January 30, 2008

International Bits Bucket For January 31, 2008

Please post items of interst from outside the US here.

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Comment by Bye FL
2008-01-30 20:05:11

How much will house prices drop in London, especially central London? One bear predicts 30%, all the bulls say it can’t drop *rolleyes*

Comment by alta
2008-01-30 21:14:52

“it can’t drop” is the brit version of “real estate never goes down”

Comment by ozajh
2008-01-30 22:58:04

Let’s see now, :rolleyes:

Comment by ozajh
2008-01-30 23:02:34

Nope, ah well.

But I digress.

My UK relatives tell me that the % drops are going to be far greater in places like Nottingham and Birmingham than they are in London, and even within London the lower-end suburbs are likely to fare worse than the top-end areas near the city.

Comment by nhz
2008-01-31 01:08:24

yes, I agree with that. As long as money is flowing in the central banking system, homes in the top locations of London will remain extremely expensive as it is the source of the worldwide money spigots. Difficult to say how much homes will drop in London, but certainly the cities and small villages 1-2 hours (or more) from London will do far worse; 50-75% down seems not unlikely there.

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Comment by Dan (from SoFla)
2008-01-30 23:02:59

Well, the Brits are waiting for the Russkies to buy up all the flats in Kensington … while the Miamians and the Manhattanites are waiting for the Brits to buy up in the US.

Of course, the Russkies wouldn’t have their petrol dough if the Yanks didn’t drive their SUV’s every day.

And round and round it goes.

Comment by Jas Jain
2008-01-31 02:30:14

Wherever the prices were during 2000-02, IMO. How much have prices in London gone up over the past 5-7 years? 200%?


Comment by nhz
2008-01-31 05:06:24

probably +60-100% (+8-12% yoy), depending on area. Most of the price gains in the hot areas of Europe occured already before 2001. Over the last five years the big gains occurred in the newer EU countries and speculative areas along the Meditteranean Coast.

If I look at my country the gains from 2002 to 2008 are +50-100%, depending on area; but between 1990 and 2001 pricegains were already +350-500% …

Comment by Professor Bear
2008-01-30 20:49:18

Stop behaving as whiner of first resort
By Ricardo Hausmann
Published: January 30 2008 19:36 | Last updated: January 30 2008 19:36

The same voices that supported tough macroeconomic policies to deal with the excesses of spending and borrowing in east Asia, Russia and Latin America are today pushing for a significant relaxation in the US to deal with the so-called subprime crisis. Interest rates should be slashed quickly and $150bn put into taxpayers’ pockets by April at the latest, they say. The Fed cut by another half-point on Wednesday.

The goal seems to be to avoid a 2008 recession at all costs. As Larry Summers, former Treasury secretary, put it, failure to act would make Main Street pay for the sins of Wall Street.

It is easy to lose sight of the overall picture. Main Street consumers have overspent and over-borrowed and are unable to meet their obligations. The fact that households may have so behaved because they were enticed by “teaser loans” does not change the facts; it only assigns blame. Consumption has been above sustainable levels and needs to adjust down, whatever view one has about the responsibility of adults over their financial decisions.

An efficient adjustment to the US over-consumption imbalance (and Chin­ese under-consumption) in a way that does not hurt longer-term growth should be based on compensating for the decline of US consumption with an increase in domestic investment and in consumption abroad. It should not be based on giving the US consumer more rope with which to hang himself.

Hence, macroeconomic policy should not be based on a panicky attempt to avoid a 2008 recession at all costs but on a forward-looking strategy that achieves the needed reduction in consumption at the lowest cost in terms of the stable growth. This is not achieved by giving US households a $1,000 cheque by April, a trick that no macro­economic textbook would argue is particularly effective. If there is fiscal room – a big if, given the weak structural position of the US government and its likely cyclical worsening – it would be better spent in accelerating investments in plant and equipment via accelerated depreciation schemes, to improve the capacity of the economy to keep on growing after the crisis.

The logic behind monetary easing is also suspect. Much of it is automatic, as central banks pump in money just to keep interest rates steady. It is understandable that politicians facing a November election and bankers with a lot of their money at stake should feel that this is the worst crisis ever and have an obvious interest in exaggerating the consequences for Main Street.


Excuse me, pardon me for interrupting this lovely and fascinating diatribe, but has there ever previously been a downturn where things turned so far south so fast, to the tune of billions and billions of dollars of bank writedowns that seemingly came out the blue and so far show no end in sight? If so, then I concede the point that this is not the worst downturn ever. Otherwise, the jury is undecided.

Comment by vozworth
2008-01-30 21:15:55

when you cant find the bottom, HOZ pegged a market crash. The great unwinding is here.


gold, equity, commodity, debt, currency, information?

the depth of understanding is shaking foundations….derivatives are concerned..

got counterparty risk?

