future. I think potentially next reserve currency. It is backed by great fundamentals. The USD is backed by subprime and debt that can't be paid. Same for sterling. The Uk bonds and US treasuries are no better than junk bonds.

not only are they buying the above

around the Pacific rim and E Africa they are buying up the ports and the railways

cornering the market in many places!

rock on!

[md23040]

you state that chinese consumers have been burned in property and equities

the actual figures reveal a differant story

property investment up 31%

capital investment up 27%

consumer spending up 23%

Property investment up 31% - China property has stalled. It did so before in 2005 after new rules against foreign owners were introduced. But following large rises in 2007 the same as Northern Ireland has occurred in 2008. Guangzhou -19%, Beijing -9.5% and Shenzhen -9.4%. Please RnR know the facts behind your stats rather than quick internet searching on China daily etc to counteract me. On the subject of China daily etc

Wall Street Journal - China's Battered Property Stocks Require Rigorous Value Appraisal

Wall Street Journal 15.08.2008- China's property market is sputtering through its roughest patch in a decade, and developers' share prices have suffered a prolonged drubbing. Is it finally time to go bargain hunting?

Now what happened in the UK with property stoxx hitting the skids before the wider property market fell. As you know stoxx react quicker.

Shanghai Daily 15.08.2008 Average housing price set to shrink by double-digit drop

Shanghai Daily - THE average housing price in Shanghai is likely to see a double-digit decrease in the coming months as more real estate developers are introducing discounts to lure buyers.

"Almost all property developers have lowered their expectations (of sales) as the weak sentiment among home buyers has been overwhelming,'' said Xue Jianxiong, head of research at Shanghai Uwin Real Estate Information Services Co, a research and consultancy firm.

Shanghai house sales see declining trend By Jin Jing (China Daily)

China Daily - Housing prices in Shanghai has shown signs of decline, with some luxury apartments in the city center seeing a cut in prices while potential buyers remain uncertain on the timings of making a purchase.

Many potential buyers in Shanghai are waiting for a price plunge following the drop in Shenzhen housing prices, which declined by nearly 30 percent in the first half. Statistics from China Real Estate Index Academy showed that the housing sales in Shanghai in the first half dropped 27.6 percent from last year to 8.85 million sq m while housing prices rose a slight 7.26 percent.

Do you want anymore before you are convinced the property market in China is in trouble? On top of this as mentioned over 100 million people have lost on average $7000 in the Shanghai and HK stock exchange correction and rather than learning from this they have piled straight into leveraged commodities. Where are commodities today, e.g. metals other than gold approx -40% etc. Look at the renege by China on future contract for difference settlements on Malaysian palm oil down -45%. The losses in commodity margin calls will make any previous stock market losses look like a picnic, IMO.

exports have become less significant in Chinas GDP growth with domestic consumer demand now the principle driver!

Can you provide evidence of this please based on some national statistics? Again in five years time the consumer story will be huge but it is not significant enough at the moment. China can not decouple yet. India is in a better position since English is the principle language in a low cost, highly educated environment. China is a different model at the moment.

"China has the purchasing power of the Iberian penisula."tut tut MD trying to mislead us again. the Iberian penisula has a Gdp of only half of China in 07

The Iberian Peninsula was mentioned only by me to contextualise the size of China’s internal purchasing power. People get carried away with the size of its market presently. But who can afford more, citizens like the Spanish on $33,000 per year or Chinese on less than $8000-10,000 [or the average $2400!!], with property prices many more multiples compared even to the Northern Ireland situation and high cost of living by comparison. Shanghai is listed within the expat global index as the sixth most expensive city for relocation within the globe!!

added to the fact that while Spain and Portugall are drowning in debt

China has cash reserves in excess of 1.6 trillon!

China’s property values to income or every bit as bad as Spain, Italy, Greece, Ireland and the UK. The government there recently made 20% down payment as a new rule to cool its market and create sensible norms. Anyone caught up because of this legislation – too bad.

With prices at $2200 per square metre and salaries of less than $10,000!!

