The Infatuation Had A Short Shelf Life
A report from the Bangkok Post in Thailand. “Over the past several years, concerns have been periodically raised about the possible re-emergence of a bubble in the Thai housing market, particularly on the back of condominium oversupply in Bangkok. The latest warning by Supachai Panitchpakdi, a former director-general of the World Trade Organization and secretary-general of the UN Conference on Trade and Development, about a possible property bubble, has further driven home those prospects. But is Thailand heading for a 1997-style property crash?”
“Prasert Taedullayasatit, president of the Thai Condominium Association, says developers have been more cautious in launching new supply after they learned a significant lesson from the 1997 financial crisis. ‘High household debt, which had an impact on homebuyers in the middle- to lower-end segment, has driven developers to launch new supply in higher-priced segments,’ Mr Prasert says. ‘Everyone learned a lesson.’”
The Daily Mirror in Sri Lanka. “While dismissing fears of a property bubble, Fitch Ratings Lanka said Colombo’s luxury apartment buildings may end up becoming incomplete ‘ghost projects’ if developers continue without strong pre-sales in a market that is currently in oversupply. ‘The question is whether the developer has a cushion? Does he have a fall back? Now in that scenario you could have ghost projects; meaning someone who has a skeletal structure up, cannot complete it, and banks aren’t likely to give you funding when there’s a glut,’ Fitch Ratings Lanka Managing Director Maninda Wickramasinghe said.”
The Irish Times. “On the way down, we convinced ourselves it wasn’t happening, or at least most of us did. Warnings about the unsustainable nature of the Irish housing market went unheeded or were countered with guff about soft landings and demographic imperatives. The naysayers, that minority of bankers, investors and economists who raised a red flag, were painted as cranks; contrarians; those who got in the way of business.”
“Regardless of where the Irish market is headed, John McCartney, director of research at estate agency Savills, believes the two biggest problems of the last decade will be avoided. ‘Because the credit has been rationed [courtesy of the Central Bank’s lending rules] you’re not going to get banks with heavy losses arising from bad loans; and we’re not going to get people with impossible debt burdens.’”
“He also doesn’t believe that this period of very rapid house price growth will be followed by a crash either. ‘I think it’s just going to be a glide path to slower, more sustainable growth. The fact that so many investors are piling into the market is indicative that there are very good returns and the reason that there are such good returns is that rents are growing so strongly and the reason that that’s happening is because there is not enough housing units to go around.’”
The South China Morning Post. “The developer has been forced to stop the sale of the remaining converted apartments at its luxury serviced apartment project, Arch Residence, on the Huangpu River in Pudong. More than 100 buyers who bought the converted apartments last year for prices ranging from 9 million yuan (US$1.3 million) to 18 million yuan now face potential huge losses, according to sources.’
“‘The value of this kind of apartment will certainly drop significantly as most buyers are unwilling to pour money in these properties. People don’t know what the government will do next with these apartments,’ said Clement Luk, chief executive for east China at Centaline Property.”
From The Tyee in Canada. “Steve Saretsky began his career as a realtor in Vancouver just as home prices climbed to crazy highs. He realized most of the things the public hears about the market are either false or over-simplified. So he decided to expose the truth. In Saretsky’s words: ‘I would boil it down to low interest rates creating an easy credit environment, slash foreign capital coming in and distorting the market, and ultimately, as prices went up, it fuelled a fear-of-missing-out speculation.’”
“In the meantime, developers are adamant that our housing crisis could be solved simply by building more condos. Saretsky isn’t buying it. ‘When you’re pushing supply as the solution, and then you’re ultimately selling it overseas to foreign speculators, it’s really not helping locals,’ he explained to Global News.”
“Saretsky knows he isn’t the only person in real estate who desires serious change. Some industry people worry about the type of city their children will grow up in. Or the economic fallout from a housing crash. ‘A lot of realtors I’ve spoken with want some sanity to the market,’ Saretsky explained. ‘They know it isn’t sustainable.’”
The Vietnam Express. “When the bubble inflated in 2007, My didn’t see it coming. Like many others, the Vietnamese car dealer quit his job to become a real estate investor, after seeing robust growth in a market that appeared to have an army of homebuyers willing to line up for villas and apartments from midnight — an image perpetuated by the local media at the time. The infatuation had a short shelf life.”
“The market in Ho Chi Minh City crashed that same year, triggering a long phase of freezing that followed. Some refused to admit that the bubble had burst, or even rejected the idea of a bubble in the first place. For My, the damage of the burst has always been real. As home prices plunged and the costs of bank loans soared, he turned from a hopeful investor to a debt-ridden man. Even though all of his company’s assets have been seized, creditors are still following him every day, hoping to recover more for their own losses.”
“Khai, another investor hit by the 2007 crisis, has counted himself among the lucky ones. Betting on several properties in Binh Duong, he always hoped he could reap a 15-20 percent return as promised by his brokers. He even mortgaged his house in Ho Chi Minh City to secure the deals. What came after that was a nightmare for him: land prices dropped, interest rates surged and buyers disappeared. He rushed to sell his properties despite huge losses. Then he borrowed from his relatives to pay the banks.”
“‘Had I not acted quick enough, I would be a homeless man now,’ Khai said, asking to be identified by his first name only.”
“Watching the so-called land fever in Ho Chi Minh City unfold in recent months, a businesswoman couldn’t stop thinking about the bubble a decade ago. Speaking on condition of anonimity, she said she has been warning everyone around her about a possible bubble. Her advice: investors should stay out if they have to rely on bank loans. She turned to leveraging when she entered the market in 2007. Bank loans accounted for half of her investment and, after three years, ‘I had nothing left but debts to pay,’ she said.”