Comment by Professor Bear
2008-01-30 20:54:51

Where would the costs of a bond insurer bailout fall? (My guess: Savers in dollar-denominated assets…)

US bond insurers expected to fall further
By Aline van Duyn and Saskia Scholtes in New York
Published: January 29 2008 21:13 | Last updated: January 29 2008 21:13

Large numbers of investors are continuing to ‘short’ shares in Ambac and MBIA, the two biggest US bond insurers, suggesting expectations of further share price falls despite growing efforts by regulators to push through a rescue plan for the sector.

According to Data Explorers, which tracks short selling, the percentage of shares on loan relative to the market capitalisation of Ambac stood at 40 per cent last Thursday. For MBIA, the proportion was 39 per cent.


Comment by vozworth
2008-01-30 20:56:34

International flavor:

The US housing market is tanking, led by Australia.

The Internation bond market market is fake. Why: The US exported the Ficticious Capital, these markets are supported by the purchasing power of individuals..

The individual is sayin, F#CK OFF!

What can I do without? Where can I cut cost?

Comment by from_usa
2008-01-30 21:24:44

My uncle bought 6 houses in Australia (Melbourne and the Gold Coast) and he is renting them now. He bought them from 2001 to 2003 these houses. I’ve been telling him to get out of the market and cash the profits. he has been very adamant and is waiting for thr next up cycle in 4-5 years from now and that is when he’ll sell them. He is not able to understand what is coming in between the next boom cycle: a major bust.

Comment by Bye FL
2008-01-30 22:16:11

He will be waiting decades, not years. Can he absorb the losses for that long or will he walk away?

Comment by from_usa
2008-01-30 22:26:39

He says he has 40-50% equity in them and he is saving for his retirement this way. He is 61. God knows will he ever see his retirement amount??????????????????

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Comment by ozajh
2008-01-30 23:07:59

Be aware that while there are problems in the Western Suburbs of Sydney (traditionally the bottom end of the Sydney market), the Australian housing market as a whole is very, very healthy at the moment.

I speak as someone who sold in 2004, and is now watching in disbelief as already crazy prices ratchet even higher. The suburb in Canberra I now rent in had a median price rise of 25% in 2007.

Comment by nhz
2008-01-31 08:05:14

what ozajh says sounds similar to Netherlands around 2001: there was a mini-crash in the most speculative areas like Amsterdam (-30% or so, probably similar to Sydney and really nothing compared to the prior runup of around +500%). Many people called the end of the Dutch housing bubble then. But average national home prices kept rising without a glitch, because more remote areas took over with double digit pricegrowth. Although it looked like a crash, 2001 was just a minor bump on the road of the housing bullmarket; even prices in Amsterdam are now far higher than in 2001. Never underestimate bubble forces…

Comment by Professor Bear
2008-01-30 20:56:53

Qatar considers dropping dollar peg
By Simeon Kerr in Dubai

Published: January 30 2008 19:59 | Last updated: January 30 2008 19:59

Qatar is reviewing its currency policy and could revalue or drop the dollar peg as the booming Gulf state struggles to tame inflation while the US reduces interest rates to head off a recession.

Qatari officials on Wednesday said the gas-rich emir­ate was considering revaluing its currency or linking it to a trade-weighted basket of currencies as well as other policy proposals aimed at cooling rampant inflation of up to 15 per cent.

Abdullah al-Attiyah, the oil minister and deputy prime minister, on Wednesday said the central bank and finance ministry were studying a currency revaluation, but he did not say when any decision would be made.


Comment by vozworth
2008-01-30 21:07:57

creating volume of poor ideas to create slope in a currency..

The value is false.

Comment by vozworth
2008-01-30 21:10:59

th alue of oil is a function of the plastic and cloth of the emerging market…

make your clothes, dont watch the tele.

Watch it fall….

the price of gas will be greater than 4 bucks a gallon,
summer aught eight greater forty eight.

Comment by yogurt
2008-01-30 21:55:32

Qatar is reviewing its currency policy and could revalue or drop the dollar peg as the booming Gulf state struggles to tame inflation

And who says the US doesn’t export anything any more? ;-)

Comment by Neil
2008-01-30 23:02:39


Nitpick, much of Qatar’s inflation is due to growth in India, Pakastan, and the Philipines. Their economy is dependent on cheap imported labor due to a rather unproductive domestic workforce. This is actually a positive effect of globalization.

However, Qatar sells oil in dollars and buys goods in Euros. I would be surprised if they didn’t go to a basket of currencies to ’store the wealth.’ For unless the funds are immediately re-invested, that level of money cannot be easily stored in anything but government bonds…

Got popcorn?

Comment by Professor Bear
2008-01-30 23:09:06

As I note below, bad subprime debt was a leading U.S. export product in recent years…

Comment by vozworth
2008-01-30 21:05:57

The failures in:
1. Communication distribution
2. Finanacial knowledge
3. Individual sustainability
4. Leadership
5. Application of understanding

astound me.

I cannot make the world do what it is, or is supposed to do. All I can do as an individual is lead, teach, act..and do. Be a maker of things, be a doer of things, make something happen. Observance of behavior is a method of learning.\\

make the world what you desire, make the world believe “what is so?”.

Those that come here are the strong hands.