See here for Beijing - http://www.chinaeconomicreview.com/dailybr...n_December.html

To put in context the average white collar worker in Shanghai earned 50,000 or less CNY whilst the daily CNY rates to Euro is 10.11 to €1

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Overall this thread is getting carried away with itself with topics drawing off from the original post but to recap

Short term oil IMO is in trouble. Demand erosion kicked in about $125 but it was not until the bull spike reached $145 did it go beyond reproach. Long term the oil story is a good one. But it will settle IMO to around the $90 level until the Western economies return to positive growth.

China can not pick up the slack in the meantime from any Western downturn, it is impossible. China will use .8 mbpd in 2008 compared to 1.1 mbpd extra in 2007, a notable slowdown - oil increased 20% less than 3 weeks ago as government removed part subsidy. Short term China is in trouble because it relies on the West for low margin high turnover goods. The long term story for China is very good. This short term clean out of a global downturn will good for China, and led to a more robust and resilient economy in the longer term. The Mao to Mall can not be fully achievable yet IMO, however again, in the future its internal consumer consumption will be huge. But reality is that average wages in the Megalopolises are only $8000-10,000 and $600 rural. There are more rural dwellers than dwellers in the major urban centres.

So short term oil will go down because of the cooling West coupled to a comparable slowdown in Chinese growth. That’s the kernel of my argument – long term oil and China are good, possibly very good.

China will blip short term - look at the PMI and CLSA stats, it is obvious China is cooling rapidly for the number of resons mentioned, wages demands, cooling west, appreciating currency, inflation, faltering property market and stock market etc etc etc . However for the 100th time oil and China are long term exciting stories not short term. Oil short term will crash...

Edit - none of the hyperlinks working

Edited August 17, 2008 by md23040

[dieselfreak]

I thought the 30% deposit thing, was only on second homes, to curb speculation?

Anyone ?

[md23040]

China's banks told to tighten mortgage rules

Chinese officials and government economists have warned domestic banks to tighten their mortgage lending criteria and has in recent days urged the country's state-owned commercial banks to beware of risks in the real estate sector and ordered them to tighten loan approval processes.

Others among China's policy community have also begun to express concerns about the health of the country's banks amid signs a once-booming property sector has begun to slow.Lending standards at Chinese banks are often much looser than in developed countries, in part because China is still in the early stages of building a credit rating system. "Anyone can get a mortgage loan in China, no matter who they are," Mr Yi told the FT. "There is also a huge amount of speculation in the market and insider dealing when it comes to bank officers granting loans." More than half the population are peasants without means to invest in property.

So its only the US that had lax lending structures. It seems credit in China will become harder to obtain too.

China's mortgage quality worse than U.S.: academic

HONG KONG (Reuters) - The quality of Chinese home loans is worse than in the United States, where a subprime mortgage crisis is causing turmoil in global financial markets, according to a prominent academic quoted in a Hong Kong newspaper on Sunday.

Yi Xianrong, a banking and finance expert at the Chinese Academy of Social Sciences, said Chinese banks had been lax as they built up 3 trillion yuan ($396.2 billion) of mortgage lending.Fearing a dangerous bubble could be forming, authorities have tried several measures to try to cool the market, including interest rate rises, rules to curb foreign investment in property, and steps to encourage construction of cheaper homes.

Global financial markets are jittery, and credit has dried up, because it is difficult to say to what extent a U.S. housing downturn will hurt funds holding securitized mortgages held in collateralized debt obligations (CDOs).

Market Oracle Hyperlinks not allowed on HPC??

Market Oracle - Economic Decoupling Fails as World Follows US into Recession 15.08- The old mantra was that if the United States sneezed, the rest of the world would catch a cold, as the US was seen as the main driver of world growth. That was then. Economists and analysts began to argue that China and the developing markets were starting to provide a consumer base for the world. Today, we look at evidence that this might not quite be the case. It seems I may have been a little too optimistic.

