A Cautionary Housing Tale from Japan
- Thread starter Andrew_A
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Not that I think Australia (or the US) is anywhere near the psychotic levels the Japanese reached in the last 80's. A reading of books (precious few) and articles about that time are sobering. Japanese banks (egged on by the MITI and their own relationships with the various keiretsu) lent money with no risk assessment. They lent money for conglomerates (and some previously unknown people) to buy Japanese as well as US property at simply ridiculous prices. I vaguely remember (I must have been 12 or 13) there were genuine fears that Japan would just buy up New York and Hawaii.
I've read a few Japanese novels (business fiction) about the end of the bubble, and it's genuinely scary what happened. Securities houses promising to reimburse clients for corporate finance losses, etc.
It's not that much of a leap to see the parallels in Chinese banking today. Chinese banks, with very little experience of risk assessment, egged on to lend to state-owned enterprises and entrepreneurs with political connections.
Alex
I've read a few Japanese novels (business fiction) about the end of the bubble, and it's genuinely scary what happened. Securities houses promising to reimburse clients for corporate finance losses, etc.
It's not that much of a leap to see the parallels in Chinese banking today. Chinese banks, with very little experience of risk assessment, egged on to lend to state-owned enterprises and entrepreneurs with political connections.
Alex
...and family connections. There's still a huge familial influence on lending money to family, extended family, and family friends, and when they default on the loan, it would be "losing face" to forclose on the loan. Not a good lending situation to be in.
cheers
Sharon
hi all
one interesting thing that has been lost in this story.
and that is that the loan is on the property not the person so they do a two generation loan 60 years and the person taking the loan is the dad and his son how would an australian bank get a 3 year old to sign for the loan for the next 30 years.
it shows to me a very interesting different between what Australian lenders want and think and asian lenders want and think.
Australian lenders lend to a person and require the person to repay the loan.
the asian lenders lend to the property and require the person owning or controlling the property to pay the loan they are two very different things.
we have not got to the
it does not matter what you earn as long as a the property is loaned to a value that if we had to sell we would be able to get the money back
and b is your networth
worth us investing in you.
alex I won't try to defend the asian way of doing business but will say a couple of things.
both japan china and to some degree indo china are not the only places that use connections to do business
it was and still is the most effective way
enterprises and entrepreneurs with political connections
one interesting thing that has been lost in this story.
and that is that the loan is on the property not the person so they do a two generation loan 60 years and the person taking the loan is the dad and his son how would an australian bank get a 3 year old to sign for the loan for the next 30 years.
it shows to me a very interesting different between what Australian lenders want and think and asian lenders want and think.
Australian lenders lend to a person and require the person to repay the loan.
the asian lenders lend to the property and require the person owning or controlling the property to pay the loan they are two very different things.
we have not got to the
it does not matter what you earn as long as a the property is loaned to a value that if we had to sell we would be able to get the money back
and b is your networth
worth us investing in you.
alex I won't try to defend the asian way of doing business but will say a couple of things.
both japan china and to some degree indo china are not the only places that use connections to do business
it was and still is the most effective way
enterprises and entrepreneurs with political connections
Another is that "uncle's" monthly interest bill would have been (a lot?) less on his $1+m property than an Aussie with a qtr mil mortgage.
In those heady days Japanese owned large tracts of FNQ but lost a lot of money in the same manner Skaife did.
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Yes Gross, I can see your point....
The banks are just big hands off landlords....
The banks are just big hands off landlords....
hi alex
this maybe off this thread and I did it as a separate becuase it could be moved if need be.
but to say
It's not that much of a leap to see the parallels in Chinese banking today. Chinese banks, with very little experience of risk assessment, egged on to lend to state-owned enterprises and entrepreneurs with political connections
is simply to me wrong. and here is why.
I won't try to defend an asian style of lending as I am sure they can defend themself but you need to understand that the style of lending is not the same as the western style of lending.
to say that.
Chinese banks, with very little experience of risk assessment is simply wrong
there lending risk management its higher then here in Australia
for a start for a development you don't get your hands on any money until the end
here you get 80% from any lender while constructing and if you go bust they chase you for the money
in china you get nothing until complete or what we call here lock up.
so you go bust
its well we have the building and you have no money.
you tell me which has the higher risk.
next here you build and you the get to 80% complete and you look for a buyer
there when you start the project you have a completed price that a body is going to pay you for it
so its persold before you start.
again which is the higher risk.
and third you have to get a decree if you want to get your profit out
so any funny business and your money is going no where
again do you think any western bank is going to say to its depositors sorry we think your a spruiker so we won't let you get your money out.
