Peter Suderman on Why Obamacare Means What Obamacare Says

Is it possible to discern congressional intent by
examining what was never said? In the wake of last week’s circuit
court ruling that, contrary to the Obama administration’s current
implementation, Obamacare does not allow insurance subsidies in
federally run health exchanges, supporters of the law and reporters
who covered it have argued as much. No one in Congress ever said
that subsidies were limited to state-run exchanges, their argument
goes, and the idea was unheard of before critics of the health law
decided to challenge the administration in court.

It’s true that the legislative history isn’t particularly
revealing. The issue of whether subsidies would be available in
federally established exchanges was rarely if ever brought up prior
to the law’s passage.

Thankfully, writes Reason Senior Editor Peter Suderman,
there’s no need to infer from what wasn’t said. There is a clear
record of congressional intent in the plain text of the legislation
that Congress voted into law.

View this article.

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The Ugly Aftermath of America's Intervention in Libya

Remember when NATO’s intervention in Libya was supposed to
be an example of a war that worked? Three years after the
U.S. helped overthrow the regime of Col. Muammar el-Qaddafi,
The New York Times
reports
, the

Welcome to Libya.country is coming undone. Relentless factional
fighting in Tripoli and in the eastern city of Benghazi has left
dozens of people dead. Well-known political activists have been
killed, diplomats have been kidnapped, and ordinary citizens fear
bandits on the roads.

Water and electricity shutdowns have become more frequent than at
any time since the chaos after Colonel Qaddafi’s fall, and fuel has
disappeared from Tripoli’s gas stations. On Sunday, several Western
nations advised their citizens to leave immediately. Gunmen
attacked a convoy of British diplomats….

This time, the fighting in Tripoli seems at least partly fueled by
the campaign of a general named Khalifa Hifter, who vowed in May to
rid the country of Islamist militias. He and his self-proclaimed
national army have focused their fight in Benghazi, where daily
battles with the militias have settled into a deadly
stalemate.

Mr. Hifter has won support from Libyans who fear the growing
assertiveness of extremists, especially in eastern Libya. But his
campaign has also stirred new divisions, and violence, across the
country. Militias from the coastal city of Misurata that oppose Mr.
Hifter have been clashing for weeks around the Tripoli airport with
fighters from the mountain city of Zintan, who support
him.

Any glimmers of a potential peace? Well, the forces battling for
control of Tripoli’s airport agreed to a
cease-fire
last night—but only to give firefighters a chance to
try to put out a gigantic fire that a missile set off at an fuel
depot. After 24 hours, the truce is scheduled to expire.

The Atlantic‘s Conor Friedersdorf
comments
: “At the very most charitable, the common
interventionist claim that Libya vindicated them in their dispute
with non-interventionists was wildly premature.” At the very most
charitable, yes.

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The Ugly Aftermath of America’s Intervention in Libya

Remember when NATO’s intervention in Libya was supposed to
be an example of a war that worked? Three years after the
U.S. helped overthrow the regime of Col. Muammar el-Qaddafi,
The New York Times
reports
, the

Welcome to Libya.country is coming undone. Relentless factional
fighting in Tripoli and in the eastern city of Benghazi has left
dozens of people dead. Well-known political activists have been
killed, diplomats have been kidnapped, and ordinary citizens fear
bandits on the roads.

Water and electricity shutdowns have become more frequent than at
any time since the chaos after Colonel Qaddafi’s fall, and fuel has
disappeared from Tripoli’s gas stations. On Sunday, several Western
nations advised their citizens to leave immediately. Gunmen
attacked a convoy of British diplomats….

This time, the fighting in Tripoli seems at least partly fueled by
the campaign of a general named Khalifa Hifter, who vowed in May to
rid the country of Islamist militias. He and his self-proclaimed
national army have focused their fight in Benghazi, where daily
battles with the militias have settled into a deadly
stalemate.

Mr. Hifter has won support from Libyans who fear the growing
assertiveness of extremists, especially in eastern Libya. But his
campaign has also stirred new divisions, and violence, across the
country. Militias from the coastal city of Misurata that oppose Mr.
Hifter have been clashing for weeks around the Tripoli airport with
fighters from the mountain city of Zintan, who support
him.