“Land prices in suburbs skyrocketed in the first five months, increasing by 30 to 40 percent between January and May in many outlying districts. Figures from leading real estate advisers CBRE and Savills showed that the land market is cooling down. Sales in the residential sector in the first quarter fell 13 percent from late last year with a 47 percent drop in the apartment sector, according to Savills. Duong Thuy Dung, director of CBRE Vietnam, said that the market in the megacity has shown signs of a slowdown and the question is how long it will be able to maintain a safe distance from crashing.”
FYI I’m driving to Texas on business starting today. The usual things about posting and moderation will apply.
Texas: Chris Rhea
“warm winds blowing,
heat n’ blue sky,
and a road that goes . .
forever”
slide guitar work really drives it home.
perennial favorite of mine
His “Road to Hell” will resonate with this group, too.
…and the road’s jammed up with credit,
and there’s nothing you can do.
It’s all just bits of paper
flyin’ away from you…
Why would anyone expect inflation to magically materialize in a world drowning in overinvestment and oversupply, fostered by wave upon wave of bailouts, stimulus, quantitative easing, ZIRP, and other easy money themes? Was nothing learned from the Japanese experience a quarter of a century ago?
“Was nothing learned from the Japanese experience a quarter of a century ago?”
What was learned was that the game can go on a lot longer than most people thought.
^^^^^
Exactly.
What was learned was that the game can go on a lot longer than most people thought.
That’s certainly what I’ve learned. There’s no point in warning or mocking people picking up nickels in front of steamrollers. Turns out you can make a career of it.
There’s no point in warning or mocking people picking up nickels in front of steamrollers. Turns out you can make a career of it.
Until you decide to pick up that ONE nickel that is a little too close to the roller..
Yeah, but it’s like Darwinism. If what kills you allows you to live well and have children first, then people seem to just adapt and accept the risk as just part of life even if it horrifies everyone else. We are creating a subculture that just accepts the risk as the only way they can have the life they want, and when their number is up, so be it. Nobody could have seen it coming.
Or you find yourself picking up nickels when the roller’s brakes suddenly fail without warning…
Was nothing learned from the Japanese experience a quarter of a century ago?
So to be clear: your forecast is that we are turning Japanese?
It was never obvious to me that what could happen to a semi-isolated economy with an aging population could as easily happen to the world. Perhaps.
Great point. Japan is making their own problems worse because of their culture.
Western Europe is aging as well. And in this country, for middle-class families, it’s too expensive to have more than one or two children. While we’re not Japan, I can see deflation and demographic collapse working in a feedback loop just about anywhere.
In those places where children are wealth, and the social safety net once grown, (i.e., the Third World), the situation is a lot more Malthusian.
Law giving Czech central bank power to curb home loans could fail
* Central bank seeking legal powers to tame home lending
* Legislation hitting obstacles in parliament
* New flat prices in Prague up a fifth in past year
* Central bank has already recommended banks set loan limits
* Without law, central bank may need to use other tools
By Robert Muller, PRAGUE June 12 (Reuters) -
Czech lawmakers eyeing an October election could water down or reject a law that would give the central bank more powers to curb mortgage lending, potentially forcing it to find other tools to cool the hot
housing market.
Prices on new flats in Prague have jumped almost 20 percent
in the past year and Czech house price growth is among the
fastest in the European Union, pushed up by limited supply and
low interest rates.
Economists have yet to say the market is in a bubble, but
the central bank is seeking to expand its powers to allow it to
set limits on how much banks can lend to home buyers rather than
just making recommendations as at present.
…
http://m.nasdaq.com/article/law-giving-czech-central-bank-power-to-curb-home-loans-could-fail-20170612-00596
Global Economy
Czech central bank moves to rein in lending in ‘overvalued’ property market
fastFT
an hour ago
by: James Shotter
The Czech central bank said on Tuesday that it would increase banks’ counter-cyclical capital requirements, as it warned that mortgage lending standards in the central European country had become “highly relaxed”.
In a bid to rein in accelerating loan growth, the CNB said that from July 1 2018 the capital buffer banks must hold against domestic lending will increase to 1 per cent, up from the 0.5 per cent that has been in force since the beginning of this year.
The CNB’s governor, Jiří Rusnok, said that the Czech economy had “shifted further into a growth phase of the financial cycle, characterised by rapid growth in loans”, and that it was therefore “necessary to use good times for provisioning, as provisions enable the banking sector to operate smoothly in worse times”.
…
Since I had nothing better to do I decided to re-visit my old friend American Homes 4 Rent.
Ah, yes …
http://finviz.com/quote.ashx?t=AMH
The numbers in RED indicate that the stock is HOT! and one should think of going ALL IN!
The stock pays a dividend even though the company has never earned any money. One might take a peek at the debt level and perhaps obtain for himself a slight clue as to where all this dividend money is coming from (since it ain’t from earnings), or (and most likely) one might as just as well say to himself “The hell with the numbers” and go ALL IN so as to not miss the boat.
Mr. Banker has “nothing to do” !?
I thought you spent your days on 3-martini lunches at the club with the white shoe boys?
tut tut, my good man! At least dash off a quick RSVP for the Hasty Pudding shindig. Don’t forget the tux for Skull & Bones later.
Nothing better to do.
