CORRUPTION AND THE REAL ESTATE BUBBLE Im not an expert,but when you talk about real estate bubbles two things come to mind; corruption today and corruptions past. Why corruption? Corruption is represented by undocumented money in the hands of people who need to legitimize it. Crooks legitimize money by buying something high and at worst selling low. Thats called laundering and laundering is usually done by getting a third party to buy the property for the crooks. Now if you assume that 30% of the national budget is/was going to corruption, how much of that money is buying real estate? And how much of that will be sold short if theres aggressive move to finally trace these bogus buys. If theres a significant amount sold short then anyone who bought on a loan may find it cheaper to ditch their property in favor of the bank instead of continuing to pay for a devalued property. Then theres the issue of corruptions past. In the time of AMLA its assumed that less money has been going out of the country so corrupt crooks have been forced to put their money into something local and that something may be real estate. There have been rumors that some if the largest corruptors have put their money into several mega billion large real estate developments. Now what if the projects in development come to a halt if the current govt finally digs deep enough and proves that the developments are funded by stolen money. What if these projects borrowed money from banks to legitimize the source of cash then only to have repayments shut down as stolen money is kept ( to hide from investigators) and funding dries up for these projects? Like I said but Im not an expert so I cant talk about the science of real estate. But it seems that in beer driven conversations its only natural to ask what percent of the real estate boom is fueled by dirty money when talking about a possible bust.
Posted on: Tue, 05 Aug 2014 00:08:52 +0000
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