China’s housing bubble puts all other housing bubbles to shame

[Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a housing bubble of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Evergrande isn’t China’s biggest problem. A [housing bubble is](. - A [Covid silver bullet may be coming]( after all. - It may be [time for Mark Zuckerberg to go](. - Crude oil prices are [about to heat up](. Evergrande Isn’t Lehman. For China, It May Be Worse When playing word association with China’s economy right now, some phrases spring to mind that may seem unfair: pyramid scheme, house of cards, Jenga tower with half the pieces missing, intoxicated teenager on stilts. But two terms that do not come to mind, and absolutely should not, are “stable” and “sustainable.” If you’re a New Zealander or Canadian or American, you might think your housing market is wild. And it is. But for sheer deadly froth, nothing matches China. Not only have prices been soaring, but [real estate makes up nearly 30% of GDP](, compared with 19% for the U.S. in its housing bubble, writes Noah Smith. Worse, housing makes up 78% of Chinese assets, compared with 35% for the U.S., writes Niall Ferguson. [Popping this bubble would hammer China’s economy]( in a way that could make the Great Recession look like a spoiled gender-reveal party. Making this frothier is the fact that possibly a quarter of [China’s housing is just sitting there empty](, as Lara Williams pointed out this weekend. We’ve all heard of China’s ghost cities, but it turns out there are also ghost towns, ghost suburbs and ghost duplexes. And with China’s population growth slowing, ghosts may be the only residents ever to inhabit these places. Too much supply plus too little demand equals goodbye, bubble. That brings us to China Evergrande Group. We’ve [established]( that this massively overleveraged developer won’t be the next Lehman Brothers. Of course, [we still don’t really know what banks are exposed]( to it and similar Chinese firms, or by how much, writes Bloomberg’s editorial board. This might be a nice thing to fix before another crisis happens. Just spitballing here! Worse, there are many more Chinese firms that [rely too much on complex supply-chain financing]( as Evergrande did, warns Anjani Trivedi. But hopefully we can count on Beijing to grease the financial gears and avoid a repeat of that day in 2008 when all of the money suddenly caught on fire. At the same time, Beijing has conflicting desires that won’t make its job any easier. It wants to unwind the leverage in its system, while also shucking its reliance on fossil fuels, writes David Fickling. These are admirable goals, but they [also happen to attack the two pillars of China’s economic growth]( for the past few decades. How will it replace these load-bearing structures? Arguably less admirable is Xi Jinping’s reassertion of Communist Party dominance over the economy, Niall Ferguson writes. This, as much as any bubble or decarbonization, may be the real threat to growth. Again, this may not be a fair metaphor, but what springs to mind is that intoxicated teen on stilts trying to take off a T-shirt. He could do it, but you wouldn’t want to bet money on it. Better Than Horse Paste Because we live in the weirdest timeline, many Americans would rather ingest horse dewormer than take a proven, lifesaving Covid vaccine. Part of this reflects our broken politics, but some of it is just that we’re always looking for a quick fix (though tricking a veterinarian into giving you horse paste seems like more of a hassle than just popping over to the local CVS, but what do I know). As luck would have it, a quick fix could be in the offing. Max Nisen writes several [drugmakers have antiviral pills in late-stage testing](. These could be as effective as vaccines at keeping people out of the hospital, while also being cheaper to make and easier to deliver. This could help not only with future American Covid waves but in places around the world where far fewer people are vaccinated. But these drugs are still months away from fruition. You can get vaccinated right now. Believe it or not, it’s better than horse goo. Facebook’s Zuckerberg Problem An old joke format goes something like this: Insulter: You’re an ignorant, arrogant hack. Insultee: Hey, I’m not that arrogant. The funny part here being that the insultee stipulates by omission the accuracy of the other insults. Facebook CEO Mark Zuckerberg did something like this recently by responding to a blistering news report about the state of his company by complaining the story had mistaken a hydrofoil for an electric surfboard. As Parmy Olson writes, this is a sure sign [Zuckerberg’s attention has wandered away]( from the many fires burning in Facebook’s kitchen. The company doused one of those today by putting its dubious Instagram 4 Tots (not its real name) [project on ice](, something Bloomberg’s editorial board [called for]( last week. It still has many more regulatory, business and legal fires burning, Parmy writes. It may take a new head chef to address them all.  Telltale Charts It may be an [energy crisis]( for actual humans who need to stay warm, but relax, everybody: [Crude oil prices will have a toasty winter](, writes Julian Lee. Some U.S. states have [high percentages of citizens who have been vaccinated]( or infected, making it harder for Covid to spike in the fall, writes Justin Fox. Other states aren’t in such great shape. Further Reading With Angela Merkel departing, [Europe’s new de facto leader is Mario Draghi](. — Andreas Kluth Neil [Gorsuch is trying to be the intellectual heir of Antonin Scalia](, but even more strictly textual. — Noah Feldman [Credit Suisse must quickly reform or ditch]( its investment banking arm. — Paul J. Davies Investors are more [pessimistic about the economy but still want stocks](. — John Authers [Impersonating a customer on a call]( with a potential investor is a new level of shamelessness. — Matt Levine Expanding Medicaid isn’t the answer for [getting more Americans long-term care](. — Allison Schrager ICYMI Olaf [Scholz looks like he’ll form a new German]( government, with a center-left coalition that should make [Bloomberg’s editorial board happy](. Two regional [Fed presidents stepped down]( after trading scandals. R. [Kelly was convicted](. Danish artist [took a museum’s money and called it art](. Kickers A winged microchip is [humanity’s smallest-ever flying structure](. (h/t Ellen Kominers) The NASA probe Lucy will take [a wild ride to Jupiter’s moons](. (h/t Alistair Lowe) [Crypto-trading hamster outperforms]( human investors. (h/t Mike Smedley) Meet the [double-charm tetraquark](. Notes:  Please send crypto-trading hamsters and feedback to Mark Gongloff at markgongloff@bloomberg.net. [Sign up here]( and follow us on [Twitter]( and [Facebook](. Like Bloomberg Opinion Today? [Subscribe to Bloomberg All Access and get much, much more](. You’ll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. 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