Sadly, the 'decoupling' thesis has little support in theory or in practice. Its proponents overlook the fact that during the past five years the U.S. economy grew faster than all the other G-7 economies. During that time, America's economy remained the principal generator of global aggregate demand, accounting for around one-fifth of global imports and 25 percent of global production. This evidence suggests that, as in the past, if the U.S. economy sneezes the rest of the world will catch a cold.

"... A number of the shocks presently affecting the U.S. economy are global in nature, and are already slowing European and Japanese growth. The credit crunch flowing from America's subprime woes is causing a global increase in market interest rate spreads and a global tightening of bank lending standards. This is hardly surprising: almost half of all U.S. asset-backed subprime mortgage securities were distributed abroad.

"... The 'decoupling' optimists are ever hopeful that China's rapid growth, together with the rest of Asia's emerging market economies, will offset any U.S. economic downturn. But they tend to forget that Asia is filled with export-dependent economies: in some countries, exports to the United States alone [emphasis mine] account for more than 10 percent of annual GDP. The "decouplers" also forget how relatively small these Asian economies still are, at least in relation to the G-7 industrialized economies. Even the vaunted Chinese economy is barely 15 percent the size of the U.S. economy."

It seems the press has a different short term view on China which concurs with my own. Time will tell, its all theory and projection.

Edited August 17, 2008 by md23040

[zceb90]

The price of oil is 'set at the margin' hence a relatively small variation in supply or demand can lead to what appears to be a disproportionate price impact. It's been argued on 'The Oil Drum' that a 1% change in demand can precipitate a 20% price change.

The fact that oil price has fallen by $30/bbl in past few weeks does not necessarily mean that it's become more affordable to those at the economic margin. Sterling has also fallen around 10% against the dollar in past 2 weeks which means that only about half the oil price decrease will actually filter through to UK consumers. We also need to consider why the price has fallen - reduced demand due to actual recession or threat of recession is a common explanation by analysts. UK recently reported a 60k rise in unemployment - those newly unemployed are going to use a lot less oil...and the same is happening throughout the OECD. Furthermore the businesses that the newly unemployed used for their goods / services are experiencing far less demand from those without work or who feel less confident about their current prospects; in turn those businesses will use less oil.

Against this background the issue of China has been raised upthread. China is reported to have 100 airports under construction and to have 10m new vehicles taking to their roads each year. Let's assume a (deep) recession impacts China and as a result only 80 airports are completed and vehicle fleet addition falls to 8m units pa. It still means China will need more oil next year, and each year thereafter. At the same time global output of oil has been flat since 2005 and COE of Total Oil has recently stated that 'reserve replacement costs $80/bbl'. On this basis it would appear we have some kind of a floor under the price in that should price fall much below $100/bbl CEO's of the IOC's will seriously question whether large scale exploration is worthwhile or whether it would better add shareholder value by accelerating existing program of stock buybacks.

The way I see it, in the absence of an actual reversal of growth in China as the oil to meet their increased demand won't come from the ground it can only come from reductions in consumption elsewhere i.e. OECD. The big challenge for UK and others will be 1) how to emerge from recession without increasing energy demand and 2) how to fund energy imports against background of weak currency.

[md23040]

Chris thanks for the contribution. Very educated. The UK should learn from the Danes who have become energy independent following the 1973 shock. This latest price shock is a good wake up call to the West generally.

http://www.nytimes.com/2008/08/10/opinion/...amp;oref=slogin

[VedantaTrader]

The price of oil is 'set at the margin' hence a relatively small variation in supply or demand can lead to what appears to be a disproportionate price impact. It's been argued on 'The Oil Drum' that a 1% change in demand can precipitate a 20% price change.

The fact that oil price has fallen by $30/bbl in past few weeks does not necessarily mean that it's become more affordable to those at the economic margin. Sterling has also fallen around 10% against the dollar in past 2 weeks which means that only about half the oil price decrease will actually filter through to UK consumers. We also need to consider why the price has fallen - reduced demand due to actual recession or threat of recession is a common explanation by analysts. UK recently reported a 60k rise in unemployment - those newly unemployed are going to use a lot less oil...and the same is happening throughout the OECD. Furthermore the businesses that the newly unemployed used for their goods / services are experiencing far less demand from those without work or who feel less confident about their current prospects; in turn those businesses will use less oil.

