I love a good dither. Especially when it’s cloaked in language that makes it sound like decisive action

This morning’s headline in the Financial Times reads “Beijing acts over housing bubble.” Sounds like China did something significant to control an inflating asset bubble that saw housing prices climb at an 11.7% rate in the last year. For context that’s the fastest rate of increase in housing prices since the Chinese government began keeping this data in 2005.

What did Beijing do?

The government raised the required down payment to 50% from 40% for anybody buying a second home. The down payment for a first home larger than 90 square meters was set at 30%.

There’s no reason to think that this is going to slow a real estate market that saw long-term land leases (since no one can actually buy land in China) soar to $205 billion in 2009. That was a 40% increase from 2008. (There’s no indication that the pace is slowing. Property investment was the biggest contributor to GDP growth of 11.9% in the first quarter of 2010.)

If a 40% down payment didn’t slow this market, it’s unlikely that a 10 percentage point increase will make much difference.

Especially because, as we know all too well from the U.S. mortgage boom and bust, it’s extremely easy to get around down payment rules when lenders are more than willing to let you borrow the money you need for a down payment in a second “independent” transaction.

The truth is that too many officials at all levels of government and the Communist Party are making too much money out of land and property sales to really want to bring the game to an end—or even to slow it significantly. It wouldn’t be all that hard to deflate the bubble by raising interest rates but that still seems like a move the government is trying to avoid.

The longer a bubble is allowed to expand, the more violent the eventual bursting of the bubble is.

If there’s one thing you think the world would have learned from the U.S. mortgage crisis, you’d think that would be it.

You’d think. But apparently you’d be wrong.