booktalesy Chapter 359: Advantages and Disadvantages
Chapter 359: Advantages and Disadvantages
That evening, Kong Yuan and his students left in a hurry without even attending the banquet hosted by the organizers. They felt utterly humiliated by being taught a lesson by a mere inexperienced young man, and Kong Yuan felt he had completely lost face. How could he possibly stay and become a laughingstock?
Cao Bowen, however, was very interested in Huang Xiaochuan.
During dinner that evening, Cao Bowen asked, "Xiao Huang! The three main components of the Hong Kong model are shared area, pre-sale, and mortgage. Why didn't you mention the mortgage?"
Huang Xiaochuan glanced at Wang Deyi, and Wang Deyi glared at Huang Xiaochuan.
"Why are you looking at me? Do I have flowers on my face? Just say what you have to say."
Huang Xiaochuan smiled. Since the old man doesn't object, then let's talk about it!
"As we all know, our country currently adopts an exchange standard system pegged to the US dollar. Our country controls foreign exchange, so all relevant export companies are forced to settle foreign exchange. However, as our exports continue to grow, a hidden danger has emerged. The faster the exports grow, the more foreign exchange is earned, and the greater this hidden danger becomes."
Because for every dollar we earn, we have to print RMB equivalent to one dollar's value, or in technical terms, 2. With more foreign exchange reserves, even more money is printed. The country takes the foreign exchange, so it has to pay these companies with RMB. Soon there is more money in the market, but the total amount of goods does not change significantly, which leads to hyperinflation.
So the central bank is in a dilemma. On the one hand, it is tightening monetary policy because of overheated investment in island real estate. On the other hand, it is worried that excessively high inflation will cause runaway inflation and wants to bring all the money in the market back to the banks. Therefore, it has raised deposit interest rates again. However, this money is just sitting in the banks and circulating aimlessly, which will bring a heavy burden to the banks. The money cannot be withdrawn and high interest rates still need to be paid to depositors. No matter how you look at it, it is a losing proposition.
However, there is something that can serve as a vehicle for this money that is stuck in the bank, and that is housing. Although the island's housing reform was a failure, it made the authorities see the people's desire and demand for housing. I think the original welfare housing allocation system is about to reach its end.
The next step will inevitably be to abolish the welfare housing allocation system and fully commercialize the real estate market. There are many benefits to doing this. Buying a house is a big expense for ordinary people, and they certainly cannot afford it with their own savings. Therefore, the powerful tool of mortgages comes in handy. Using mortgages to buy houses not only allows ordinary people to buy houses quickly, but also allows banks to continuously release the large amount of currency that has been piled up in the banks, allowing it to gradually settle in the real estate market.
Therefore, real estate will become a reservoir for these "2s," but even reservoirs have limits; the total amount of "2s" they can hold has an upper limit. The period when the reservoir's capacity reaches its limit will be the golden age of rapid real estate development.
Seeing that everyone was listening with great interest, Huang Xiaochuan also became more talkative and decided to say a few more words.
"We all know that everything has its advantages and disadvantages, so let me first talk about the advantages of real estate."
The first benefit is that it can stabilize the economy. The real estate sector absorbs a large amount of liquidity, preventing excess funds from flowing into the daily consumer goods market and alleviating inflationary pressures.
The second benefit is wealth preservation. Real estate will have the function of preserving and increasing value, especially during periods of inflation, it will become an important tool for residents and businesses to preserve their wealth.
The third benefit is that it can promote investment and use real estate to drive the development of upstream and downstream industries, such as building materials and furniture, thereby promoting rapid economic growth.
The fourth benefit is that it can increase the country's fiscal revenue. The country can obtain stable income through land sales, property taxes, etc., which can be used to support public construction and livelihood projects.
Having discussed the advantages, let me now speculate on the potential disadvantages.
The first is financial risk. We can draw a conclusion from the problems that have arisen in the development of Japan's real estate market: over-reliance on real estate may lead to a bubble. Once this bubble bursts, it will trigger a severe financial crisis and economic recession. Japan is a ready example, a cautionary tale.
The second issue is resource misallocation. Excessive capital flows into real estate, squeezing out other industries, especially technological innovation, and impacting long-term economic development. This is because when companies discover that real estate is more profitable than their original businesses, they flock to the real estate market, neglecting their original industries.
The third issue is the emergence of a significant wealth gap. Housing prices will continue to rise due to factors such as increased money supply and financial attributes, making it difficult for some groups to afford housing.
Fourthly, it may lead to an imbalance in the economic structure. From an economic perspective, if the whole society becomes overly reliant on real estate in the future, it will result in a single economic structure, a decline in the ability to resist risks, and thus affect sustainable development.