( aka henry kaye,mr bond, mr skase)
and last but not least
egged on to lend to state-owned enterprises and entrepreneurs with political connections.
you need to look at the development going on in china sit back have a bex
and see that the required infrastructure ( and all bhp steel) would not be possible with out lending
and then look at there banking sector with wallets with us dollars falling out
I'm sure that if the Australian government had the cash deposit that the bank of china has
parramatta rd would not be the sh-t hole it is and then because we had the cash and spent it on the road which we need and hollibrook got the contracts it would be the same
some one connected to hollibrook gave them the job,
what is missed is we need the road.
what is missed in your.
egged on to lend to state-owned enterprises and entrepreneurs with political connections.
is they need the roads, the rail, the suburbs, the coal mines, the hotels and the list goes on.
for me china is one of the oldest countries on this rock
it has one of the oldest money systems in the world long before the roman coin and for you to think that they have little or no risk management.
thats like going to meriton, or mirvac and say look guys I know you can't build so I'm here to help you
or even worse post that meriton and mirvac don't have a clue because they have very little experience of risk assessment.
thats my .002
this maybe off this thread and I did it as a separate becuase it could be moved if need be.
but to say
It's not that much of a leap to see the parallels in Chinese banking today. Chinese banks, with very little experience of risk assessment, egged on to lend to state-owned enterprises and entrepreneurs with political connections
is simply to me wrong. and here is why.
I won't try to defend an asian style of lending as I am sure they can defend themself but you need to understand that the style of lending is not the same as the western style of lending.
to say that.
Chinese banks, with very little experience of risk assessment is simply wrong
there lending risk management its higher then here in Australia
for a start for a development you don't get your hands on any money until the end
here you get 80% from any lender while constructing and if you go bust they chase you for the money
in china you get nothing until complete or what we call here lock up.
so you go bust
its well we have the building and you have no money.
you tell me which has the higher risk.
next here you build and you the get to 80% complete and you look for a buyer
there when you start the project you have a completed price that a body is going to pay you for it
so its persold before you start.
again which is the higher risk.
and third you have to get a decree if you want to get your profit out
so any funny business and your money is going no where
again do you think any western bank is going to say to its depositors sorry we think your a spruiker so we won't let you get your money out.
( aka henry kaye,mr bond, mr skase)
and last but not least
egged on to lend to state-owned enterprises and entrepreneurs with political connections.
you need to look at the development going on in china sit back have a bex
and see that the required infrastructure ( and all bhp steel) would not be possible with out lending
and then look at there banking sector with wallets with us dollars falling out
I'm sure that if the Australian government had the cash deposit that the bank of china has
parramatta rd would not be the sh-t hole it is and then because we had the cash and spent it on the road which we need and hollibrook got the contracts it would be the same
some one connected to hollibrook gave them the job,
what is missed is we need the road.
what is missed in your.
egged on to lend to state-owned enterprises and entrepreneurs with political connections.
is they need the roads, the rail, the suburbs, the coal mines, the hotels and the list goes on.
for me china is one of the oldest countries on this rock
it has one of the oldest money systems in the world long before the roman coin and for you to think that they have little or no risk management.
thats like going to meriton, or mirvac and say look guys I know you can't build so I'm here to help you
or even worse post that meriton and mirvac don't have a clue because they have very little experience of risk assessment.
thats my .002
hi all
the hardest part to educate both chinese management and western management is that there lending is very different and unfortunately for both sides they don't match.
so what you need to do is find a structure or system that can intergrate the two and that is very difficult if you don't think so ask macquarie as they still haven't done it.
the asian come to Australia and can't uderstand our lending practises.
the brokers here look at your client base and see how any of those are western european and how many are asian and you will see the disparity
and for me its simple when you ask a chinese, vietnamese, japanese to invest there are investing in you
They check the project to see if it will work
then they know that the loan is on the project but they invest in you.
our system of lending is not setup for the asian way of lending.
for me the best example is hsbc there lending criteria for lending in singapore is very different to here
I got a loan in singapore and tried to transport the same terms and conditions to hsbc here
using the management out of singapore to explain to the management in sydney and the end result was that they are separate
and they could not do the lending under that criteria so went to suncorp.
if chinese come to invest in Australia directly they will lose money and the same goes to Australians do direct investing into china , ( not all but I would say the majority)
and its a simple when the rich man meets the wise man.
my .002
the hardest part to educate both chinese management and western management is that there lending is very different and unfortunately for both sides they don't match.
so what you need to do is find a structure or system that can intergrate the two and that is very difficult if you don't think so ask macquarie as they still haven't done it.
the asian come to Australia and can't uderstand our lending practises.
the brokers here look at your client base and see how any of those are western european and how many are asian and you will see the disparity
and for me its simple when you ask a chinese, vietnamese, japanese to invest there are investing in you
They check the project to see if it will work
then they know that the loan is on the project but they invest in you.
our system of lending is not setup for the asian way of lending.
for me the best example is hsbc there lending criteria for lending in singapore is very different to here
I got a loan in singapore and tried to transport the same terms and conditions to hsbc here
using the management out of singapore to explain to the management in sydney and the end result was that they are separate
and they could not do the lending under that criteria so went to suncorp.
if chinese come to invest in Australia directly they will lose money and the same goes to Australians do direct investing into china , ( not all but I would say the majority)
and its a simple when the rich man meets the wise man.
my .002
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