CHINA: Empty Buildings in China’s Provincial Cities Testify to Evergrande Debacle.

Rows of residential towers, some 26 stories high, stand unfinished in this provincial city about 350 miles west of Shanghai, their plastic tarps flapping in the wind.

Elsewhere in Lu’an, golden Pegasus statues guard an uncompleted $9 billion theme park that was supposed to be bigger than Disneyland. A planned $4 billion electric-vehicle plant, central to local leaders’ economic dreams, remains a steel frame with overgrown vegetation spilling into the road.

The structures are monuments to the once-grand ambitions of China Evergrande Group, now among the world’s most indebted property companies, and a case study in how China’s dependence on real estate as an economic engine helped feed those ambitions.

Evergrande is in trouble in part because it developed properties aggressively in places such as Lu’an, where its debt-fueled building spree came as the city’s population dwindled.

In the end, there’s nothing harder than easy money — an old lesson our own “leadership” refuses to learn.

UPDATE (FROM GLENN): The Hayekian theory is that the damage is done in the boom, as cheap money produces malinvestment. That malinvestment — for example in empty buildings that are never used — accounts for the damage that becomes visible later in the bust. You can see that quite clearly in China and it’s becoming apparent here, too.

Meanwhile, time to plug Russ Roberts’ brilliant Hayek/Keynes rap video. It just gets better.