You are right Poway, speculation has caused a lot of problems in the markets. Nothing new there but nothing grows to the sky , everything returns to a mean at some point. As we have observed with Real Estate, a lot of amateurs have come to play in the later stages of the game and are now getting hurt or on their way to be.
As for China, I think it’s hard to say if they could be a self sufficient economy. We will have to wait and see on that. They are currently very dependant on foreign economies.
As for wages, it would take a very, very long time for wages to catch up with housing prices. We really don’t have to speculate with this concept (housing prices) because it’s been proven time and time again that when an asset class deviates out of it’s historical mean of return it ALWAYS corrects. Unfortunately, our current situation with RE prices has a lot of emotion embedded in it. This will intensify the “Hard Landing”.