As President Trump’s “Infrastructure Week” comes to an ignominious end, NIRP Umbrella’s Alex Deluce reminds us that spending money on bridges to nowhere and cities of the future is anything but the stimulating panacea it is talked up to be…
Is a Chinese credit bubble in the cards? Well, it will be interesting to see if China’s authorities can get through the unwind of US $3 trillion worth of excess credit and the distressed debt on banks’ balance sheets.
From 2009 to 2016, more than 10 trillion of Chinese investment was thrown at infrastructure, ghost cities, and corruption thanks to a helping hand from the Chinese banks and foreign lenders eager to participate in the Chinese growth story.
In fact, hundreds of new cities in China are essentially empty. The hope is that rural population someday move in.
Roughly 40% of the 300 million Chinese expected to move into a town by 2030 will mostly be moving to smaller cities in the ‘chengzhenhua’ system.
As OfTwoMinds’ Charles Hugh Smith recently explained, building bridges to nowhere isn’t just a waste of money in the present; it saddles the economy with productivity-draining costs for decades to come.
This post was published at Zero Hedge on Jun 10, 2017.