Any glimmers of a potential peace? Well, the forces battling for
control of Tripoli’s airport agreed to a
cease-fire
last night—but only to give firefighters a chance to
try to put out a gigantic fire that a missile set off at an fuel
depot. After 24 hours, the truce is scheduled to expire.

The Atlantic‘s Conor Friedersdorf
comments
: “At the very most charitable, the common
interventionist claim that Libya vindicated them in their dispute
with non-interventionists was wildly premature.” At the very most
charitable, yes.

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Canadian Doctor Quarantines Himself Over Ebola Fears After Returning From Liberia

Earlier today we wondered, rhetorically, if the CDC was wrong when it stated, with confidence, that there is “little risk” for the Ebola virus to leave the African continent, and cross the Atlantic, landing in North America. We may have gotten the official refutation less than 6 hours later, when moments ago Canada’s CTV reported that a Canadian doctor is in self-imposed quarantine after spending nearly a month in West Africa treating patients in the deadly Ebola outbreak that has claimed nearly 700 lives. “Dr. Azaria Marthyman of Victoria, B.C. was among a handful of Canadian health-care workers who traveled to Liberia, where the Ebola epidemic is currently raging. He was part of a North American team from the Christian relief organization Samaritan’s Purse.” This is the same charity organization whose two US citizen members were previously reported to have caught the virus.

Dr. Azaria Marthyman of Victoria, B.C. is seen putting on protective
gear before treating Ebola patients in Liberia.

Dr. Marthyman worked at the agency’s facility in Liberia’s capital, Monrovia, before returning to Canada last Saturday. While he has not tested positive for the disease, he has quarantined himself as a precaution.

And immediately, the attempt to spin this as good news emerges: “Azaria is symptom-free right now and there is no chance of being contagious with Ebola if you are not exhibiting symptoms,” Melissa Strickland, a spokesperson for Samaritan’s Purse, told CTV Vancouver Island.

That last statement may be worth a #timestamp, especially considering that one of Marthyman’s colleagues with Samaritan’s Purse, Dr. Kent Brantly, is confirmed infected. The 33-year-old married father of two children is undergoing intensive treatment for the disease, but has been able to speak with doctors and work on his computer.

From CTV:

Health care workers undergo rigorous decontamination processes to avoid infection.

 

“It takes about 45 minutes to suit up before going into the isolation area,” Marthyman said by telephone.

 

His journey to West Africa is not his first to an area ravaged by disease or disaster. Last year, he travelled to the Philippines to provide medical care to victims of Typhoon Haiyan. In 2010, he joined a medical team that treated patients affected by a cholera epidemic in Haiti.

 

In an interview prior to his trip to Haiti, the father of seven shared why he risks his life to help others.

 

“We have this slogan at home that we always say at the table, and it’s ‘do your share and let the love go around,’” Marthyman said.

We congratulate Dr. Marthyman for doing the right thing, and we certainly hope that all of his Ebola tests turn out negative.




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Is Hong Kong-US Dollar Link About To End? HKMA Buys $715 Million To Support Peg

Yesterday saw something quite unusual in the New York trading session. The Hong Kong Monetary Authority bought $715 million (selling HKD) in the FX markets to manage its currency peg, injecting the money into the banking system (and expanding its balance sheet) to prevent HKD from rising above its permitted range. HKMA projects its balance sheet to grow to the end of July, but as Simon Black (of Sovereign Man blog) notes, this could well be the start of a bigger shift – an end to the US Dollar peg“The US is no longer the undisputed superpower it once was. The US dollar is dragging them down. Hong Kong is easily strong enough to stand on its own.”

 

HKMA’s balance sheet is surging – HKD demand pressuring peg, thus buying USD (and selling HKD) to manage peg…

 

Is this the beginning of the end of the HKD peg to the US Dollar? (via Simon Black of Sovereign Man blog)

It was a different world in 1983.

 

Michael Jackson invented the Moonwalk. Return of the Jedi opened in theaters across the world. IBM released its most advanced personal computer yet– the XT, with a standard 10 megabyte hard drive.

 

And after nearly a decade of eratic swings and collapses, the Hong Kong government pegged its currency (the Hong Kong dollar) to the US dollar at a rate of 7.80 HKD per USD.