Against this background the issue of China has been raised upthread. China is reported to have 100 airports under construction and to have 10m new vehicles taking to their roads each year. Let's assume a (deep) recession impacts China and as a result only 80 airports are completed and vehicle fleet addition falls to 8m units pa. It still means China will need more oil next year, and each year thereafter. At the same time global output of oil has been flat since 2005 and COE of Total Oil has recently stated that 'reserve replacement costs $80/bbl'. On this basis it would appear we have some kind of a floor under the price in that should price fall much below $100/bbl CEO's of the IOC's will seriously question whether large scale exploration is worthwhile or whether it would better add shareholder value by accelerating existing program of stock buybacks.

The way I see it, in the absence of an actual reversal of growth in China as the oil to meet their increased demand won't come from the ground it can only come from reductions in consumption elsewhere i.e. OECD. The big challenge for UK and others will be 1) how to emerge from recession without increasing energy demand and 2) how to fund energy imports against background of weak currency.

Zceb90, I think you have hit the path I am running on. This has been my argument. Economists and analysts have been talking about demand destruction. However, I tend to think demand reduction is a better phrase. I mean, I made this argument that so what if China and India don't put 100 million cars on the road over the next 5 years as projected, if they still put 70 million cars on the road, that is an increase. Demand destruction for me is if they started to sell their cars, or scrap them. Airline travel fell from 15% growth last year to 9% this year. That for me still means a growth of 9%. That is not demand destruction, that is an increase in demand whatever way you spin it. The annoucements from Boeing and Airbus to increase production by 14% would suggest any supply is not meeting demand in flights growth. Anecdotally, I always found it very hard to get flights in Asia. The planes were always full.

I lived in Bangkok, and although it is a huge city, the figures are that in bangkok each week 7000 new cars are registeredfor visual stimulus. Again, the "demand destructionists" are glued to the one side of the coin. How about the other side. I see the risks to the supply side being much more of a concern, especially for the light crude, and the "easy oil". Just take a look at Mexicos drop in production. There is this misperception that Saudi Oil can get us out of this hole. However, the better informed among us, such as Matt Simmons and Jeff Rubin see this as fallacy. If the Saudis could increase production so easily why are they pumping their wells full of water to try and increase the flow? Wasn't it Matt Simmons who said the worst thing that could happen to the world is that oil falls below 100 USD...a point highlighted by Zceb90, about lack of production investment at these prices.

The Yuan has great fundamentals. It is backed by solid fundamentals. I see a large increase in value over the years in the Yuan, this can only make raw materials cheaper for the Chinese, which will increase demand for commodities. Also the lack of regulation, and the ease of planning permission in China isd not met with the same red tapes and regulations in the west. While the west especially in the UK and the US are debating the rights and wrongs of nuclear power, the Chinese have the go ahead for 25 nuclear power stations already. They are more pro-active in meeting their future energy needs.

The western currencies have nothing backing them. US and UK governmen bonds are junk bonds in my view. You will get paid, just in a devalued currency. With a recent report showing that the US need to spend 1.6 trillion USD on infastructure, surely this will be energy and raw maetrail intensive. The US will have to fund this by ore deficits which will further undermine the USD, and will mean cost increases in raw materials in USD terms. However, with Asian currencies appreciating, resources will be relatively cheaper for them.

Edited August 17, 2008 by VedantaTrader

[zceb90]

I lived in Bangkok, and although it is a huge city, the figures are that in bangkok each week 7000 new cars are registered. Again, the "demand destructionists" are glued to the one side of the coin. How about the other side. I see the risks to the supply side being much more of a concern, especially for the light crude, and the "easy oil". Just take a look at Mexicos drop in production. There is this misperception that Saudi Oil can get us out of this hole. However, the better informed among us, such as Matt Simmons and Jeff Rubin see this as fallacy. If the Saudis could increase production so easily why are they pumping their wells full of water to try and increase the flow? Wasn't it Matt Simmons who said the worst thing that could happen to the world is that oil falls below 100 USD...a point highlighted by Zceb90, about lack of production investment at these prices.

