In 2008, I closely commented on the demise of Lehman Brothers and the hidden cancers on other balance sheets. At the time, the fraudulent real estate bubble found a poster child in Lehman investment McAllister Ranch: a three square mile development in which Lehman dropped a quarter billion dollars of loans … and the mega-community became a ghost town.
Now, a few weeks from the modern space odyssey 2010, video is surfacing that even more costly and extravagant real estate developments in China are following the Lehman model (which was probably 486 Excel sheets built by a 24-year old working 110 hours a week). Welcome to the real, yet imaginary, city of Ordos:
Ordos is a hyper modern city, full of brand new glass walled residential and commercial buildings, yet devoid of inhabitants. In its attempt to present a “growing” economy, and to “invest” its $585 billion stimulus into anything and everything, courtesy of comparable idiocy on the other side of the Pacific, China’s communist party is now ruling over ghost towns. One wonders just how many such “efficient” projects sustain China’s magical 8% growth. (Source: Zero Hedge)
So, there you have it. An entire generation has grown up and been conditioned to believe economics is the fundamental nature of reality, yet the proof continues to mount that economics is simply a wealth shifting game which does not solely enhance civilizations or lives. If the Chinese government eventually pulls a Lehman, the next chapter of history will be messy.