 

This was a big move for Hong Kong. The Hong Kong dollar had originally been backed by silver until 1935 when, facing a shortage of precious metals, they pegged it to the British pound.

 

This made sense in 1935 as the British pound sterling was still (barely) the world’s top reserve currency.

 

But things changed. In 1972, Hong Kong broke from the pound and adopted a new peg to the US dollar.

 

This didn’t last either. After just two years, the US government’s rising debt and inflation forced Hong Kong to abandon the US dollar peg.

 

At that point Hong Kong was well-known and stable… so why bother pegging the currency at all? The HKD floated freely in the marketplace, just like any other currency.

 

It went well for them at first. But by the early 1980s, the Hong Kong dollar had become much weaker due to jitters over the island’s reunification with China.

 

Finally, in 1983, they re-established a peg with the US dollar. And at the time, this probably made a lot of sense.

 

In 1983, Fed Chairman Paul Volker had established tremendous international credibility, both for the US dollar as well as the Federal Reserve. And most of all, Hong Kong was in need of a strong anchor.

 

But 31 years later the world is entirely different.

 

Michael Jackson is no longer with us. The world has sat through three completely lame Star Wars prequel movies. Even the cheapest mobile phone has more storage capacity than the IBM XT.

 

And both the Fed’s and America’s credibility have waned.

 

Today Hong Kong is one of the world’s richest economies. When compared with the US, nearly every objective fundamental about Hong Kong’s economy is stronger.

 

Its fiscal balances are higher. The government runs a budget surplus. Government debt is a rounding error. It’s a night and day difference. There’s no reason why these two currencies should be linked.

 

Theoretically, Hong Kong’s currency should be much stronger than the peg allows. But its purchasing power is being artificially supressed.

 

This means that residents of Hong Kong pay more for products and services than they should, including basic staples like food (90% of which is imported).

 

But after three decades, things are starting to get interesting.

 

Just recently the Hong Kong dollar hit the upper limit of its allowable range– exactly 7.7500. And the Hong Kong Monetary Authority has had to spend billions of dollars to defend the peg.

 

The reasons are unclear, though it’s entirely possible that investors are attacking the peg, similar to what happened to the pound back in the 1990s. We could be in the early stages of such an assault.

 

Even if not, it’s time for a change.

 

These currency pegs are not set in stone; Hong Kong has changed its own peg several times. And the basic fundamentals which led them to the US dollar in 1983 have changed completely.

 

The US is no longer the undisputed superpower it once was. The US dollar is dragging them down. Hong Kong is easily strong enough to stand on its own.

 

Bottom line, there’s no longer any benefit in maintaining the peg. Yet the costs (inflation, asset bubbles) are too high. This will eventually right itself.

 

For the last several years, we’ve been recommending that our readers hold Hong Kong dollars– especially if you normally hold US dollars.

 

The currency is still pegged to a very narrow band, so the most it would fluctuate is 1.27%.

 

But if the Hong Kong government revalues the Hong Kong dollar, the gain could easily be 30% or more if they simply revalue to the level of the renminbi.

 

Given the limited downside risk, this is a very safe bet to make.

 

The best way to do it? Open a bank account in Asia.

*  *  *

Between China unveiling stealth QE, the strengthening of CNY and now the upward pressure on HKD, something is afoot under the surface as The Fed nears the end of QE.




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Former Aide to Bill Clinton Speaks – “My Party Has Lost its Soul”

Screen Shot 2014-07-29 at 10.37.26 AMOne reason we know voters will embrace populism is that they already have. It’s what they thought they were getting with Obama. In 2008 Obama said he’d bail out homeowners, not just banks. He vowed to fight for a public option, raise the minimum wage and clean up Washington. He called whistle-blowers heroes and said he’d bar lobbyists from his staff. He was critical of drones and wary of the use of force to advance American interests. He spoke eloquently of the threats posed to individual privacy by a runaway national security state.

He turned out to be something else altogether. To blame Republicans ignores a glaring truth: Obama’s record is worst where they had little or no role to play. It wasn’t Republicans who prosecuted all those whistle-blowers and hired all those lobbyists; who authorized drone strikes or kept the NSA chugging along; who reneged on the public option, the minimum wage and aid to homeowners. It wasn’t even Republicans who turned a blind eye to Wall Street corruption and excessive executive compensation. It was Obama.

