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After US/UK, India facing its own subprime crisis?

Sure, it could cause, but why no one ever mentions about India's real estate bubble, but is sure about mentioning a real estate bubble in Hong Kong, Spain, Ireland, so on. By logic of GDP, Hong Kong, now Spain, Ireland, and others are nowhere close to India.

Presently, a slowdown/collapse in Indian economy would have a much bigger impact on global economy than any of the above, ex China, as India increases its GDP by an average $150-$200B/year >> UK>>>Japan.

More specially, I was referring to the fact that everybody says that a slowdown in Chinese economy will occur due to bursting of real estate bubble, but no one says that in case of India. In fact no one even believes that India is in a bubble.

Further, economists predict that India will grow faster than China from 2012 onwards because of slowdown in China (real estate etc etc). I mean it is insane to neglect such warnings signals in real estate market.
 
Another question: Can we expect the BRIC financial crisis in 3-4 years?

At least we know for sure that India and China, by far the biggest growth contributors, are in serious real estate bubble. Russia and Brazil are basically commodity exporting countries. The moment China and India pop, we can expect Russia and Brazil to follow suit.
 
The world is more depended on china in terms of offshore zone than india. Look what happens to big western manufacturers and therefore their domestic economies if Chinese bubble cause economic cataclizms in China - like increased unemployment or inflation. Inflation can cause the employees' demand for high wages to preserve the same purchasing power as they had prior to increased prices, which will be the direct hit to the western firms outsourcing to China. We both agree that Chinese market is 5 times as big for outsourcing as India right?! So it'll definitely have greater impact on western corporations moving offshore rather than Indian bubble threat.
 
@ Tsotne

I totally agree with you. In fact, I don't even challenge the point that China will have more impact on global economy. Just read my post #3 and #4. However, I think China and India have different fields of expertise. I believe we can safely say that China just cannot compete in terms of IT with India (Most IT jobs are outsourced to India) Similarly, India cannot compete with China in terms of manufacturing.

It is just that no investment adviser (on buying stocks in India) comments on the risks that might be there. They all picture a hunky dory story. India is the place to Invest; India's banks are the safest, etc etc and all kinds of B.S.

Further, just see dubai. Until prices were going through the roof, no one even predicted or talked about bubble in its real estate market,a and when the bubble burst, the whole world knew. And Dubai is only 1/20th of India.
 
Correct. BTW, India and pakistan has very good IT specialists and I have many Indian programmer friends. And I don't resist the point you raise. I simply don't see the surprise when Chinese bubble causes many talks and Indian doesn't, according to the point I stated above. Talks about bubble is a matter of fear. Who fears most. Indian investors should be more concerned in the bubble burst chances than Americans since in real estate itself, even if it's highly visible, international reaction is expected to be lower because of the possibility of impact strength caused from burst.
 
I agree with you. Now, what if China and India burst simultaneously, like US and Europe (at-least many parts -UK/Spain/Greece), first of all we will have an Asian financial crisis of the scale 10 times the last one. Secondly, Brazil and Russian economies will be grave danger.

But more importantly, economies such as India and China risk stagnation (see Brazil in 1980's), something that they can ill-afford, unlike western economies. These governments cannot afford to take high debts without immediate major financial consequences, unlike US or UK.

The last thing, what if inflation still persists, because of crash in their local currencies and commodity prices do not fall at all (European and American economies start booming).

Europe + US are still several times bigger than India + China.
 
Such "overlapping" economies are sure to cause harm for US and Europeans too and I'll tell why. I'm more aware of China than India so I'll provide Chinese examples.

If we look at the Chinese financial politics we'll quickly discover that they are looking into the future by "giving" money to their feeders. Take a look at the annual purchase of US treasury securities by China. They are receiving money as a form of offshore investment from US and Europe and putting those yields back to US economic health in order to maintain "healthy feeder". These all happens while the mainland of Chinese population is poor. So they are focusing on long term system. That's why I think that Asian collapse as you mention will cause harm to other big economic players.
 
But Federal Reserve itself proved that even buying truckloads of treasuries makes little difference to their interest rates. See March 2009 QE1. Further, late 2010 China bought fewer treasuries, as a result rates still didn't rise much. In fact I remember that in 2010 UK cut its treasury holdings by almost $300B, but still nothing major happened. Treasury markets are indeed the most liquid markets in the world. Now, let us say China were to say sell all its $1T holdings and at the same time Fed were to monetize it, that supply of treasury would never even reach the market, so the markets will remain unaffected. Also, the data on Chinese holdings is at best a guess. By the time we know that China sold its holdings, Fed would have already bought it.

I doubt that China puts any decent amount of money in Europe. Couple of billion dollars here and there wouldn't make much difference.

See Japan collapse in 1990. Japanese GDP was almost the same as US's, still no effects could be seen in US equity markets.

Asian Financial crisis 1997, and US was literally booming on the back of .com boom.

In fact even now, a collapse in many European economies is having NO impact on German economy (Q1 -5.2% yoy), even though people were ranting that Germany exports everything to these Euro currencies. Similarly a collapse in Greece+ Portugal +Ireland couldn't have much impact on US, even though such countries had major external debt holders.

Also, just see post #46. I said, if US and Europe were to boom. Now if they started to boom, their deficits would quickly fall back (see Germany), their domestic population could easily support that much borrowing.

Frankly speaking, I believe that China's role is too much overstated. It actually does more harm than good to western economies (cheap products destroying local industries, overpriced commodities (fueled by real estate and construction bubbles), et etc). China is much much less integrated with the world in Financial terms : if a Chinese bank were to collapse, it would have no affect on world economy, as its activities are limited to China (unlike say a Lehman Bros, GS, MS). Further, if China and India could rise comparatively unscathed from GFC 2008, with US+Europe and rest of the world almost collapsing, I believe so can US and Europe. I believe that the effects that you talk about and temporary. Also, I talked about inflation in their local economies as a result of collapse in their currency. This inflation will have no effect on US and Europe, as this will be a localized event.
 

Question: how to regconize real eastate bubble? :) ​
Click to expand...
​
The best way, in my opinion, is to determine the price/income. The higher the ratio, the more frothy the market is. For this reason, I posted the per capita incomes and real estate prices of Shanghai/Mumbai/NY/London etc.​
 
Jacksc said:
Question: how to regconize real eastate bubble? :)
Click to expand...

I don't think there is a "great" way to identify a bubble anywhere. I like to look for signs of excessive speculative activity.

For example, when oil hit 116 recently, "speculators" were reported to hold 3x more oil than when oil was at 150... then it abruptly collapsed.
 
I don't think there is a "great" way to identify a bubble anywhere. I like to look for signs of excessive speculative activity.
Click to expand...

I completely agree with you on this. Even more difficult is to predict when the bubble will pop. The mania could go on for several years until it pops.

Though we can at-least identify bubbles, using prior precedence for benchmarking. So we can at-least avoid the risk of being caught unaware in a bust.
 
Jacksc said:
Question: how to regconize real eastate bubble? :)
Click to expand...

Difficult. In the early '70s the income-price ratio for property in NYC and London was at one level; today it's at another. Maybe on a national level one can -- though even then, the British ratio seems to have shifted upwards for good. The question should be: When national economies and the global economy are based on one bubble after another (because of the supremacy of finance capitalism and debauched fiat currencies), how can one protect oneself?
 
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