Saudi is injecting 7m bbls/day seawater into Ghawar, the world's largest oilfield, in order to maintain reservoir pressure and drive the remaining easily-produced oil to the producing wells. The fundamental problem, of course, is that Ghawar is now 6 decades old and the most productive area containing the best quality light crude is significantly depleted. Saudi Aramco is admitting as much by policy over recent years of MRC wells (horizontal wells with intelligent completions) vs traditional vertical or partly-deviated wells. MRC wells undoubtedly increase the extraction rate for a time but when the injected water encroaches on horizontal wells it tends to do so 'all at once'. It's no coincidence that MRC wells have been used in Mexico's Cantarell field and Yemen's Yibel field; output of oil in both has subsequently crashed. Matt Simmons has referred to production increases due to application of this type of oilfield technology as 'a super-straw effect leading to a monster ball of depletion'.

The key area which economists and others generally overlook is the impact of ongoing production declines in mature oilfields. There are various estimates of such average decline rates including 4.5% (CERA), 8% (Schlumberger) and 10% (Simmons) but even applying 4.5% to (say) an 80m bbl/day base (excluding tar sands etc) points to need to add 3.6m bbls/day of new production every year solely to offset such declines...yet alone accommodate demand growth. Put another way the industry needs to commission new production equivalent to the current output of Saudi Arabia every 2-1/2 years solely to offset decline of mature oilfields. It's already both difficult and espensive to do so....and in future years it's only going to get harder.

Edited August 17, 2008 by zceb90

[blofield]

Saudi is injecting 7m bbls/day seawater into Ghawar, the world's largest oilfield, in order to maintain reservoir pressure and drive the remaining easily-produced oil to the producing wells. The fundamental problem, of course, is that Ghawar is now 6 decades old and the most productive area containing the best quality light crude is significantly depleted. Saudi Aramco is admitting as much by policy over recent years of MRC wells (horizontal wells with intelligent completions) vs traditional vertical or partly-deviated wells. MRC wells undoubtedly increase the extraction rate for a time but when the injected water encroaches on horizontal wells it tends to do so 'all at once'. It's no coincidence that MRC wells have been used in Mexico's Cantarell field and Yemen's Yibel field; output of oil in both has subsequently crashed. Matt Simmons has referred to production increases due to application of this type of oilfield technology as 'a super-straw effect leading to a monster ball of depletion'.

The key area which economists and others generally overlook is the impact of ongoing production declines in mature oilfields. There are various estimates of such average decline rates including 4.5% (CERA), 8% (Schlumberger) and 10% (Simmons) but even applying 4.5% to (say) an 80m bbl/day base (excluding tar sands etc) points to need to add 3.6m bbls/day of new production every year solely to offset such declines...yet alone accommodate demand growth. Put another way the industry needs to commission new production equivalent to the current output of Saudi Arabia every 2-1/2 years solely to offset decline of mature oilfields. It's already both difficult and espensive to do so....and in future years it's only going to get harder.

Good post. Most people are not watching the real issues with regards to oil, they should be watching the "rate sensitivity" as you described, This is the real issue not the price...forget about the price. I'm glad you use Ghawar as an example, which produces anywhere from 40% - 50% of Saudi's oil. Saudi are under no obligation to produce cheap oil and you could see production in Ghawar ease off as they close up a few wellheads to let the monster rest for a while

As for production and distribution figures coming out of Saudi, you will probably know as well as me that they are a nonsense. There is no accurate data and any economist, publication or organisation that chooses to report on Saudi's oil are using false numbers or guesstimate's.

Demand compounds and some like to forget this and use static figures in their calculations. These same people are calling the top in the shoulder season for gawd's sake. They have called the top for years, you learn to look past the noise.