A populist revolt among Democrats is unlikely absent their reappraisal of Obama, which itself seems unlikely. Not since Robert Kennedy have Democrats been so personally invested in a public figure. Liberals fell hardest so it’s especially hard for them to admit he’s just not that into them. 

– From Bill Curry’s excellent article in SalonMy party has lost its soul: Bill Clinton, Barack Obama and the victory of Wall Street Democrats.

Bill Curry’s article published this past Sunday by Salon is simply extraordinary. One of the things I’ve felt has been lacking in America for some time is the ability for well-meaning people within the “power structure” to look inward and be honest with themselves about the immoral decay fellow members of its socio-economic class have wrought upon the nation via a singleminded pursuit of wealth and power. A perfect example of an ignorant, destructive oligarch completely devoid of self-awareness was put on full display earlier this year when Sam Zell appeared on Bloomberg TV and essentially said the poor just need to act more like the rich.

continue reading

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FAA Grounds College Students Pursing Drone Degrees

In drone school, students study math and
learn robotics. What they do not do is fly drones.

That’s because per Federal Aviation Administration (FAA) rules,
unmanned aerial vehicles cannot be operated for commercial
use—and
that applies to for-profit teaching programs.

To get around the rules, schools like Embry-Riddle Aeronautical
University train students on flight simulators or have students fly
drones indoors.


But this restriction is still likely to stifle academic
research, according
to a lengthy letter signed by 29 professors and sent to the
FAA.

The letter details several issues that concern drone
enthusiasts:

1. Unprecedented Expansion of FAA Jurisdiction

The Interpretative Rule states that “the FAA intends to apply
its enforcement authority to model aircraft operations that
endanger the safety of the National Airspace System
(NAS).”While federal statutes in place since 1926 grant the FAA
authority to regulate the navigable air space, understood to be the
airspace above approximately 500 feet altitude in most areas, the
NAS is a term that the FAA now implies comprises all airspace in
the United States, including our campuses, private backyards,
and possibly even inside buildings.

2. Unreasonably Broad Definition of “Aircraft” 

The Interpretive Rule also vastly expands the conventional
definition of “aircraft” to include, in a most literal sense, “any
contrivance invented, used, or designed to navigate, or fly
in, the air”. Objects the size of butterflies and
even toys that are “used in the air” appear to be gaining
the rights, regulatory obligations, and federal protections
afforded to full-sized passenger aircraft.

3. Unwarranted Distinction between Recreational and Commercial
Model Aircraft

The regulatory distinction between “recreational” and
“commercial” use of model aircraft is troubling in that the FAA has
not substantiated how this distinction promotes safety. It is
concerning, for example, that a ten-year-old hobbyist can freely
fly model aircraft for recreation, while our
nation’s scientists, engineers, and entrepreneurs are
prohibited from using the same technology in the same types of
environments.

Private for-profit schools are not the only ones getting on the
FAA’s nerves.
Last year, the agency sent letters to two public universities
telling them to shut down their drone journalism programs.
The
University of Missouri and the University of Nebraska-Lincoln were
both told to halt their programs and obtain Certificates of
Authorization. The process for being granted a certificate can take
several months. The schools had been trying to operate under the
rules set for recreational use of model aircraft. But the FAA
didn’t consider the programs as recreational.

The FAA considers the journalism drones to be “public aircraft”
and the university to be a public operator, which places it in a
more restrictive category than amateurs.

Under amateur rules, unmanned aircraft must stay under 400 feet
and conduct flights away from populated areas. Under the more
restrictive rules, the program must designate a small area—up to 2
square miles—and provide proof of the airworthiness of each
vehicle.

Entrepreneurs, researchers, and students trying to use drones in
new innovative ways will have to continue to wade around in murky
waters because the FAA has not finished writing its drone
regulations. Congress gave the agency to September 2015, but
according to a report from the Department of Transportation’s
inspector general’s office,
the FAA is “significantly behind schedule” will likely not meet the
deadline. 

