On my 9 1/2 hour flight back from Florence last week, I watched two movies (Will Smith in Hitch and some

movie with sub-titles—bad idea on a plane with the screen coming down from the ceiling), read six magazines and two weekend sections of the EU edition of

Financial Times ( I subscribe to the US weekend edition at home).I have picked up a habit of ripping out articles I want to send to people or reference later.

At the end of the ride, I had a pile of ripped out papers and you can imagine what the floor looked like! Kidding- I like a clean space on the plane.I am going

to give a synopsis of an article dated February 3, 2007.

     After four years of a slump the Shanghai markets have doubled since August, 2007. Many people have been said to tap into their credit cards and borrow money to buy stock. Yes, there have been profits. Therefore, many more [greedy] people have tapped into the EQUITY OF THEIR HOMES to buy stocks.

     The Chinese government prohibits people from getting a bank home equity loan to play the stock market. So, I guess there are many new decks and driveways and paint jobs on the houses there….. So what have folks been doing? Going to pawn shops. Are you kidding me!The dealer will front up to 60% of the equity of the home at an average annual interest rate of 36%. Approximately 330 US million dollars have been lent out by pawn shops in 2006. It only takes a few documents and a few days and “show me the money”.

     It is all very exciting and has caught on like fire. Great profits have been won! February 27, 2007….a day to remember….oops. FORECLOSURE. Do pawn brokers know how to foreclose? Will there be a defense of insanity, stupidity, loser!!?So, when I came home, I sent the article to my broker and SOLD my China Fund. Not a day too soon. It pays to read.

– Dale Siegel

Read this article and learn: Chinese Bet the House on Share Prices Going Through The Roof. Financial Times (2/3/2007)