Comment by Professor Bear
2008-01-30 21:09:28

Last Updated: Tuesday, 29 January 2008, 15:59 GMT
New dip in US consumer confidence

Consumers are wary of spending in the current economic climate

Confidence among US consumers fell sharply in January on worries about the health of the job market and business conditions, new figures show.


Comment by vozworth
2008-01-30 21:12:27

why spend?

when the technology treadmil always exposes lower prices?

Comment by Professor Bear
2008-01-30 21:16:38

Big Japan banks’ subprime losses seen at $4.7 bln
Nikkei: fiscal year losses to total nearly 30% of combined projected profits
By MarketWatch
Last update: 4:42 p.m. EST Jan. 30, 2008

SAN FRANCISCO (MarketWatch) — Japan’s four biggest banks face 500 billion yen ($4.7 billion) in losses associated with U.S. subprime mortgages in the current fiscal year through March 31, according to a published report.

These losses represent nearly 30% of a combined 1.9 trillion yen in projected group net profit for the current fiscal year for Mitsubishi UFJ Financial Group Inc. , Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Sumitomo Trust & Banking Co., the Nikkei reported on its Web site in a report dated Thursday.


Comment by Professor Bear
2008-01-30 21:20:34

Expect more than a typical recession
Commentary: Bankers’ and brokers’ greed has undermined our economy
By Bill Donoghue, MarketWatch
Last update: 7:15 p.m. EST Jan. 30, 2008

SEATTLE (MarketWatch) — Call this the perfect financial storm or what you will; Wall Street has made fools of financial institutions around the world with their CMOs, CDOs, and greedy boo-boos. At least they didn’t lose as much as their customers. The stock market is in distress, bond insurers are looking for a $200 billion bailout, junk-bond markets are at risk of further losses and life-, home- and auto insurers’ risk has not yet been fully assessed.

As for you personally, it’s every person for themselves and their family. Study the charts: This is a bear market.

The worm turns

The Wall Street worms have made our economy rotten to the core. Combine dazed and confused credit markets with globalization, and our economy is in a bind. A Fed rate cut won’t turn things around for more than a week.


Comment by Pamala in Argentina
2008-01-30 22:25:51

Professor Bear, I read your posts with anticipation, but I am disapointed that you, especially, do not adhere to the ‘thread topics’ that Ben puts forth. You are above this!

Comment by Professor Bear
2008-01-30 23:07:14

“Wall Street has made fools of financial institutions around the world with their CMOs, CDOs, and greedy boo-boos.”

That sounded plenty international to me — bad subprime debt has been a leading U.S. export in recent years! Sorry to offend thee, oh queen arbiter of the blog.

Comment by Pamala in Argentina
2008-01-31 10:51:12

My bad. I should have read the articles more closely before shooting off my big mouth. Sorry.

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Comment by rellimgerg
2008-01-30 23:46:05

Chill out! I’m enjoying his posts. :)

Comment by sleepless_near_seattle
2008-01-31 01:16:35

Should I buy some gold? Discuss.

Comment by Lost in Utah
2008-01-30 21:26:28

Here in the State of Utah, all the flags are flying at half-mast on FEDERAL and STATE buildings to mourn the loss of President Hinkley of the Mormon (LDS) Church. So much for the separation of church and state. One of these days I’m moving back to the good old United States.

Comment by foreclose_me
2008-01-31 02:03:54

I’m no fan of Mormons, but there is nothing wrong with this. Separation of church & state is an ACLU myth designed to attack the culture. The actual First Amendment states that there can not be an Establishment of Religion by the federal government, and elsewhere the Constitution says there can not be religious tests for federal office.

The purpose was to assure religious denominations in each state that the new USA would not help the other guy get the jump on them.

Comment by In Colorado
2008-01-31 08:27:55

Did flags fly at half mast when Pope JP II died ? (I do not recall). After all, there number of Cathoics in the US is an order of magnitude greater that the number of LDS.

Comment by Lost in Utah
2008-01-31 08:41:18

No, my point exactly. If we’re going to go half-mast, do it for all major religious figures. I can guarantee they wouldn’t do this for the Dalai Lama (I’m not Buddhist either, BTW).

Comment by DavidInOpelika
2008-01-31 11:03:21

Is the Pope Catholic American?

Comment by Lost in Utah
2008-01-31 13:35:17

Sometimes the obvious just ain’t so obvious…LOL

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Comment by from_india
2008-01-30 21:34:46

Will this bubble ever burst in India. I’m sick and tired of people claiming how good investors they are and how smart they are in making money. I just don’t like it when a lot of people get it too easy without even knowing the basics and facts underneath the current situation. A very medium style low level condo (flat) in Delhi costs more than US$200K and high end can go upto USD1.4 to USD 2.0 million. Such a speculative behaviour with average household income of $2,000 per year.

Comment by JaiT
2008-01-30 22:14:49

You are not alone from_india. I am with you and have been bearish about indian Real Estate.

I know some of my friends who HELOCd their house/condo and invested in India assuming themselves so smart that why the hell I did not do it when its easy to double the money in a year.

