Thursday, March 27, 2008
The Most Important Article You Probably Didn’t Read This Week
The most important article you probably didn’t read this week appeared in the Wednesday edition of the Wall Street Journal, Section C, page 10 (in our edition), buried in “The Property Report” next to a Caldwell Banker advertisement.
Now, it is true that the most important article you probably didn’t read contains all the usual hair-raising things you’d expect to see about the real estate market, including “developers under siege,” “signs of weakness in key markets,” developers “slashing prices,” and the head of a major builder advising “that people wait three to four years before purchasing a new home.”
But the most important article you probably didn’t read is not about real estate markets in Naples, Florida, or Sacramento, California.
It is about China.
Tables Turn Quickly on Chinese Developers
After Buying Up Land, Firms Can't Raise Enough Cash to Build
By JONATHAN CHENGMarch 26, 2008; Page C10
HONG KONG -- Just six months ago, Chinese property developers were on a shopping spree, dipping deep and borrowing heavily to snap up more, and more expensive, pieces of land.
How quickly things have changed.
Three months into 2008, China's property developers are under siege. Property prices are showing signs of weakness in many of the country's key markets, and capital markets have all but seized up for these -- and other -- offerings. The Chinese government is on a high-profile campaign to clamp down on new bank loans, hoping to curb inflation, rising at its fastest clip in a decade.
There follows fourteen more paragraphs with some of the most graphic detail on the currently imploding Chinese real estate market that has yet to appear in a major business publication, and most likely you didn't read it.
At least, we assume you didn’t read it because the article didn’t make the top 10 “Most Viewed” or even the 10 “Most Emailed” in the online version of the Wall Street Journal, thanks to its being buried in a bunch of boring real estate ads on Page C-10.
If we here at NotMakingThisUp ran the joint, the story would have been the entire front page, under a banner headline on par with the Apollo Moon Landing, Dewey Defeats Truman, and Hillary Dodges Bullets in Bosnia.
How the Journal’s front-page editors missed breaking the greatest new story of 2008 is beyond us. Maybe Rupert Murdoch doesn’t want to upset his friends in China, what with the Olympics coming and Tibet trying to escape Chinese suppression and all.
In any event, we urge you to stop reading this and head straight to the Journal’s web site. Read the article carefully and then print it out for your files.
Yesterday's article will be “Exhibit 1” in what will become, we suspect, a very fat file on the impending Chinese Real Estate Implosion.
I Am Not Making This Up
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The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 8:03 AM