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Millennials Less Sympathetic to Israel Than Older Americans

It’s another
destructive, deadly
day in Gaza. Twenty-two days into the
current iteration of this conflict, despite the fact that Israel
and the U.S. are snapping
at each other
, Israel remains the sympathetic party in the eyes
of many Americans. But millennials are drifting away from that
norm.

The latest Pew Research Center poll, which was published
yesterday,
shows
that Americans aged 18 to 29 are pretty divided. When
asked about “Israel’s response to the conflict with Hamas,” 31
percent said it’s been “about right.” Nearly as many, 29 percent,
said that it’s “gone too far.” Tellingly, only 7 percent of young
Americans believe it has “not gone far enough.”

By contrast, in the older age demographics (50-64 and 64+) 16
and 18 percent, respectively, believe that Israel’s use of force
hasn’t gone far enough. Generation Xers are a bit closer to
millennials’ views in some respects; 34 percent say Israel’s
response has been about right, while 30 percent say it’s over the
top. But again, 16 percent believe Israel’s military action should
be more aggressive.

In fact, with the exception of self-described “liberal”
Democrats, 44 percent of whom say the Jewish state has gone too far
while only 7 percent say it’s not enough, every other demographic
polled – whether political independents or Republicans; college
graduates or high school dropouts; blacks, whites, or Hispanics;
men or women – have double digit support for Israel ramping up its
campaign against Hamas.

Notably, general support for Israel in its grappling with
Palestine has been eroding in the last few years, though a hawkish
minority has grown: In January 2009, the percent of Americans
willing to say that Israel’s tactics are “about right” has dropped
15 percentage points from 50 to 35, while those who believe it
should go further has nearly doubled from 7 percent to 15
percent.

Although it’s outside of the scope of Pew’s research at hand,
it’s worth noting that the numbers fit into a trend that
Reason-Rupe’s own polls have been shedding light on: Millennials
are politically unclaimed, but see Democrats as the
less bad option
on
some issues
such as foreign policy.

Likewise, the drop in general support may reflect what
Reason‘s Jesse Walker noted last week:
the American public doesn’t have much of a stomach for
war

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An Ebola Epidemic Will Not Happen in the U.S.

EbolaUSA Today features a
slightly alarming headline:
Ebola Only an Plane Ride Away from USA
. Of course that is true,
but that does presage the possibililty of a widespread epidemic
here? No. Why not? Because my fellow Americans would go seek
treatment when they feel ill and would submit to quarantine if
diagnosed with the disease. Contrast this with how the New York
Times

reported
some West Africans are sadly confusing correlation
with causation:

Eight youths, some armed with slingshots and machetes, stood
warily alongside a rutted dirt road at an opening in the high
reeds, the path to the village of Kolo Bengou. The deadly
Ebola
virus is believed to have infected several people in the
village, and the youths were blocking the path to prevent health
workers from entering.

“We don’t want any visitors,” said their leader, Faya
Iroundouno, 17, president of Kolo Bengou’s youth league. “We don’t
want any contact with anyone.” The others nodded in agreement and
fiddled with their slingshots.

Singling out the international aid group Doctors Without
Borders, Mr. Iroundouno continued, “Wherever those people have
passed, the communities have been hit by illness.”

Health workers here say they are now battling two enemies: the
unprecedented Ebola epidemic, which has killed more than 660
people
in four countries since it was first detected in March, and fear, which
has produced growing hostility toward outside help. On Friday
alone, health authorities in Guinea confirmed 14 new cases of the
disease.

Workers and officials, blamed by panicked populations for
spreading the virus, have been threatened with knives, stones and
machetes, their vehicles sometimes surrounded by hostile mobs. Log
barriers across narrow dirt roads block medical teams from reaching
villages where the virus is suspected. Sick and dead villagers, cut
off from help, are infecting others.

“This is very unusual, that we are not trusted,” said Marc
Poncin, the emergency coordinator in Guinea for Doctors Without
Borders, the main group fighting the disease here. “We’re not
stopping the epidemic.”

Efforts to monitor it are grinding to a halt because of
“intimidation,” he said. People appear to have more confidence in
witch doctors.

Despite the scary headline, the USA Today article does
note:

Yet while Ebola is a fearsome disease, the virus “would not pose
a major public health risk” in the USA, [Michael] Osterholm,
[director of the Center for Infectious Disease Research and Policy
at the University of Minnesota] says.