[VedantaTrader]

Yes, I would echo Blofields comments. Very good technical knowledge there. Do you work in an engineering background Zceb90? Commodities are more supply driven than demand driven. The risks are very much to the supply side. I loved Matt Simmons comment recently, when he said, one cup of oil could take a 2000 pound car with 6 people and luggage 2miles, and one cup costs 24 cents a cup. Try negotiating that with a man with a horse and a cart. It is cheaper per cup that coffee, water, and beer.

[Rock-n-Roll]

my my MD being a tad selective with your facts?

if Chinas property is toast as you claim

why did prices rise in the 70 biggest cities on average 8% yoy to end june?

http://www.property-report.com/aprarchives...amp;date=180708

Rock on!

[md23040]

my my MD being a tad selective with your facts?

if Chinas property is toast as you claim

why did prices rise in the 70 biggest cities on average 8% yoy to end june?

Indeed YoY reports may show this. But what about 6month or 3 month lead in data? I'm being selective, really. How many articles do you want me to produce?? Given you already have pieces from the Wall Street Journal, China Daily, Shanghai News, and The Economist.

So in your opinion is Chinese property rising at the moment across China YES/NO??

Please Yes or No

Get Gogglings - no doubt within the plethora of the Web you'll find something in order to always have the last word.

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Ftr long-term the oil story is good for the reasons outlined by zceb90. Also in addition by 2020 the Chinese will consume as much oil as the Americans at 320 million gallons per day. The trick will be can China long term subsidise oil that is 10% cheaper than American rates. AFAIK Venezuela is still the cheapest globally but a long way for a fill up.

Edit Hyperlinks..

Edited August 18, 2008 by md23040

[Rock-n-Roll]

Indeed YoY reports may show this. But what about 6month or 3 month lead in data? I'm being selective, really. How many articles do you want me to produce?? Given you already pieces from the Wall Street Journal, China Daily, Shanghai News, and The Economist.

So in your opinion is Chinese property rising at the moment across China YES/NO??

Please Yes or No

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Ftr long-term the oil story is good for the reasons outlined by zceb90. By 2020 the Chinese will consume as much oil as the Americans at 320 million gallons per day. The trick will be can China long term subsidise oil that is 10% cheaper than American rates. AFAIK Venezuela is still the cheapest globally but a long way for a fill up.

yes MD you know perfectly well you were being selective!

you picked the three cities where prices are falling

but if prices are falling generally as you claim

then you should be able to name quite a few more

the available data to end june clearly shows this not the case

as for oil

if the yanks and the chinese will both be consuming 320 mil galls /day

wont be a hell of a lot left for the rest of us

or just how much oil do you expect to be produced globally by 2020?

rock on!

rock on!

[zceb90]

Yes, I would echo Blofields comments. Very good technical knowledge there. Do you work in an engineering background Zceb90? Commodities are more supply driven than demand driven. The risks are very much to the supply side. I loved Matt Simmons comment recently, when he said, one cup of oil could take a 2000 pound car with 6 people and luggage 2miles, and one cup costs 24 cents a cup. Try negotiating that with a man with a horse and a cart. It is cheaper per cup that coffee, water, and beer.

I worked in the oil industry and am thus familiar with the terminology. I agree with your thoughts on Matt Simmons - I've been to 2 of his lectures in the past few years and he's definitely one to listen to very carefully as he has an important message. A message which the majority of businesses and politicians choose to ignore (deny?).

[md23040]

yes MD you know perfectly well you were being selective!

you picked the three cities where prices are falling

but if prices are falling generally as you claim

then you should be able to name quite a few more

the available data to end june clearly shows this not the case

For the record when Shanghai, Beijing or Shenzhen Metropolitan districts are quoted it often refers to the cities encompassed within them too. These Megalopsis area's are like New York, LA etc within many urban area's overlapping. But the three or four cities quoted by me should have the bulk of the 70 cities mentioned by your article contained within their Metro area's. Anyway the bulk of the urban popualtion is based in these three urban supercentres. A few of the cities encompassed would be

- Shanghai also encompasses Suzhou, Wuxi, Changzhou, Nantong, Wutang

- Shenzhen/Guangzhou also encompasses Macau, Sanxiang, Zhongshan, Jiangmen, Xiaolan, Daliang up to Hong Kong

- Beijing also encompasses Langfang and Tangshan.