In general, I believe that real estate, as a reservoir of currency, helps stabilize the economy and store wealth, but it may also trigger financial risks, resource misallocation, and widening the gap between the rich and the poor.
Therefore, it is necessary to formulate reasonable policies to balance its advantages and disadvantages and ensure healthy economic development.
No one at the table touched their chopsticks; they listened intently to every word Huang Xiaochuan spoke.
As a reborn individual, no one understands the history of China's real estate development better than Huang Xiaochuan. In order to help the real estate industry avoid some detours and to bring more benefits to the people, Huang Xiaochuan gave a simple explanation based on the theories he learned from books and the problems he witnessed in the development of real estate in his previous life.
After Huang Xiaochuan finished speaking, the people at the table remained silent for a long time.
After a while, Cao Bowen asked, "That's it?"
Huang Xiaochuan paused for a moment, then replied, "No!"
"Did you research all of this? Have you published any papers on it?" Hu Guanglin asked eagerly.
Huang Xiaochuan answered truthfully, "Oh! I'm writing it now, and some details still need to be refined."
"Okay, okay! Make sure you show me your paper when you're done."
Cao Bowen sized up Huang Xiaochuan for a while, and finally asked, "You really have a girlfriend? I have a granddaughter who is not only beautiful but also a master's student at Peking University. Why don't you consider it?"
Huang Xiaochuan touched his nose and looked at Wang Deyi, thinking that the old man was right. This old Mr. Cao really wanted to take everything good that he saw.
Unlike Huang Xiaochuan, Wang Deyi wouldn't give Cao Bowen any face; he directly dismissed Cao Bowen's idea.
"Hey Cao, if you bring this up again, I'm cutting ties with you."
"Alright, alright, I won't mention it anymore, okay?" Seeing that Wang Deyi was really going to turn against him, Cao Bowen immediately shrank back.
Today, because of Huang Xiaochuan's performance, Wang Deyi became the most handsome old man in the room, and everyone was so envious and jealous of him! They envied this old man for having taken on such a good student.
Wang Deyi's face remained calm, but he was inwardly overjoyed. He had made a great impression today. Although his wayward disciple usually annoyed him, he was capable when it mattered.
Huang Xiaochuan also gained a lot today, with a thick stack of business cards in his hand, all given to him by others, who also invited him to give a lecture when they had time.
On the way home, Wang Deyi asked, "When will the thesis be finished?"
"About a week!"
"I'll give you three days, is that alright?"
Then Wang Deyi said to Huang Xiaochuan, "If you use all the time you would spend eating, drinking, and having fun, three days should be enough."
Huang Xiaochuan nearly fainted from anger at the old man's words. What? I just ate, drank, and had fun? What did I do? What did I enjoy? Eating and drinking? If you don't eat and drink every day, are you going to starve?
Huang Xiaochuan, of course, retorted: "Don't you know what 'slow and steady wins the race' means?"
Wang Deyi really wanted to give this kid a good whack on the neck, but he couldn't bear to. He had taken on many students in his life, but this was the only one who dared to bargain with him. However, he was indeed talented, and more importantly, he was filial.
Although she can be a bit irritating at times, she takes great care of herself, hiring a part-time housekeeper to cook and clean for her. She buys new clothes every season and spends a summer at the Taihu Sanatorium. Occasionally, the housekeeper will come over to cook a few dishes, have a few drinks, and chat with her.
Old Cao and Hu Guanglin don't know this yet. If they did, their eyes would probably be red with envy.
The two haggled along the way, and when they dropped Wang Deyi off at home, the two reached an agreement: five days later, Huang Xiaochuan would submit his thesis.
This was because Wang Deyi said that as long as the paper could be successfully published in an important domestic economic journal, he would go out of his way to help Huang Xiaochuan apply for a master's degree next June.
Huang Xiaochuan then agreed to complete the paper within five days.
At 9:00 AM local time on December 12th in the United States, Gaze officially went public on Nasdaq. On this day, the world witnessed the enormous potential of the Internet and the miracle of the capital market.
Gaze, a startup founded just one year and one month prior and still operating without a profit, has attracted considerable attention from investors due to its potential. Prior to its IPO, investment banks valued Gaze at only $19 per share, but market enthusiasm far exceeded expectations.
When Gaze opened on Nasdaq, its stock price soared like a runaway horse. It reached a high of $71 per share, a price that left stockbrokers across the United States in disbelief. Within just two hours, all 500 million shares were snapped up, and the stock closed at $6825 per share. Overnight, Gaze's market capitalization reached $26 billion, making it a new darling of the capital markets.
Gaze's successful IPO on NASDAQ opened the first page of the internet company wealth creation myth, thus beginning the turbulent era of the internet.
In fact, Zhang Yun had called Huang Xiaochuan several times to ask him to go to Nastass to ring the bell, but Huang Xiaochuan didn't want the hassle of traveling back and forth for more than 30 hours just to attend a ceremony. He thought it wasn't worth it.