That’s because people need to be in intimate contact to spread
the virus, Osterholm says.

Ebola is actually much harder to spread than respiratory
infections, such as influenza or measles. Those viruses pose a much
greater threat on a plane or in any confined space, says Osterholm,
who notes that people cannot spread the Ebola virus simply by
sneezing or coughing.

Ebola also can only be spread by people with active symptoms,
[Stephan] Monroe, [deputy director of the CDC’s national center for
emerging and zoonotic infectious diseases] says.

“No Ebola cases have been reported in the United States and the
likelihood of this outbreak spreading outside of West Africa is
very low,” says Monroe, who says that the CDC has sent 12 experts
to Africa to help with the crisis. “While it’s possible that
someone could become infected with Ebola in Africa” before boarding
a plane to the USA, “it’s very unlikely that they would spread it
to other passengers.”

Ebola does spread readily through body fluids, such as blood and
saliva, Osterholm says. On a plane, a sick person could potentially
contaminate the bathroom if he or she vomits or has diarrhea…

Hospitals in the USA are on high alert for Ebola, however, and
would quickly isolate anyone with suspicious symptoms who has
recently returned from Africa, Osterholm says.

“Right now, we’d have to assume every case is an Ebola case,” in
people with suspicious symptoms, Osterholm says.

In a worst-case scenario, Osterholm says, a handful of emergency
room workers could be exposed before a sick person is
diagnosed.

That being said, if you’ve traveled to West Africa recently and
begin to experience fever, muscle aches, chills, sore throat,
vomiting and diarrhea, a rash and start bleeding all over the place
– go see a doctor.

For more background, see my 2003 column, “Disease,
Public Health, and Liberty
,” analyzing when quarantine is
appropriate.

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Why China Couldn't Care Less About Its Stock Market

Following the latest liquidity injections by the PBOC (set to make 2014 the biggest credit creation year since Lehman), countless bailouts of insolvent companies by Beijing and local governments despite promises there would be no bailouts, and what some have dubbed is an actual Chinese QE, all making it quite clear that China was clearly not serious when it threatened to burst the housing bubble (it hoped it could do a “controlled landing”; it failed which means full steam ahead onto the inevitable NPL collapse), Chinese stocks have clearly responded by jumping higher with the Shanghai Composite spiking to its highest in 7 months.

This in turn has brought the permabullish Chinese penguins out of hiding, who, having been wrong on the Shanghai Composite for 6 years, now see a sudden resurgence in the Chinese stock market. Their thinking is predictable: like the US stock market is to the Fed’s “wealth effect”, so China’s would be to the PBOC, right?

Wrong.

The reason: while in the US the bulk of America’s $67 trillion in household wealth is in financial assets, read the S&P 500, with only 28% of wealth invested in real estate (according to the latest Flow of Funds reports), in China the wealth distribution is a mirror image, with a negligible amount of wealth invested in stocks and the bulk of household wealth invested in real estate. By bulk we mean a whopping 75%!

From Xinhua:

About one percent of Chinese households own one-third of the nation’s wealth, raising concerns about income inequality in the world’s most populous country, according to a study by Peking University.

 

Chinese households on average had a net worth of 439,000 yuan (about 71,000 U.S. dollars) in 2012, up 17 percent from the 2010 level, the university’s Institute of Social Science Survey said Friday in its latest report on China’s livelihood development.

 

However, income inequality rose rapidly during the period, the report said, as the top one percent of Chinese households held more than one-third of the nation’s wealth, while 25 percent of households at the bottom owned only 10 percent of the country’s property value.

 

The researchers based their main analysis on 2012 data from the China Family Panel Studies, a large-scale survey project conducted by the institute.

 

The report showed about 74.7 percent of Chinese household wealth came from owning real estate.

Which confirms what we have been saying for years namely that “to China housing is like the stock market to the US: both mission-critical bubbles designed to give a sense of comfort and boost the “wealth effect”.”

The allocation of household wealth to real estate is shown in the chart below, but the message is clear: when it comes to chasing China’s latest and greatest bubble reflation, focus on real estate; nobody cares about Chinese stocks.




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