The only important Tier 1 cities off the top of my head would be Zanghou and Hangzhou

Also note that all land in China is leasehold usually 70 years and

The purchasing of a property in China does result in the purchase of the buildings but does not result in ownership of the land. The purchaser also receives a land use right of a certain length (normally around 70 years) for the exclusive (but transferable) right to the usage of the land. Furthermore, as all lands are state owned, the city or provincial government officials in China possess all power when it comes to land usage planning and allocation.

So that's how all the houses were cleared prior to the Olympics. Hmmmm

Now also according to the Hong Kong Federation of Industries it is expected 10% of all firms in the Pearl Delta [the largest urban centre in China] are to close. Is this why Guangzhou has fallen -30% in the last 6 months? The Pearl Delta is responsible for 30% of all China export output.

All area's of China in the last 6 months have readjusted property values because of the overflow effect of the American Credit Crunch, prior to this the garden was a wee bit rosier.

Still waiting a Yes or No answer to the question posed?

Edited August 18, 2008 by md23040

[Mr Mephisto]

Looks like this thread has become relevant again - perhaps this website should be renamed "Total Financial Meltdown". That REM song keeps coming into my head "It's the end of the world as we know it, (And I feel fine)".

I have enclosed a quick link to YouTube if you fancy a quick blast!

http://uk.youtube.com/watch?v=cGqroT1FZ5Y

Interesting to use the retrospectoscope in light of current facts and see what calls individual posters made on the matter at the time

[Malthus]

http://www.bloomberg.com/apps/news?pid=206...id=aGDOMpbHQ9sE

Dec. 4 (Bloomberg) -- Crude oil fell to the lowest in almost four years as the deepening recession in the U.S., Europe and Japan cuts fuel consumption.

Prices may dip below $25 a barrel next year if the recession spreads to China, Merrill Lynch & Co. said in a report today. U.S. fuel consumption during the four weeks ended Nov. 21 was down 6.2 percent from a year earlier, an Energy Department report showed yesterday.

[Mr Mephisto]

$25 a barrel - bring it on !! I'm off to turn my heating up full blast and see if I can find myself a good second hand Range Rover Sport - there should be plenty around at the moment going for nothing. I might even take a look at the petrol supercharged version if oil prices are going to fall to that level. The only potential fly in the ointment is if the bottom falls out of sterling. Are we heading for £1 buying $1 anytime soon?

[Traktion]

$25 a barrel - bring it on !! I'm off to turn my heating up full blast and see if I can find myself a good second hand Range Rover Sport - there should be plenty around at the moment going for nothing. I might even take a look at the petrol supercharged version if oil prices are going to fall to that level. The only potential fly in the ointment is if the bottom falls out of sterling. Are we heading for £1 buying $1 anytime soon?

haha, would be nice in the short term, for sure. I'd like to get a little, used, Lotus Elise (or maybe used VX220 - getting very cheap now) still though and enjoy the performance and efficiency!

That said, this could cause problems in the longer term. $150+ per barrel was daft and there was clearly a speculative element going on there. At $25 a barrel, oil exploration may decrease, causing another oil price shock later on. Personally, I'd rather the prices bubble around $40-$50 a barrel, to keep the prices steady in the medium term. However, the markets will dictate what happens, though and maybe with credit being tighter for decades will decrease speculation anyway... perhaps the shock would never be as bad as the recent peak as a result?

Edited December 5, 2008 by Traktion

[Mr Mephisto]

I'd like to get a little, used, Lotus Elise (or maybe used VX220 - getting very cheap now) still though and enjoy the performance and efficiency!

Personally, I'd rather the prices bubble around $40-$50 a barrel, to keep the prices steady in the medium term.