Here’s a tidbit I picked up off the net …
“A bit of math. With the global debt / GDP ratio at 320% and the cost of average debt service at 2%, it takes 6.4% growth per annum just to service the debt. Not happening.”
If true then something has to give. This “something” that “has to give ” may be delayed in its giving but nevertheless eventually it will have to give.
Stay tuned.
The math is cute but the assumptions are wrong. For one thing, GDP is not actually income. If it were we’d all be making over $100,000 here, every man, woman and child in the USA. For another thing, the debt not only can’t be serviced, all the new debt goes to pay the old debt.
glad you got the skills to catch that math bit.
as soon as I saw the word “math”, my eyes glazed over & I wondered if I remembered to feed the squirrels out back of my crapshack.
now if only my neighbors were a bit quieter in the early morning as they head out to pick strawberries.
It’s silly to reduce it to a simple matter of arithmetic, or even to discuss the global debt to GDP ratio, which should probably be called GGP. The 6.4 growth isn’t necessary if consumption is reduced. The Chinese government could just choose to reduce the standard of living of its population for a decade.
Why couldn’t the “something” simply be wave-upon-wave of quantitative easing, used to finance central bank purchases of unrepayable debt and burial thereof on their balance sheets?
Seems like this game could go on for quite a long time, as noted above…
And that’s what I expect to end with the Fed owning everything, as they buy up all the overpriced assets over time that were associated with the unpayable debt. But somehow I think it will all break before it gets quite that far.
Who would’ve thought that securitized subprime auto loan bonds could possibly be an unsound investment?
Seems like we’ve been down this road before.
https://www.bloomberg.com/news/articles/2017-06-12/subprime-auto-bonds-from-2015-may-end-up-worst-ever-fitch-says
“Seems like we’ve been down this road before.”
And we will go down this road again, and again, and again because there simply is no curve in the so-called learning curve.
LOL this doesn’t even [I]sound[/i] like a good idea.
From yesterday’s bloomibergi (excerpts):
———————
China’s Skyscraper Age Is Over
As workplace habits change, supertall buildings are sitting empty.
By Adam Minter
June 12, 2017, 5:00 PM EDT
At more than 2,000 feet, Shanghai Tower is the world’s second-tallest building. …Only 60 percent of Shanghai Tower is rented out, and only a third of current tenants have actually occupied their leased space…
…more than 600,000 square meters of new office space went on the city’s market in the first quarter of this year, with an additional 850,000 coming soon — even as rents are trending downward and vacancies are up. That’s common in many of China’s biggest cities.
..In 2014, the average one-way commute in Beijing and Shanghai exceeded 50 minutes — longer than in New York — while six-hour round-trip commutes are not unknown.
Perhaps more significantly, workplace habits are changing. Older generations were raised to appreciate lifetime employment and the stability of a large organization — precisely the sort of companies that tend to occupy tall office buildings. But millennials in China, as elsewhere, are embracing gig work, part-time opportunities and entrepreneurialism.
——————–
Since when are there Chinese Millenials? The American generational model is derived from WWII, which I’m not sure affected Chinese demographics. If anything, shouldn’t these young Chinese be the one-baby generation?
Where is Albuquerquedan when you need someone to convince you that any article expressing concerns about the health of China’s economy is wrong?
Shanghai 45 % one year gain in house prices
No bubble here, as we often say when China home prices are skyrocketing at historically unprecedented and unsustainable rates…
Empty newly-constructed buildings are a natural artifact of a command-and-control communistic economy, where there is no free market price mechanism to allow supply and demand to reach or even approach equilibrium.
I don’t know about that, P-bear. Wasn’t there a ton of empty office space in capitalist USA, especially after the dot-com crash? Many unfinished see-through glass office towers. Not to mention the empty luxury apartments (but those I guess are an artifact of the command-and-control Fed and their easy credit.)
Vanity and easy credit. White Elephants all around the world.
And ignorance - especially ignorance.
The part of the U.S. economy that stimulates and subsidizes real estate investment is far from a free market system.
So your point is wrong.
‘At more than 2,000 feet, Shanghai Tower is the world’s second-tallest building. …Only 60 percent of Shanghai Tower is rented out, and only a third of current tenants have actually occupied their leased space…’
so, about 20% occupied……
Like I said before, most of the business on that side of the river is there because the govt *strongly encouraged* them to be there. I can totally see how signing the lease would make the govt leave you alone while taking your time actually moving anything important over there might make more business sense.
Sort of a “How to Hide a Ghost City in Plain Sight”.
Kind of, except it’s not exactly a ghost city. There’s a ton of stuff over there…but not all of it was voluntary, and I can see how some games might be being played.
I was thinking of the empty floors in that one vanity tower alone.
“Regardless of where the Irish market is headed, John McCartney, director of research at estate agency Savills, believes the two biggest problems of the last decade will be avoided. ‘Because the credit has been rationed [courtesy of the Central Bank’s lending rules] you’re not going to get banks with heavy losses arising from bad loans; and we’re not going to get people with impossible debt burdens.’”
“He also doesn’t believe that this period of very rapid house price growth will be followed by a crash either. ‘I think it’s just going to be a glide path to slower, more sustainable growth. The fact that so many investors are piling into the market is indicative that there are very good returns and the reason that there are such good returns is that rents are growing so strongly and the reason that that’s happening is because there is not enough housing units to go around.’”
____________________________/
This guy sounds like an Irish Lawrence Yun. It’s interesting that the same justifications for unrealistic housing prices are being voiced worldwide, you’d almost think that everybody got together in a room and agreed on them beforehand.