Therefore, Zhang Yun was fully authorized to participate in the bell-ringing ceremony as the representative of Gaze's major shareholders.
As night fell, the dazzling lights of Manhattan, New York, reflected on the Hudson River. The celebration party for Gaze's successful listing on NASDAQ was held at The Pensu Hotel in Manhattan, New York, where the lights created a dreamlike atmosphere.
Inside the banquet hall, crystal chandeliers cast a soft glow, while golden decorations and a deep red carpet complemented each other, creating a luxurious yet solemn atmosphere.
Outside the banquet hall, a red carpet was laid out, and flashes of light from cameras filled the air. Guests, dressed in elegant attire, entered the venue one after another. Tech elites, investment giants, media celebrities, and the core team of Gaze were all present. Every guest's face radiated joy and anticipation, as if this reception was not only a celebration of Gaze but also a tribute to the future.
Zhang Gaolei, dressed in a well-tailored dark blue suit with an exquisite badge pinned to his chest, appeared at the entrance of the banquet hall with Zhang Yun.
Zhang Yun, dressed in an elegant black evening gown and adorned with simple yet sophisticated jewelry, walked into the party with one arm around Zhang Gaolei's.
Upon their arrival, Darwin and Trevor went forward to greet them.
Darwin felt like he was floating on clouds all day. He received a lot of phone calls, one after another, including calls from family and friends, as well as various funds and insurance companies.
Although the calls from these funds and insurance companies were annoying, he also felt a sense of pride, as his net worth had increased along with the soaring stock price of Gaze.
Even after several rounds of dilution, he still retains 6% of Gaze's shares, which are currently worth $156 billion. That's right, Darwin has joined the ranks of billionaires, and he is known as an internet upstart.
Upon seeing Zhang Yun and Zhang Gaolei, Darwin was filled with mixed emotions. He greeted Zhang Yun respectfully.
"Hi, Catherine, you look absolutely stunning tonight!"
Zhang Yun politely replied, "Thank you!"
Then Trevor went up and greeted Zhang Yun and Zhang Gaolei, while Darwin gave Zhang Gaolei a tight hug.
"Zhang! Thank you!"
Darwin's words of gratitude were heartfelt. Zhang Gaolei was the one who started the project with $80,000, so he deserves great credit. Later, when the company was short of funds and could not find any investment, Zhang Gaolei brought in Hong Kong Changhong, which invested $800,000, solving the company's development problems. This led to the follow-up investment from Goldman Sachs and other investment institutions, until the company went public.
After Darwin let go of Zhang Gaolei, Zhang Gaolei patted Darwin with a smile: "Brother, nice perfume."
"Right! Bulgari's Darjeeling Tea men's fragrance is perfect for this season." Darwin couldn't help but show off when Zhang Gaolei praised his taste.
"If you like, I'll give you a dozen!"
Zhang Gaolei quickly waved his hand: "No need, no need. What suits you may not suit me."
Darwin shrugged. "I envy you so much. Why don't you Asians have any body odor? God is so kind to you."
"Catherine, you're so beautiful!"
"Zhang, congratulations on joining the ranks of billionaires!"
"Thanks!"
"Thanks!"
Soon, many people came to greet Zhang Yun, Zhang Gaolei, Darwin, and Trevor. They were the most dazzling protagonists of the night, especially Darwin and Trevor. These two didn't even have girlfriends, making them true bachelors. Soon, a lot of beautiful girls gathered around them, most of whom were the daughters of the invited guests.
As Zhang Gaolei's girlfriend, Xiao Qianlan was naturally fortunate enough to attend the celebration party, and she wore a beautiful evening gown for the occasion.
After greeting Zhang Yun, she joined Zhang Gaolei in receiving congratulations from all directions.
Zhang Yun stood in front of the floor-to-ceiling windows of the banquet hall, the champagne glass in her hand reflecting the dazzling night view outside. The light reflected from the crystal chandelier shone on everyone's smiling faces, and the clinking of glasses was filled with compliments and congratulations.
At this moment, several senior Wall Street investors came over and started chatting with Zhang Yun.
Tonight's main topic of discussion is the future direction of internet investment and whether there will be opportunities for in-depth cooperation.
Meanwhile, Huang Xiaochuan was busy in Shanghai arranging some work for the following year.
For example, financial support for southwestern and northwestern Sichuan, the continued implementation of the lunch program, subsidies for rural teachers, and the construction of Hope Primary Schools.
After listing all the documents in detail, Mai Guangde handed them over to Huang Xiaochuan for approval one by one.
Whenever it comes to projects in southwestern or northwestern Sichuan, Huang Xiaochuan provides full support, giving money and materials as needed.