But recently, they try to avoid any conv related to real estate. I am not able to stop myself having a smirk on my face when I see them turn blue while taking about RE.

Still they think Real Estate in India wont go down because its different in India and all the people who bought RE are rich and smart. Sure HELOCing house/condo in US and bought at the peak in India and holding….. Smart for sure.

Comment by Bye FL
2008-01-30 22:21:13

The bubble is global(a few countries were less affected) most of America house prices are a ripoff. Only thing one can do is rent or relocate to a cheaper location and ride this insanity out.

Comment by Pamala in Argentina
2008-01-30 22:33:54

Think South America.

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Comment by nhz
2008-01-31 04:25:04

the US is leading the pack in the downslide of first world home prices (Argentina had a false start, obviously). I think it will be difficult to find something that is much cheaper (taking local income into account), unless you want to accept a radical change in lifestyle. Cheaper areas in the US have very competitive pricing now compared to Europe and most other first world countries.

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Comment by In Colorado
2008-01-31 08:29:57

Isn’t that sad? As unaffordable as it has become here, its a bargain when compared to anywhere else.

Comment by Neil
2008-01-30 23:05:14

This reminds me of comments on Tech stocks before the dot bombs busted. Coworkers bet everything on the ‘easy money.’

Cash will be king very quickly. Or maybe that’s gold…

Got popcorn?

Comment by JaiT
2008-01-31 12:47:18

My friend and his wife who have been working from 1996, put all of their savings in Tech stocks starting 98-01 closely following analysts and lost $250k+ and the jobs in 01.

Moved into their sisters house in SF Bay area and stayed until my friend’s wife got a job in 2003. 2 years living in his sisters house strained their relationship and they are not that close anymore.

Icing on the cake…. They maxed out credit cards and took out loans of about $100K to “invest” in stocks.

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Comment by JaiT
2008-01-30 23:25:14

latest updates from HYD, India:

there is unknown ‘lull’ in the market. Builders & home owners do not want to reduce the prices. Buyers do not want to buy with high prices. Hence, no transactions taking place. Time will tell who are the winners. It’s a good game going on. lay your options .

Comment by JaiT
2008-01-30 23:31:30

Information I found on Indian forum.

My cousin just came from Hyderabad, India; his 2 cents on HYD-RE.

He visited Shamsabad-new airport, Fab City, Hitec city surroundings: Pls. see his comments on each area below.

Shamsabad: He found that so many plots are for sale and most of the plots owned by NRI’s(Non-Resident Indian). When he visited that area to see the plots there are 20+ brokers approched him to sell the plots. He thinks that this area is satuarated plus no re-sale value to the existing plots. Those who bought

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Comment by JaiT
2008-01-30 23:35:01

This one is my favorite.
I live in Jax, FL. I have 9 plots close to meerpet. I brought these in 2002 and planning to sell 3 plots(200/250/300 sq yards) for market rate. If i get one buyer, i will give good discount. Clear titles and personnel guarentee. These plots are walkable distance from Engineering college. Close to future ring road(2kms.). Some houses already built around the area. I will write more details about these plots some time tomorrow. Mean while any questions, send me a email. These are good investment.
These plots are below 1/2 Km to Matrusri Engg. College.
These are under Nagargool gram panchayat. On the way from Balapur to Badangipet. The 200 ft road that connects these area is called Adibatla road.
Let me know if any one interested. Planning to sell Rs.3100 per Sq Yard.

Comment by JaiT
2008-01-30 23:38:16

Here is the reason for the sale of above plots(empty undeveloped land to build a house).

Why i am selling?
Recently brought home in Jax,FL. Need some money to pay off part of mortgagee loan to reduce monthly mortgagee payment.
I will keep rest of the plots for future.

Comment by from_india
2008-01-31 00:01:36

I think by summer 2008, most of the world markets will start seeing the truth. Especially India where the stock market (SENSEX) could go back to 10,000 points from 18,000 (as of today). The first phase as was seen in the US in 2005/6 is denial phase. This is what is happening there right now. Next phase would be realisation and price drops and then substantial price drops. 60-70% people there seem to be speculators.

Comment by nhz
2008-01-31 01:16:06

even in the very optimistic view that this is just a correction in a bull market, a correction could erase 62% of the previous gains (in most countries the gains from the 2002/2003 bottom) before the bull continues. In Europe that would amount to 40-50% decline from the top of last year.

Comment by Sick of bangalore
2008-01-31 07:51:58

Its the same in Bangalore.. nearly $200K for a 2BHK. The apt rents for 500$ while the mortage payment per month is nearly $1500. There are 100,000 vacant apartments on account of pure speculative buying. Infrastructure is terrible..

Comment by In Colorado
2008-01-31 08:32:54

We are hearing at work that the salaries of our Indian colleagues will be at parity with ours in just a few years (software engineers). Managers are already at parity.

Next stop, Brazil!

Comment by from_india
2008-01-30 21:38:24

And god knows why institutional investors are playing with the retirement money of a lot of people in the west by investing it in emerging world. Maybe good in the short run but stock markets all over Asia have a 50% fat that may start trimming by 2nd quarter of US earnings report.