The Irish people bailed out their irresponsible financial sector. They’ll be doing it a second time. The more painful the lesson, the more recalcitrant the student.
All of a sudden Americans are souring on the housing market
excerpt:
So a Bad Time to buy
Fannie Mae’s survey, “the most detailed consumer attitudinal survey of its kind,” as it says, threw some very untoward data points into the mix:
Americans who say it is a bad time to buy surged 6 points from April to 33%, the highest ever in the data series.
Americans who say it is a good time to buy fell 2 points from April to 60%, tying for the lowest level in the data series.
Suck ‘em in, shake ‘em out.
How many of those “who say it is a good time to buy” would like to sell?
When you make money off of transactions, it’s always a good time to buy or sell. There is one point on which I’m curious: the last bubble featured the head-over-heels involvement of many people employed within the real estate industry. You’d see mortgage brokers, appraisers, house salespeople, etc. owning several speculative properties. Is that happening again?
I suspect that in places like Vancouver and Toronto, local politicians are heavily invested.
The toxic trifecta of UHS, appraisers and mortgage dealers is ever present and treacherous.
That 60% are tomorrow’s FB’s.
I have so much money left after “throwing money away on rent” every month that I don’t know where to throw it.
I have so much left over after not paying rent or a mortgage that I am having a blast, because I do know where to throw it.
(raises hand) Here! Here!
If you were a normal person, I would say that you should be throwing that money into an investment account with a decent return. If you had a real job, you would be retiring from that real job at some point. Then you would need that saved money to buy a dwelling outright.
But since you are a slightly arrogant early Millenial trust fund baby, the only advice I can give is to keep hiking and toking and tindring and abiding, dude.
I think that he’s too old to be a millennial.
He might be borderline. Given that he goes mostly on day trips to ski, instead of staying at a lodge, and eats homemade sandwiches when he goes (if I recall correctly), either he’s a tightwad, or he exaggerates about how much money he has to throw around.
Quite the sewing circle you ladies have going here.
The oldest Millenials are hitting age 35-36 now.
But my original point still stands. No matter how you slice it, it’s best to have a paid-off dwelling when you retire. Whether you rent for 30 years and save your pennies, or buy earlier and pay off the mortgage, get a paid-off dwelling.
“No matter how you slice it, it’s best to have a paid-off dwelling when you retire.”
I’m there. However, I wish I were closer to a metro area with real services, e.g., airport, hospital, sports, etc., but I am situated in a low-overhead environment. The thought of a “tender vittles” retirement isn’t comforting.
“But it’s a Great Time to sell.”
“…from 9 million yuan (US$1.3 million) to 18 million yuan…”
There is no place like home.
Heading to Thailand in the fall and as part of trip planning I was watching videos on where to stay, what to eat, etc. Came across one video a few months back of (I think) a british ex-pat renting a condo who pointed out all the flimsy construction in the building. Some of it, like some sort of glass paneled rail around the rooftop pool, looked pretty dangerous - if you leaned against, sayonara. Another video of another ex-pat was saying it makes much more sense to rent (as he did) instead of buy as prices were insane and even drove around his area talking about the rent vs. buy ratio. Another video by an American just walking around one city showed some of the construction going on and it looked like they were in a rush to throw something up and sell it.
Interesting that all 3 guys who have vlogs on what life is like in Thailand touched on the insanity of housing there. Must be a big deal there for 3 unrelated people with very different backgrounds to touch on it.
Negative equity in autos hitting all-time highs as defaults rise.
Thank goodness housing only goes up, or there would soon be millions of FBs in the same predicament.
http://wolfstreet.com/2017/06/13/defaults-subprime-auto-loans-falling-used-values-negative-equity/
A random thought that occurred to me recently:
One of the under-appreciated but very real costs that I think has come out the government’s handling of this downturn: cultural moral hazard. We talk about moral hazard in the way that it affects bank’s behavior when they are back-stopped, but not about how it affects the moral fiber of our culture.
By cultural moral hazard, I mean that many people have learned that it is advantageous to be scammers, to work the system, rather than to play by the rules. Think of the hundreds of thousands who didn’t pay a mortgage for five, six, seven years—and learned that there were no consequences; what was previously unthinkable is now oh-so-easy to contemplate. Where previously we celebrated people who worked hard and pulled themselves up by their bootstraps, now people have no hesitation to tell a newspaper, and thus the world, that they came out way ahead by working the system. I would posit that we’ll have many more people willing to freeload in the future, rather than work hard and pay off debt. Our culture has been harmed the the way that the Fed chose to kick the can down the road.
We reap what the Fed sews. A broader swath of the population will be even MORE inclined to no-pay or walk-away in the future when it becomes clear that housing is a money-losing investment.
Ha-ha, just look at CONgress. There’s a bunch of moral hazard right there.
What a collection of vile scum. (with a few exceptions)
“Think of the hundreds of thousands who didn’t pay a mortgage for five, six, seven years—and learned that there were no consequences…I would posit that we’ll have many more people willing to freeload in the future, rather than work hard and pay off debt.”
I’ve been thinking about this a lot recently as I watch houses that not long ago sold for $350k go well over $750k and go pending within a week, then close. If the banks didn’t want them back in 2009, they’ll surely not want them back at even higher “valuations.” This means, aside from those who can afford these places, people will squat there with no consequences. In fact, I’m half kidding about studying up on squatters rights here, finding a vacant property and just camping there myself, after changing the locks of course.
