I was in China, mostly Beijing, a couple of weeks ago, checking on a property investment. The property sector is important: A lot of the pressure on raw materials prices supposedly coming out of China was related to the property sector, to construction. The amount of building that had been going on was enormous and visible, all over Beijing. I saw one luxury housing development after another, most of them just in the process of construction, or recently completed, and…sales had last year just come to a halt. It was amazing, the physical reconstruction of that city. A lot of it had to do with the Olympics, but a lot of it also had to do with property speculation.

And Beijing really is not the city that had the most residential property speculation. The optimism that pumped up that sector was pretty incredible. Here you have a provincial city where there was maybe one 4-star hotel—suddenly there are four 5-star hotel projects under construction, and you just wonder who the heck is going to stay in them. A city that really didn’t have much in the way of luxury housing suddenly has tons of luxury projects sprouting up, a lot of those getting sold to speculators, with nobody at the end of the chain. Toward the end of last year people realized just how far supply had outrun real demand, and how far prices had run up.