Comment by Faster Pussycat, Sell Sell
2008-01-30 21:58:24

Blame the RBI for the (implicit) currency peg.

The `carry trade’ will go on until they unpeg.

Comment by Pamala in Argentina
2008-01-30 22:08:17

FWIW, I’m not seeing food, water or energy shortages in Argentina. There are gaps (of course: this it TIA = This Is Argentina), but I am truly amazed at the amount of locally grown food available here. I love this country for its resources, but the people are basically sh$t. Hook up with a reputable Americani if you move out of the county. And, take your time getting to know them. Please, do not rely on Web sites or other media upon which to make your decisions…remember that “America” is a spirit that you take with you!

Comment by In Colorado
2008-01-31 08:34:46

I love this country for its resources, but the people are basically sh$t.

Care to elaborate? I lived in Mexico City for years, and let me tell you, they don’t like the Argies there.

Comment by Pamala in Argentina
2008-01-31 12:32:28

It was inappropriate of me to use such a broad brush to describe them because not every Argie is a scoundrel. I’m feeling particularly raw over some recent experiences and should not have expressed myself in this manner. My Argentine friends swear a lot because they like those English words. It appears to have rubbed off on me. That’s no excuse, so blog readers, please accept my apologies. I’ll be more careful in the future.

Most of the Argies I have encountered are ethically challenged. They will sell out their own family members (deliberately) if they even think there’s something in it for them. An Argie will cheat you today even though it means they’ll get nothing out of you tomorrow. And they do it knowing that they won’t get anything out of you tomorrow. It’s an amazing concept to wrap one’s mind around if you’ve not experienced it before. And it’s different from what an American would expect from other Americans that lie, cheat or scam. These events are random in the US. Here it’s pervasiveness, e.g., one (and this includes the Argies themselves) must view every action or dialogue with another Argentine (if they are not a trusted friend), and this includes the business community, as a potential opportunity to create harm. The harm is generally financial but not always. I have one Argie friend whose sister and niece were kidnapped in the front lobby of the apartment building in which they lived in Buenos Aires. This was supposedly a secure building with buzzer and guard-controlled entry. The kidnappers wanted ransom money to release the sister and niece. The money was paid and the sister and niece let go. I’m told this is not uncommon. Buenos Aires may be a cosmopolitan city, but it’s also very dangerous. I’ve heard more horror stories from Argies who lived there and escaped to where we live than I ever heard while living in the big cities of Chicago and LA.

Many Argies are cruel to animals as well and do not view the pain and suffering of an animal with any concern. I find that very difficult to stomach and reconcile with a people who appear to care for their families and children.

At first I attributed the Argentine attitude to their lack of prosperity but after experiencing wealthy people who scam in the same manner as the poor, I don’t believe that’s the reason anymore. It’s a mindset and a destructive one at that. Even my wildest dreams could not prepare me for what I’ve experienced here. It’s been a hard education. The other expats that I know have all had the same type of experiences, so I’m not alone in my thoughts on the conditions here. In spite of everything, I like living here and plan to stay.

Comment by Pamala in Argentina
2008-01-31 15:34:20

To put my words above into some context, I’d like to provide an example. We had a neighbor who lived on the farm next to ours and was employed as that farm’s chief worker (Worker A). Worker A did some side work for my husband, but unbeknownst to us, Worker A did not have an arrangement with his current employer/owner of the farm to take on additional side work. The owner has another farm down the road on which Worker A’s father lived. The father called the owner to tattle on his son and let the owner know that the son was doing some side work for my husband. The father’s motive, according to the son, was that the father thought he would garner points with the owner and secure his position on the other farm if he were to do this favor for the owner and report his son’s side work. The father, also according to the son, knew that the son would lose his job and a place to live over this. And he did. The owner gave Worker A his eviction notice. Worker A has a wife and children (three girls, ages 5 to 11).

The son and his family were afraid to stay on that farm because some farm owners will hire thugs to evict people they want to get out. We wanted to help and give them a chance to have a better life. So, we fixed up our empty worker’s house and gave the son a job on our farm as a worker. Everything was going fine until one of our puppies was stolen. The manner in which it disappeared left no doubt it was stolen and those who had access to it were limited to Worker A and another occasional worker (Worker B). Worker B did not live on our property and had another full-time job, so he did not need the work he did for to subsist. We knew it was one of the two and could not believe that Worker A would steal the puppy because he knew that he would be fired if he ever stole anything from us. And, he’d just experience the upheaval of getting evicted from his previous home and losing that job. No one would want to go through that. So, in our minds, it had to be Worker B. Also, Worker A implicated Worker B as the perpetrator and made several other allegations about Worker B that convinced us he’d done it. All this made sense to our minds because no one would risk being fired from a good paying job (unemployment is very, very high where we live, and the pay is real lousy), losing a free place to live, and a better life for the wife and three young girls.