Aaron Clarey just did a video of this - evil makes money. The example he used is the fat acceptance movement, as if its not completely destructive to your health. But people are pushing it and making a lot of money off of it.
The Dems, especially Ozero, Mel Watt, Franklin Raines and others push speculation in housing - its a way to keep their peeps loyalty at the voting booth. Eventually you have a feral population who feels they are entitled to free everything - housing, health care, education, a living wage and no responsibilities or work is required to earn anything. Thats where we’re at right now.
The Dems, especially Ozero, Mel Watt, Franklin Raines and others push speculation in housing - its a way to keep their peeps loyalty at the voting booth. Eventually you have a feral population who feels they are entitled to free everything - housing, health care, education, a living wage and no responsibilities or work is required to earn anything. Thats where we’re at right now.
That doesn’t make any sense. I can’t see how “speculation in housing” would lead to a “feral population who feels they are entitled to free everything”.
Also, there so many people involved in pushing speculation, including many in banking. It’s odd that you would point out “Ozero, Mel Watt, Franklin Raines”. Gee, what do those three have in common?
Its clear from your constant “correcting of the record” here that you know very little about the real world and just parrot whatever fake info the (((ny times))) spews. Who knows, its likely youre quite old - like your leaders - and possibly disabled so your ability to experience reality is probably very limited. You have never mentioned any anecdotes drawn from real life ever that I can recall, and specifically never anything related to the housing market. Youre just here to harangue people into your PC-inspired utopia and yet you have probably done more to drive people away from your cause with arguments only a lobotomy patient could appreciate.
And the answer to your question is: poverty pimps
Youre just here to harangue people into your PC-inspired utopia
You probably can’t state an example.
Its clear from your constant “correcting of the record” here that you know very little about the real world and just parrot whatever fake info the (((ny times))) spews
So you must have met Franklin Raines personally and not read about him in the news.
You have never mentioned any anecdotes drawn from real life ever that I can recall, and specifically never anything related to the housing market.
Actually, I have a few times. A few weeks I mentioned something I learned form a family member who used to be a realtor.
But I don’t mention personal anecdotes frequently because they don’t often make for an interesting discussion.
And the answer to your question is: poverty pimps
We all know that that is not the truth.
Where previously we celebrated people who worked hard and pulled themselves up by their bootstraps
Those people are no longer celebrated, in part, because there are very few of them. It’s much more difficult for people born into poverty to overcome that poverty through hard work.
“It’s much more difficult for people born into poverty to overcome that poverty through hard work.”
No, it is not. It is just far easier now to be a victim.
You’re just espousing what’s called the Just World Hypothesis. It’s possible programmed into many human brains before birth.
It’s much more difficult for people born into poverty to overcome that poverty through hard work.
Why, Mike, WHY? I want a real answer this time. Or are you just going to hurl the usual vague innuendos as you usually do?
There’s a whole list of reasons. I may have gone through them in the past. Go and Google up the Great Gatsby curve. There’s a relationship between inequality and social mobility. The rise in inequality has been fueled things like the decline in the unions, the failure of Congress over the past few decades to raise the minimum wage to keep pace with inflation and worker productivity, the growth of Wall Street, NAFTA, the outrageous increases in tuition at state universities. Our phenomenonally wasteful health care system plays a small role.
The culture is also a factor. The decline in the nuclear family has hit poor kids especially hard.
The decline in the nuclear family has hit poor kids especially hard.
I would think that is the main reason. If a poor kid, especially a minority kid, wants to go to college, there are tons of scholarships available. Of course, they need to be accepted into a real college for that to work, and that won’t happen if they had poor grades in HS, poor SAT/ACT scores or dropped out.
But I have seen my share of smart minority kids go to places like Stanford on full ride scholarships.
Thanks for answering, Mike. I don’t quite agree with your answers. I don’t think health care plays that much of a role. I think most of the issues are created by the outsourcing of jobs to Chindia, the insourcing of millions of unskilled illegal immigrants, automation, the focus on stockholder profits instead of retaining employees, and yes, the culture as you say.
The increase in college tuition is not a factor. Even if college were free, there just aren’t enough college jobs to employ everyone with a college degree.
My list has quite a few items because I think that each of them plays a role. When college was cheaper, the benefits clearly outweighed the costs for nearly all college graduates. That’s not the case anymore.
I might also that, a couple of decades before NAFTA, the big challenge came from Japan. Corporate America’s failure to meet that challenge played another role in the loss of good manufacturing jobs.
By cultural moral hazard, I mean that many people have learned that it is advantageous to be scammers, to work the system, rather than to play by the rules.
Bingo. Great post. I’ve been thinking along these same lines, thanks for making it coherent.
Yes. Our very own government has made it easy to become a taker (on gov’t benefits), and very difficult (small business owner who has to comply with a myriad of rules) to be a producer.
My neighbor is on state disability due to a knee injury. He has a permanent handicapped placard. He seems to live a normal life and only does manual labor late at night when nobody will see him doing it.
Noticed several articles on zerohedge comparing current FANG stock mania to 1999 stockmarket bubble.
IMO we need a crash which resets everything and decouples the Western economies from China. China probably recognizes that the west’s interests are different than China’s interest and therefore China started the one belt one road program.
In this century WW 3 will occur and China will challenge USA for world domination.
In this century WW 3 will occur and China will challenge USA for world domination.
But will we play the part of Britain…or Germany…while they play the part of USA with the big manufacturing base and lots of farm kids to draft?