Hi Traktion. I'm still running as scared as everyone else with anything to do with money at the moment. The interest rate cut is saving me an absolute fortune with regard to my mortgage repayments - I'm lucky to have a relatively old tracker which doesn’t appear to have a collar or a floor with regard the bottom rate that I will get charged - or at least I think I have - I have had a look through my original mortgage documents and I see no reference to a "bottom rate". Still I will be saving my pennies like everyone else and trying to pay down my debt.

I have done quite a bit of fantasy car shopping recently on the web however I think I will stick to my 10 year old diesel Golf. It is nice to dream however. What about a Nissan 350Z - they seem to be going cheap at the moment. I see that one of the local garages is trying to offload a 2005 Aston Martin DB9 with 19,000 miles on the clock for £49,000 - do you think they would accept £12,000 with the Golf as a trade in?

As for oil prices I was a little more conservative than you – I thought $60 - $70 a barrel was a reasonable long tem bet. That judgement was however when oil was at its peak price level. Now that the worlds economy is heading down the toilet who knows?

[Traktion]

Hi Traktion. I'm still running as scared as everyone else with anything to do with money at the moment. The interest rate cut is saving me an absolute fortune with regard to my mortgage repayments - I'm lucky to have a relatively old tracker which doesn’t appear to have a collar or a floor with regard the bottom rate that I will get charged - or at least I think I have - I have had a look through my original mortgage documents and I see no reference to a "bottom rate". Still I will be saving my pennies like everyone else and trying to pay down my debt.

I have done quite a bit of fantasy car shopping recently on the web however I think I will stick to my 10 year old diesel Golf. It is nice to dream however. What about a Nissan 350Z - they seem to be going cheap at the moment. I see that one of the local garages is trying to offload a 2005 Aston Martin DB9 with 19,000 miles on the clock for £49,000 - do you think they would accept £12,000 with the Golf as a trade in?

As for oil prices I was a little more conservative than you – I thought $60 - $70 a barrel was a reasonable long tem bet. That judgement was however when oil was at its peak price level. Now that the worlds economy is heading down the toilet who knows?

At least you have some positives then! Could be worse!

I sold my 350z the other month, so I know how cheap they are, unfortunately! The main solace I have is that other cars seem to be tanking too, but it was a costly toy. I knew I would lose money on it, but didn't expect to lose quite so much. I'm happy that I have the cash now though, as it's helping me focus on running my business interests, rather than worrying about the bills.

If you're interested, I wrote this article the other week about car auction prices: http://www.drivewire.eu/news/cars/other/bo...or-auctions.htm

The only cars holding value seems to be the super cheap ones (less than 1k with MOT etc). Everything else, is plummeting. I'm planning on sitting on my hands until spring/summer and then I'll look for a bargain... if finances permit, of course!

EDIT: For long term oil prices, up to $75 seems reasonable over the next decade or so, but I do wonder just where the minimum, reasonable price lies. They say $75 is what the Russians budgeted for, but maybe some efficiencies will make $50 viable? Who knows, but I think if it falls too low in the short term, it could come back to bite us!

Edited December 5, 2008 by Traktion

[Mr Mephisto]

If you're interested, I wrote this article the other week about car auction prices: http://www.drivewire.eu/news/cars/other/bo...or-auctions.htm

Thanks Traktion. I now know who to contact if I need any car buying advice! I did think about adding a smiley at this point, however I think that not only do I need a dictionary for abbreviations but I would also need one for smiley’s.

[shipbuilder]

EDIT: For long term oil prices, up to $75 seems reasonable over the next decade or so, but I do wonder just where the minimum, reasonable price lies. They say $75 is what the Russians budgeted for, but maybe some efficiencies will make $50 viable? Who knows, but I think if it falls too low in the short term, it could come back to bite us!

I read the other day that $50 was about the lower limit for the oil sands in Canada, while future plans were based on $70-80. I imagine that this is probably one of the most expensive ways of extracting oil at the moment.