A Threat to Global Economic and Financial Stability

January 29, 2010
There is an emerging real-estate bubble in China. Ultra-loose monetary policy in the U.S. and an over-the-top stimulus plan in China, coupled with a pegged yuan, have created optimal bubble conditions. BusinessWeek reports that in Beijing’s Chaoyang district, a typical 1,000-square-foot apartment sells for 80X the income of the average resident. Sound troubling? The Chinese leadership is concerned. Monetary policy is being tightened, and the government is reimposing a tax on home sales. A hard landing for the Chinese real-estate market is a real risk to global economic and financial stability. If China falters, there will be blowback across global financial markets. Is your portfolio protected? In my monthly strategy reports, I provide specific guidance on how to insulate your portfolio from global economic risks.