The history nerds are comparing China to what Germany was a round 1900 - a rising industrial power that will start using its newfound wealth to become a military power.
carl. close i think it will be over Taiwan, china will blockade it and force it to join the mainland. aka one china policy
<em.while they play the part of USA with the big manufacturing base and lots of farm kids to draft
China might want to hurry up with the world domination thing, as later this century they are going to be a geriatric nation.
Borrowers to tank hard!
http://www.cnbc.com/2017/06/13/fed-rate-hike-this-week-to-hit-millions-of-borrowers.html
http://www.movoto.com/simi-valley-ca/market-trends/
Simi valley Ca housing CRATERS 7% yoy
The naysayers, that minority of bankers, investors and economists who raised a red flag, were painted as cranks; contrarians; those who got in the way of business.”
How many posters in here are bankers, investors, and economists? Not many, I’m guessing. Those seem to be the LAST people who are going to raise a red flag.
Their paychecks depend on no one raising a red flag.
What came after that was a nightmare for him: land prices dropped, interest rates surged and buyers disappeared. He rushed to sell his properties despite huge losses.
Watch and learn, FBs. Watch and learn.
No one wants to buy Needless Mark-up. Must be waiting for the bankruptcy fire sale.
http://www.scmp.com/business/companies/article/2098199/us-retailer-neiman-marcus-abandons-hope-sale-huge-debt-scuppers
The company continued to struggle with lacklustre demand in the face of stiff competition from Amazon.com and fast-fashion retailers such as H&M and Zara.
This isn’t about one struggling store. This is a seismic shift in the women’s apparel industry. Luxury retailers — Marcus, Nordstrom, Lord and Taylor — all thrived on rich Baby Boomers who dressed well, either in their professional career or in their “career” as trophy housewife who had to entertain. But their Millenial kids are not developing the same taste for quality. Oh, and the high-end stuff is made in Chindia too.
So what do rich woman spend their money (or their husbands’ money) on now? Couldn’t these stores sell whatever that is to them?
Those well heeled women are still buying, their kids? Not so much.
Even wealthy folks are spending money on their mortgage and cars now. The young adults spend a crapload on their dogs too. But mainly, people just aren’t interested in clothing anymore. It’s more about internet and entertainment.
“My father always said about the California coast: ‘They don’t make any more of it,’ ” he said. “But here it is.”
http://www.mercurynews.com/2017/06/13/big-surs-brave-new-routes-cross-epic-landslide/
The standard arc of a debt-driven market runup. Credit standards start declining as the boom ages. NAR is quietly starting to push subprime again.
Does Anyone Remember How to Make a Subprime Mortgage?
By Kristen Grind
Realtor.com
Jun 13, 2017
Brokers willing to learn the lost art of making risky mortgages are in demand again.
Brandon Boyd was a high school junior during the financial crisis. Now, the former Calvin Klein salesman is teaching mortgage brokers how to make subprime loans.
A big hurdle: finding the right kind of brokers and instructing them in the lost art of making a subprime loan. Some are returning to the industry for the first time since the crisis. Others like Mr. Boyd have never been in it.
http://www.realtor.com/news/real-estate-news/anyone-remember-make-subprime-mortgage/
With the exception of Trump’s election and Brexit, what a tremendous triumph these last ten years have been for the forces of the status quo. From the beginning, the intention was to restore 2006, in every way.
It will be an ephemeral victory, though.
None of this will ever go away, or correct, until the FED is a distant memory. Take that to the, ahem, bank.
https://m.youtube.com/watch?v=RfOrC_RI50U
Boogie Down Productions, 1987
Where were you that year….
Upstate NY (Finger Lakes, Syracuse) is looking more like an Oil City escape plan for me. You can find a house for $100K or less in good shape with land.
If you do come here, rent for a while. Get to know the place. Some of the micro environments are rather extreme relative to others in the winter, because of Lake Ontario. The shacks you are looking at might not be year round ready, or a long drive to the store.
Mind the 3% tax on that $100K shack.
We are in a bubble just like the rest of the country. It’s just overlaid on a more depressed economy.
I love it here, but I am not from somewhere else.
I was born in upstate N.Y. and moved away when I was a young child, to the then-alien environment of tropical Latin America. I often have thought that it would be the ultimate irony for me to return one day.
I returned after about 40 years to help my aging parents. I stayed.
Roanoke.
The problem with New York state is that taxes are very high. There are plenty of other states with more reasonable taxes and the same $100K houses. Some time back, weren’t we looking at Roanoke VA and Fayetteville NC?
By the way, the other day I road tripped to the actual Oil City. It was much nicer than I thought. And dirt cheap.
Of course NY taxes are very high. Democrat patronage and graft rackets are not self-funding.
add utilities
VA 9.4cents per kwh w some green states heading for 25
MD is 12 cents w taxes about 15% higher
FWIW, Colorado generates about 20% of its power from wind and I pay about 8 cents/kwh
“FWIW, Colorado generates about 20% of its power from wind…”
I wasn’t aware that is was that high. Here’s a gis map.
http://www.nrel.gov/gis/images/30m_US_Wind.jpg
Deceiving I think.
From instituteforenergyresearch.org:
“Colorado has moderately affordable electricity with average prices lower than the national average. Over 60 percent of Colorado’s electricity is generated by coal, the most inexpensive
source of electricity. About a quarter of Colorado’s electricity is generated by natural gas. Hydroelectric and wind power combined account for almost 10 percent of the state’s electricity generation. Major rivers flowing from the Rocky Mountains offer hydroelectric power resources.”
