WARNING: The first few paragraphs of today’s piece have absolutely nothing to do with investing, the markets, or Asia. But come on!  It’s the weekend.  Don’t we all deserve a little mental drift?

Anyway, if you’re like me, you probably have some sort of music playing in the background at points during the day.  For me, in the office, XM Radio’s Deep Tracks (I am still a Deadhead) or Bluesville are always on, 7 a.m. to eight at night.

Usually, the music stays in the background.  But there are stopping points.  Pieces that just sneak through.  Any of the three Kings – Albert, B.B., or Freddie – always makes me pause.

You guitar players will instantly know why.  Worshipping at the Alter of the Three Kings is one of the fastest ways to guitar-chop Nirvana.  And if I listened to more country music, Vince Gill would have the same effect on me.  I’ve always wondered if country fans recognize what a total freekin’ monster he is on guitar.

Now lyrics don’t generally give me pause.  But Angel from Montgomery always makes me stop – whether it’s John Prine’s version or Bonnie Raitt’s.

Prine’s song is perfect … not a wasted word… every image stunning.

The chorus is:

Make me an angel that flies from Montgomery
Make me a poster of an old rodeo
Just give me one thing that I can hold on to
To believe in this living is just a hard way to go.

I just heard Bonnie Raitt’s version on Deep Tracks and it got me thinking.

Investor’s Daily Edge is a great two-way street.  Who else makes it so easy for you to respond?

So here’s your weekend challenge.  It’s an easy one.  Think about it for a minute (or come back later tonight if you need to get in the “mood’), and use the response button down at the bottom here and send me your favorite song, or lyrics, or even symphonic movement.

All genres welcome … even Klezmer, which sometimes I “get” and sometimes not.

Add your first name and town or city and I’ll publish your favorite next Tuesday.  Don’t add your name and town and I’ll publish your favorite anyway.

And if you want, you can go ahead and tell us why the music is important to you.  You know, the who, what, when, and where.

Think of it as a way of getting to know your neighbors.

Now Back To Our Regularly Scheduled Programming

The IPO market in Hong Kong is beginning to slow down a bit.  That’s a good thing.  And certainly not cause for alarm.

Because drying up some equity means crappola companies such as Guangzhou, China-based Evergrande Real Estate has to stick its tail between its legs and limp home penniless.

More on this in a second, but I want to thank IDE editor Jon Herring for sending me a blog whose author considers Evergrande’s non-IPO as a sign of the biggest financial story not being told by the media today.

To this lone blogger, Evergrande signifies the impending collapse of China’s entire real estate market.  In fact, this one blogger took the Wall Street Journal to task for burying a story – on page C-10 – about a current softness in the Chinese real estate market.

In the blogger’s mind and blog, “How the Journal’s front-page editors missed breaking the greatest new story of 2008 is beyond us.”

On top of that, had this hysterical blogger been in charge of the WSJ, “the story would have been the entire front page, under a banner headline on par with the Apollo Moon Landing, Dewey Defeats Truman, and Hillary Dodges Bullets in Bosnia.”

Hillary Died Jan. 11

Sadly, because he made fun of Sen. Hillary Clinton, many people will take that blog’s entire message as truth.

Kinda like if, in a purely hypothetical situation, I wrote “Hilary Clinton is the greatest American ever,” a bunch of readers would flash to red (or stroke out) so fast they’d miss my instructions for claiming a free $1,000 bill.

Hell, you probably can’t innocently use the word bill these days without angering someone.  And I can’t imagine how many people were thrilled to read headlines that proclaimed Sir Edmond HILLARY died on January 11, as in Hillary Dead at 89.

But back to the above-mentioned blogger.  He is clearly confused by the normal ebb and flow of business.  And he’s obsessed with turning the slightest financial fart into a cataclysmic hurricane that will destroy mankind even before a killer asteroid from outer space has the honor.

Cool Breeze

So first, let me admit that yes, the Chinese real estate market is softer than it was when I was over there last spring.  It’s very soft in Shanghai and in Guangdong Province, which is home to the boomtowns (cities) of Guangzhou and Shenzhen.  But it’s not too bad in Beijing and Xi’an.

The reason for the softness is that the Chinese central government has been trying to curb the real estate market, because – as the hysterical blogger fails to realize – the Chinese are some of the world’s most aggressive gamblers.

Open up a new way for them to speculate – like stock markets or real estate – and they’ll jump in, double down, and then double down again.

So on most counts, Beijing was right to raise interest rates on home loans and to make the barriers to entry higher.  Real estate prices were adding to inflation.  And the prices were rising faster than most Chinese citizens and businesses could afford.

That doesn’t mean that households and businesses were going to stop buying and renting.

There is also an additional reason why Beijing has tried to cool the market.  Unlike some governments, it is committed to affordable housing not only for the poor, but also for the lower rungs of the middle class.

Beijing knows that stifling upward mobility would eventually stifle the Chinese economy.

Crazy, them commies, huh?

Bubbles Blow on Hot Air

Now, let’s get back to Evergrande and the Hong Kong IPO it just postponed.  Because there is no better sign of a bubble than investors who blindly buy crappy issues just because a stock market, region, or sector is hot.

The converse, then, must be true.  So what happened to Evergrande is a great sign.

Also, I am not totally suggesting that Evergrande is a lousy company.  It’s just not a great investment.

I am not alone.

The reason Evergrande pulled its scheduled IPO was that it failed to receive enough orders from retail and institutional investors by the time its subscriptions closed on March 19 – despite extending the application period by one day.

Or as the Wall Street Journal (cited by the hysterical sky-is-falling blogger) noted, Evergrande “was so weighed down by debt it had no choice but to take a crack at an IPO: More than half the funds Evergrande was hoping to raise were set aside to pay for plots it accumulated during a furious land grab last year.”

So a heretofore honorable real estate developer is in big trouble … AND INVESTORS WON’T BUY ITS IPO… as in, investors with money to burn didn’t buy a crappy IPO. And that’s bad news?

Evergrande will figure a way out of its mess, even if it has to sell its inventory.  Then someone else will develop that land, because unless you live in Florida, the old real estate cliché applies - they aren’t making any more land.  Sadly, we can’t say the same for the blogosphere.

That reminds me … don’t forget to read my blog.  It’s called Verge Asia.

Have a great weekend.

Andy

P.S.  To let me know what you thought of today’s article, send an e-mail to: feedback@investorsdailyedge.com.