China's 'Doomsday Scenario' Is Something Every American Understands Very Well

China's property stocks are selling off today on news of new efforts to contain the hot Chinese property market.

Some expert praise China's efforts to actively contain what many think is an asset bubble.

But according to a new 60 Minutes report, China's regulators may already be too late.

You see, China's economic growth has brought riches to the middle class. But that middle class cannot invest abroad and bank returns are paltry. And the Chinese have been turned off by their extremely volatile stock market. Just look at today's massive today's sell-off, and you can see why.

With nowhere else to put their money, the Chinese have been shoveling their money into real estate, which has fueled a massive building boom.

The problem is no one is moving into many of these new properties.

Yet with prices only going up, the investment dollars continue to pour in.

This echoes of the U.S. experience. Americans scarred by the bursting tech bubble shunned stocks and headed toward the real estate market where it seemed prices would only go up.

And the experts 60 Minutes' Leslie Stalhl spoke to think this will end badly like it did in the U.S. in 2007 and the years after.

"There are multiple classes of people who are going to get wiped out by this," said Gillem Tulloch, a Hong Kong based analyst. "People who have invested three generations worth of savings -- grandparents', parents', and children into properties -- will see their savings evaporate. And then of course there is 50 million construction workers who are working on all of these projects around China."

Anne Stevenson-Yang of J Capital Research shared this sentiment while laying out the doomsday scenario.

"Everybody wakes up one day and they find out their money's gone, and their apartments are worthless," said Stevenson-Yang. "That's the doomsday."

An imploding Chinese property market has the potential to have major global implications. Stevenson-Yang warns this could evolve into a debt crisis, which could freeze up the Chinese credit markets.

This is problematic for people outside of China because China is the world's second largest economy and arguably the world's most important source of growth.

Only time will tell if things unfold like the doomers suggest. Unfortunately, the doomsday scenario is exactly what happened in the U.S. And China appears to be following the same path.