If you choose a cheap Oil City house in a mild climate, it might be worth getting a solar system to help with the utilities. For those desert rats I suppose.
Oil City itself didn’t seem to be a bad place. I didn’t see a lot of industry, but the nearby towns of Franklin and Cranberry looked to be doing well. By the way, at least twice I saw a Super Wal-Mart thriving across the street from a dying mall. That’s the direction retail is headed in this country. One-stop shopping.
By the way, at least twice I saw a Super Wal-Mart thriving across the street from a dying mall. That’s the direction retail is headed in this country. One-stop shopping.
When is shopping “fun”? When you have plenty of money and plenty of time. When do you want one stop convenience at low prices? When you don’t.
My guess is that most of the people who used to go to the mall have less money now and would rather spend their time on the internet than hanging out at the mall with less money.
Cranberry is an entire world away from Oil City. Cranberry is a boom town suburb of Pittsburgh and Oil City is not. My farm was about between the two.
Interesting, Blue. According to google maps, there appear to be two Cranberry Twp’s in PA. The Cranberry I saw was much closer to Oil City, near East Sandy. Even the northern Cranberry appeared to be doing OK.
I was expecting Oil City to be a run down old oil town or mill town, but I was surprising how well kept most of the houses and stores were. The sister town Franklin was even nicer. However, I suspect things will be very different in 20 years as the boomers are no longer importing Social Security monies to support the towns.
That’s the direction retail is headed in this country. One-stop shopping.
WalMart is essentially the new “main street”. I wouldn’t be surprised if they actually embraced that and re-organized the insides of their giant stores to resemble actual main streets, complete with “storefronts” for various departments.
Oh. I either didn’t notice the second Cranberry Twp or forgot about it. That’s quite the Sunday drive from your place. I was through Oil City quite a few times but usually took 79 if I was going to Eire or Buffalo.
Oh, I did it over a couple days. I also stopped for a bit in State College because a couple of my friends went there. Because people with mortgages can’t do that.
The uber lyft fallout……
as the growth of ride-hailing apps like Uber and Lyft has sent the value of a medallion plummeting, from a high of $1.3 million in 2013 to less than $250,000 in 2017.
http://sunnysidepost.com/taxi-king-and-sunnyside-resident-charged-with-failing-to-pay-5-million-in-mta-taxes
Well, Uber is going down, for sure. The sad result of this will be no Uber, no taxis. Nobody wins.
As soon as we get past the stage where there are players willing to lose money to gain market share, somebody will survive and make money.
That’s a good point, Carl. That’s what has to happen.
With the recent surge in high rise and high density residential buildings the London fire is a warning sign of what can happen if a fire spreads in an upward direction. Instead of being told you are on your own in case of a fire. They were told stay in place and the fire dept. will come along shortly.
I think this was low end housing. Four units per floor and each unit had 4 bedrooms. One can only imagine how many children were in the building.
watched it live on sky news last night, that should have never happened, shoddy construction no sprinklers in hallways ..i read poor insulation….seems they refurbished the outside with plastic….
aNYCdj
Who is or was Jack Casagrande?
I was looking at pictures of Brien McMahon High School’s graduation and saw the field was named Jack Casagrande Field.
The Brien McMahon High School’s Fifty-Sixth Commencement Exercises on Tuesday June 13, 2017 in Norwalk Conn.
http://www.greenwichtime.com/
Back when we had phys ed 2 hours twice a week as a mandatory class no wussieness then.
Casagrande taught physical education at McMahon for 35 years and was head coach of the wrestling team for over two decades.
It is simply horrible - and since they did a refurbishment (of sorts) to the building recently, how in the heck were they not required to bring the building up to the modern fire code???? And in a major global city that should have it’s stuff together regarding building codes and standards.
The death toll is going to be high on this one. It’s going to take them weeks to even figure out how many were actually lost.
It goes to show once again: when disaster strikes, don’t ever trust in government to take care of you.
“And in a major global city that should have it’s stuff together regarding building codes and standards.”
Council housing is owned by the municipal government (i.e. the council). When a huge percentage of your populace lives in such housing, there’s no way the council can afford to do such things, even with the huge taxes in the UK.
Fire codes represent big government telling private business what to do. Make up your mind.
As this sad example shows .gov exempts itself from such requirements. Bottom line: if there ain’t no money, it ain’t gonna happen.
“Bottom line: if there ain’t no money, it ain’t gonna happen.”
+1 Eventually we have to deal with the math.
Agreed, this is nightmarish. Those are the worst images — people jumping out of windows. 911 was like that too.
I think this was low end housing.
I believe that it’s what Brits call “Council Housing”, in other words it was welfare housing. From what I saw in metro London, there are two types of housing: million pound plus row houses for the well heeled, council housing for the free sh!t army.
And the free $hit army rule London.
Oh yeah, that crowd in the Square Mile will probably be looking for another bailout in a few years.
Precious metals off to the races this morning, despite the Fed supposedly poised to raise rates.
http://www.kitco.com/market/
But…but…recovery!
http://www.zerohedge.com/news/2017-06-14/retail-sales-tumble-most-january-2016-gasoline-electronics-prices-slump
Hong Kong Parking Space Sells for Record $664,300, Ming Pao Says
by Fion Li
June 13, 2017 7:38 PM
➞
Car park cost more than some two-bedroom homes in the city
➞
Sale price was HK$27,500 per square foot, newspaper says
Hong Kong just set another property-price record. This time, it was for a parking space.