So, we fired Worker B. About two months later we discovered that it was Worker A who had stolen the dog and lied to get Worker B, an innocent man, fired. We humbly asked forgiveness from Worker B (he accepted) and fired Worker A, who is now without a place to live and a job to support his family. Yes, we could have slapped his hand and told him never to steal from us again, but Worker A had asked my husband for the dog twice before she was stolen. Both times my husband said no. Worker A didn’t have any respect for my husband’s word and, more egregiously, got a good man (who has five children) fired for something he did not do. That’s not the sort of character we could ever trust to be around us and ours, so he had to go. In the end, we believe that Worker A arrogantly thought we were too stupid to ever figure out that he was the one that stole from us. Ironically, it was his later actions that would tip us off that he’d been the thief all along.

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Comment by aladinsane
2008-01-31 15:56:06

Watched a cool Argentinian film the other day…

“Nice Queens”, a film about a couple of grifters, like “The Sting”.

Along the way, the film showed much of the crime going on (motorcycles with 2 people on them, one driving, one looking for purses to rip off, etc.)

Comment by Pamala in Argentina
2008-01-30 22:15:08

Btw, and for minds greater than mine, what’s up with the rumor that the US TPTB stopped buying subrime SH$T in 2003?

Comment by dutch_renter
2008-01-30 22:35:47


I just want to say that I like the idea of an international thread. Nice to read of other parts in the world.

Comment by RoundSparrow
2008-01-31 07:00:54

Although I have to say that it seems to me that unlike many “forums” on the web, Ben probably can’t easily move topics from one “category” to the other. So he can’t clean up after the ~20% of people who are poor at choosing the proper category or only post on the most recent (top).

Comment by New Zealand Renter
2008-01-30 23:13:51

Continuing the conversation on NZ real estate from yesterday.

The idea of the Bay of Islands as an outpost of international Richistan is greatly overblown. There are a very few trophy properties here. Population of the BOI region is 30k, so about 10k households. I don’t have an exact census of trophy properties, but there are very, very few. Certainly fewer than 100 houses in the region that are up to Richistan standards, less than 1%. And these quality properties seldom change hands so they don’t have much affect on median price. This place is deeply middle class/working class. Most of the absentee owners are amateur flippers from Auckland who used refi money from their primary residence to speculate on additional properties.

There is an international element but that would be middle class expats mainly from South Africa, the UK, and the Netherlands. One reason there are so few Richistani home owners is that there is no infrastructure for them here. Very limited shopping, entertainment, and dining and certainly no health care options up to Richistani standards. Also no superyacht berthing. This is not Monaco, not by a long shot. Not even Atherton, CA or Greenwich, CT.

Economically, this place is Fresno or Stockton. There is no reason for the average POS middle class Kiwi spec house on 1/8th acre to have been bid up to $500-600k. Before the worldwide plague of easy credit to greedy deadbeats, just six years ago, houses here were around $200k.

And as NHZ noted, the South Island is as bad or worse. Nelson and central Otago are ground zero of the NZ bubble. The only cheap(er) places (to buy) are truly scary. South Auckland is Compton bad, much of Christchurch is Oakland bad. Last I noticed, we have had ten gruesome murders so far this month. Worse yet, one of the murders was of a tourist in Taupo, a trendy lakeside resort area similar to Tahoe. So all the troubles of the world are very much present in idyllic “middle earth”.

Of note parliament is talking about raising the criminal penalties for violent crimes against tourists.

Oh well, the air is still fresh and clean.

Comment by nhz
2008-01-31 05:17:50

I think a major difference between NZ and most of the first world is that (tourist) murders are still widely reported in the newspapers there. Probably domestic violence and road deaths are more frequent in NZ than in parts of Europe, but apart from that it still is a friendly country.

I remember RE fever was running high when I visited there end of 2004; prices have climbed a lot since then and I’m sure they will have to come down (maybe by a strong devaluation of the Kiwi dollar?). I also remember some of the locals being very disgruntled with the foreigners and Asian investors who drive up prices. Cities like Nelson will remain expensive for years because of all the rich UK buyers that are settling there (maybe that will end when the UK housing market really goes bust?).

I read last year that of all customers purchasing $500K plus RE around Auckland in the previous year, some 80% already owned other properties and something like 20% owned five properties or more. Nearly all of them werer planning to buy more properties. So a relatively small group is causing most of the transactions in the higher price range. Probably these are also the people who now try to sell an old Kiwi bach near the Bay of Islands for at least 1 million.

Comment by mac
2008-01-31 06:42:34

Oh yes New Zealand is for sale to the highest overseas buyer

Comment by SanFranciscoBayAreaGal
2008-01-30 23:41:50


I have to agree. I love reading comments and opinions from other parts of the world.

Comment by CA renter
2008-01-31 04:12:56


One of the many strengths of Ben’s blog is an inside look at markets across the country and around the world. It’s how I (and I imagine many other posters) came to know this was a **global** credit bubble.

Just opens up a whole new perspective.

Thank you, Ben!!!!! :)

Comment by New Zealand Renter
2008-01-31 00:21:25

Maybe it is the server is being serviced during international thread hours for me. Yesterday I never saw my post, it finally showed up overnight. Same thing seems to be happening now.

