The market is pre-occupied with the demise of China’s real estate sector, but my macro take remains one of “what happens in Vegas, er, China, won’t stay in China” and will have to happen in the rest of the world as well. The only difference here is the timeline – which in China’s case is here and now while in Europe it will emerge from unsupportable demographics as ever more young voters are disenfranchised just as the largest demographics with bloated pension accounts are set for retirement….
The access to important aspirational assets like a well paid job and especially a decent house or apartment, has never been worse for the “have nots”. And it’s a direct consequence of the failed monetary policy of “trickle down” policies. QE and liquidity provision reward the already wealthy by pumping up asset values, so much so, that the idea I have stated earlier that “Karl Marx had the model right” is playing out again. Karl Marx got a lot wrong but his model of capitalism – he did invent the word, after all - is correct: Capital, labor and investment need to be allocated and float (upwards) simultaneously. Before some left leaning newspaper gets the wrong idea, I am a still a card carrying, socio-liberal economist with a taste for objectivism and liberal thinking, but first and foremost I am a “thinking human being”, who believes justice, social contracts and equal opportunity to access what our world has to offer drives us all to a better life and world.