A 188-square-foot space on Hong Kong island sold for HK$5.18 million ($664,300), or HK$27,500 a square foot, last month, newspaper Ming Pao reported Wednesday, citing land registration records.
The car park cost more than some Hong Kong homes: Centaline Property data shows a HK$4.2 million sale of a 284-square-foot, two-bedroom home in Sha Tin, in the New Territories, in April.
https://www.bloomberg.com/news/articles/2017-06-14/hong-kong-parking-space-sells-for-record-664-300-ming-pao-says
Why does this make me think of the movie Bladerunner?
I’ve rented a series of SFH since we arrived here in Las Vegas from NY in 2006.
LL’s agent called to say an appraiser is coming over. He says it’s because the owner is refinancing a 2014 loan from the 5% range to 3%.
I asked him when we could sign the new lease (exp. June 30), he said he’d get a “temporary extension” (?) to us shortly.
If we’re getting the boot, and it feels like that to me, in 11 years we’ll have moved five times, only two times voluntarily.
In 7 yrs I have moved once. My rent is about $500 below market rate.
All good.
I move every day or two. The only thing I have to pack is the beer fridge. Mooring is free.
in 11 years we’ll have moved five times
On the bright side, you’re probably getting good at it.
No.
It does help counteract the assemblage of excess material possessions though. I used to move every three months during college (year-round co-op college program with alternating semesters of work and school 300 miles apart) and I could fit everything into my station wagon.
Now, after living in the same house for 19 years, well, it’s not good . . . but I’ve probably got what you need, if I can find it!
That’s true. I’m in the process of going through my mother’s clothing. I was going to keep some for when I am an old(er) bat, but the hell with it, it’s all going.
“…in 11 years we’ll have moved five times, only two times voluntarily.”
Wow, that’s a lot of time and energy exhausted. Toss in the kids with schools and friends and one can understand why some decide to pull the mortgage trigger.
Wow, that’s a lot of time and energy exhausted.
It has definitely not been worth waiting to buy. Nutty, nasty LLs, inspections. It will be a cosmic joke if we’re forced to buy now after all this time.
No kids involved - daughter is home, but 25 yo and Aspergers-y, and freaking out at a temp job, first one she’s been able to get in a long time. Co-workers sense her difference and bully her. I hope she makes it through the week. Also, this time I don’t have the added pressure of caring for my mother (passed away in February.)
The only good thing was being able to move closer to our jobs, schools, etc.
Well, I don’t know for sure what’s happening yet.
It’s an thankless job navigating a family through the fragility of American’s debt ridden economy. I’ve got one in college and another ready to start in a year, and I’m getting ready to bail on my current job, which is ramping-up to “do more with less.” I’m no spring chicken either; it’s going to be risky.
I hear you and wish you the best.
We pay heavy duty life insurance premiums so my daughter will at least have a nice nest egg when we go.
It looks like some states are doing something about public pensions:
http://money.cnn.com/2017/06/13/retirement/pennsylvania-pension-reform/index.html
New teachers and state workers will no longer get a traditional pension in Pennsylvania.
Governor Tom Wolf signed a bill Monday, making it the ninth state to replace the pension with a “hybrid” retirement plan. It goes into effect in 2019.
The new plan combines elements of a traditional pension and a 401(k)-style account.
Overall, new workers will contribute more of their salary, work longer, and likely receive a smaller payout in retirement than under the current system, according to a report from the state’s Independent Fiscal Office.
“Overall, new workers will contribute more of their salary, work longer, and likely receive a smaller payout in retirement than under the current system, according to a report from the state’s Independent Fiscal Office.”
Anyone else sense turnover?
Just looking at some photos that poor guy Otto Warmbier. Right there’s some globalism for ya. No one ever really told this fellow what communism is really like in some countries. Or Islam, for that matter. I’ll bet he got a lot of happy talk from his teachers and such on how we’re one big happy family all over the world! No one told him that actions can have bitter consequences outside of the US. And at this point, even in the US itself. What might be a prank to one person is a serious offense to others.
And THAT is why borders and strict immigration laws and enforcement are a good thing. Because when this crap starts happening on our shores, as it has, that’s a real problem.
If you’d like to learn about globalism a bit more, I suggest you look at the photos. Oh, and please note, the “official” explanation is that he’s been in a “coma” for the past 15 months due to botulism and a sleeping pill. What a load of horse hockey. He was beaten into a vegetative state. But don’t depend on the lying, filthy media to tell you that. Believe your lyin’ eyes instead.
Sure, what he did was wrong according to the culture and laws of North Korea. But how would he know unless he received guidance from his family, his teachers?
Oh, and never doubt that North Korea is an extension of Red China. And then think about all the Red Chinese in this country and the possible consequences of their presence here in sufficient numbers to enforce their customs and laws on the populace of the US. Good luck with that.
Good ol otto was/is a cia or nsa spy. I am certain of it.
10 billion a month for 400 months ?
fed selling out
When fed sells the 2005 mbps type traunch “vintage” anyone here going to buy ???
Me personally no. But there are plenty who will buy if the price is few enough pennies on the dollar.
Foreign cbs will buy our junk. And the fed will buy their junk.
Game is already played.
And the building did not fall. What does that say about 911?
nothing at all
Does anyone really believe that Yellen the Felon intends to unwind the Fed’s $4.5 trillion balance sheet?
http://www.cnbc.com/2017/06/14/interest-rates-addressed-at-fed-meeting-with-janet-yellen.html