Comment by frankie
2008-01-31 02:04:32

UK house prices fall for third month.

“House prices fell for the third month in a row during January, according to the latest survey from the Nationwide.
The building society said prices fell by 0.1% during the month, taking the average cost of a home to £180,473.

The annual rate of price growth dropped to 4.2%, which is the lowest rate since December 2005.”


Comment by nhz
2008-01-31 02:23:30

Netherlands: december 2007 producer prices were up 8.8%, mostly as a result of higher prices for food products (+13%) and oil/energy products (+34%). This increase is similar to the one for the previous month, so it looks like a trend. But rest assured, inflation is contained, CPI is only 1.6% thanks to the statistical magic of our Ministry of Truth.

Comment by nhz
2008-01-31 04:17:41

… and the latest Eurozone CPI also just came in: +3.2%, highest level in 14 years.

Comment by miami33
2008-01-31 04:13:59


From The Times
January 31, 2008

FBI targets senior bankers in far-reaching sub-prime fraud inquiry
Tom Bawden in New York

America’s Federal Bureau of Investigation is investigating senior banking executives for insider dealing and fraud as part of a criminal inquiry into the sub-prime crisis, the agent leading the inquiry said yesterday.

Neil Power, the head of the FBI’s economic crimes unit, is heading the most far-reaching criminal investigation into the practices of the mortgage industry since it began to melt down last year, after years of increasingly lax lending finally fed through into an increase in defaults on home loans.

The FBI is investigating every level of the conspiracy that it believes perpetuated the housing boom and ultimately resulted in millions of Americans losing their houses, investment banks losing billions of dollars and the chief executives of Citigroup, Merrill Lynch, Bear Stearns and UBS resigning.

Mr Power said: “We’re looking at the accounting fraud that goes through the securitisation of these loans. We’re dealing with the people who securitise them and then the people who hold them, such as the investment banks.”

Comment by aladinsane
2008-01-31 04:40:44

Anybody catch what’s going on in China, with the snowstorms, and people stranded @ railways stations, on the verge of Chinese new year, and for many Chinese, this is their only week of vacation, for the whole year.

Very much a Black Swan event, if it continues for awhile…

Comment by Professor Bear
2008-01-31 05:29:49

Sorry to post a stale news item, but you’ve gotta love the byline…

Last Updated: Friday, 25 January 2008, 18:30 GMT
Banks ‘may need an extra $143bn’


Comment by Professor Bear
2008-01-31 05:34:27

Does anyone else suspect 1200 cases may be a slight undercount? As others have duly noted here, when you see one cockroach in the kitchen, you can be certain that hundreds lurk nearby, hidden from view.

(Note: I am posting this item here because it appeared in the BBC NEWS; not sure this is in keeping with the ‘international’ theme or not, but I am interpreting international news stories about the U.S. subprime crisis as fair game.)

Last Updated: Tuesday, 29 January 2008, 22:33 GMT

FBI investigates sub-prime crisis

The FBI is concerned about mortgage fraud

The FBI is investigating 14 companies embroiled in the sub-prime mortgage crisis as part of a crackdown on improper lending.
It did not identify the companies but said the investigation encompassed developers, sub-prime lenders and investment banks.

FBI officials said the agency was looking at instances of accounting fraud and insider trading.

The cases could lead to potential civil or criminal charges, the FBI said.

The FBI said it viewed mortgage fraud as an increasing threat to the national economy.

It said that there had been 1,200 cases of mortgage fraud for the 2007 financial year compared with just 400 in 2006.


Comment by Professor Bear
2008-01-31 05:39:41

The blame game continues to play out in high circles…

Fed Official Is on Shaky Ground
January 31, 2008; Page A12

WASHINGTON — The credit-market turmoil could produce an unexpected casualty: Federal Reserve governor Randall Kroszner.

Mr. Kroszner, a former senior Bush administration official with a deregulatory bent, runs the Fed committees that formulate policy on bank regulation and consumer protection. In both areas, the Fed has come under fire for not acting more aggressively to forestall mortgage-lending practices.

Mr. Kroszner was the point person on a proposal released in December to rein in those practices. But congressional Democrats criticized the measure as weak, belated and halfhearted.

Since then, the 45-year-old Mr. Kroszner has become a lightning rod for Democrats frustrated with the central bank and the White House approach to economic policy. His term expires today, and Senate Banking Committee Chairman Christopher Dodd has suggested he will block the White House’s nomination of Mr. Kroszner for a 14-year Fed term.

“Many people — myself included — wondered whether Mr. Kroszner…was a good choice for the job,” said Rep. Carolyn Maloney, the New York Democrat who heads the House Financial Services Subcommittee on Financial Institutions. “I think our concerns have panned out.”


Comment by aladinsane
2008-01-31 07:07:24


You are the only one that doesn’t play well with others, by sticking domestic stories, in this international thread.

Why’s that?



Comment by Professor Bear
2008-01-31 11:04:44

That one was a misfire… sometimes I get so irrationally exuberant in the wee hours that click on the wrong bucket.

Comment by ugh
2008-01-31 08:33:12

Ok, do we classify Canada as international or what?

Comment by In Colorado
2008-01-31 08:38:21

Until the NAU is formalized, yes it is international.

Comment by Professor Bear
2008-01-31 11:02:39

With all the probes going on, it might be a good time to go long into proctology futures. There is some good stuff buried in the bowels of section A in today’s WSJ…

BTW, doesn’t the U.S. Constitution give the states the rights to go after criminals who harmed them? I don’t buy into this notion that federal regulators should have exclusive rights to guard the mortgage lending chicken coop.

State Subprime Probe Takes a New Tack
By Kate Kelly, Amir Efrati and Ruth Simon
Word Count: 700 | Companies Featured in This Article: Clayton Holdings, Bear Stearns, Morgan Stanley

The New York attorney general’s office, pursuing an investigation into whether Wall Street firms improperly packaged and sold mortgage securities, is latching onto a powerful regulatory tool: the 1921 Martin Act.


Other articles (on p. A12 — sorry, no link):

Tensions Rise in Lending Probes
By Kara Scannell

WASHINGTON — Tensions are beginning to rise between state and federal authorities as the number of agencies investigating mortgage fraud continues to grow.

New York AG Andrew Cuomo is in a tussle with the Office of Federal Housing Enterprise Oversight, the federal regulator that overseas mortgage giants Fannie Mae and Freddie Mac. Their dispute is over who should be the investigating (SIC) allegations of fraudulent appraisals and mortgage fraud.

And another…

Subpoena Deepens Countrywide’s Woes
By Ruth Simon

Countrywide Financial Corp. confirmed yesterday that it received a subpoena from the Florida attorney general seeking information on its business practices.

The subpoena adds to the problems for the Calabasas, Calif. lender, which has drawn the ire of bankruptcy judges, borrowers and consumer groups for months.

Comment by nhz
2008-01-31 12:48:52

wake up professor, you are still in the wrong thread …

Comment by Professor Bear
2008-01-31 17:43:08

OK, I am still trying to get the hang of this international bucket. But I did find an international Countrywide story (see below…)

Comment by legal_immigrant
2008-01-31 11:31:28

Ha! They are still waiting for the overseas buyers to the rescue in Israel.
“Ir Yamim is a large area in the southwestern part of Netanya, being built with the sea as its focal point. When completed, it will have more than 4,000 dwellings. Proximity to the sea assures its success, according to real estate developers. Ir Yamim was designed with [overseas residents] in mind. Ir Yamim has nature on three sides: to the west, the Mediterranean Sea; to the south, the Poleg Nature Reserve; and to the east, the Irusim Nature Reserve. The buildings are designed so that the maximum number of apartments have sea views.
As is typical of a quality development near the sea, the dwellings are not cheap - and they’re not meant to be. An average 120-square-meter apartment can cost $350,000, he said, while those facing the coast can cost $500,000. Large penthouses by the sea can cost millions of dollars.”
I know that part of the town - no trees, narrow streets, traffic jams if you want to get out in the rush hours, and the nature reserves next to it are just bare hills with pretty irises that bloom for one week a year (again, not a single tree there). The bottom of the nearby beach is not sandy but rocky. And they want to sell those flats for what? To whom? In a town with no industry worth mentioning besides some tourism and service, 17 km away from the Palestinian territories? Wishful thinking.

Comment by nhz
2008-01-31 12:47:18

quality development: do these apartments come with special anti-rocket shielding and 24-hour guards? Guess there are many far cheaper (and safer) developments with nice nature all around them in the area (in other countries, so maybe less attractive to US buyers…).

Comment by Diane
2008-01-31 15:57:03

Hi, We live in Ashland, Oregon and would someday like to move overseas for a while. My husband is certified in diesel and gasoline truck engines. Does anyone have any suggestions for a good place to relocate to? I speak some Spanish, but my hubbie speaks only English. BTW, Ashland is a great city, we rent here and there are many Europeans and others here.

Comment by Diane
2008-01-31 16:02:28

English. We mainly just want to experience other cultures and hopefully earn good money. Here in the Rogue Valley (Ashland) the pay is 5 to 6 dollars an hour less than, say, Portland Oregon to the north.

Comment by Professor Bear
2008-01-31 17:11:42

SRM seeks to block Countrywide deal
By Lina Saigol in London and David Wighton in New York
Published: January 31 2008 14:51 | Last updated: January 31 2008 21:17

Bank of America’s $4.1bn (€2.8bn) offer for Countrywide Financial was thrown into doubt on Thursday when a large shareholder in the biggest US mortgage lender said it would vote against the deal.

SRM Global Fund, the Monaco-based hedge fund that has become the biggest shareholder in Northern Rock and has led a fight against British government plans for the future of the stricken UK home lender – said the offer “considerably under-valued” Countrywide.

The fund, which has a 5 per cent stake, also said it would ask the Securities and Exchange Commission to investigate the movement of Countrywide’s share price ahead of last month’s offer.


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