January 31, 2008

International Bits Bucket For February 1, 2008

Please post items of interest from outside the US here.

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Comment by ugh
2008-01-31 20:07:38

I want to hear from someone in Scotland

Comment by kaybertoss
2008-01-31 20:40:01

Let’s get pissed! J/K
Funny, that’s something I’ve not brought up with my family back there. They’re in Armadale, West Lothian. That would be in between Glasgow and Edinburgh.

I’m here in Vancouver Canada, Bubble capital of the world!

Comment by technovelist
2008-01-31 20:14:02

My wife and I are going to be in Amsterdam in July. Are you near there, nhz?

Comment by nhz
2008-02-01 04:14:34

no, that is 2.5 hours from where I live …

Comment by bubblicious
2008-01-31 20:31:54

When will Canada follow the US into recession? Discuss.

Comment by New Zealand Renter
2008-01-31 21:38:10

Let’s see:
Lumber prices at over 30 year lows - check
Collapse of global debt bubble poised to whack Hongcouver - check
Canadian auto plants to suffer from poor auto sales - check

Seriously, the farmers in Saskatchewan should do ok from food price inflation. Likewise the Alberta oil producing areas should do ok. Sudbury should be fine as inflation will keep world nickel prices high.

Everyone else is in trouble.

Comment by Blue Skye
2008-01-31 22:27:46

The premise of your question is all wrong. Canadians do not “follow” the US. What an insult!

Besides, commodities only go up and they aren’t making any more lakefront property. Plenty of time for laughing at the pathetic evil Americans.

Comment by yogurt
2008-01-31 22:31:09

Nah, only 80% of exports from Canada go to the US. It can do just fine on the other 20. :-)

Comment by Dave of the North
2008-02-01 04:03:08

How does the saying go “When the US catches a cold, Canada gets pneumonia”?
NB’s forest industry is in bad trouble - several mills have closed - lumber market to the US has collapsed, and the demand for paper is not much better. High energy prices are hurting them as well. However, Saint John is just saying “La-la-la” and real estate rolls along, due to expectations that it will be an energy boomtown.

Comment by aladinsane
2008-02-01 07:15:38

Does the St. Joseph statue buried upside down trick work, as far as helping sell your house in Saint John, or is there a problem with turf rivalry?

Comment by Dave of the North
2008-02-01 08:53:55

St. Joseph has a church and a hospital. St. John has the city, river and county.
Right now sales are pretty brisk and St. Joe is not needed. We are not reduced yet to writing letters about feeding the squirrels.

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Comment by aladinsane
2008-02-01 09:24:33

St. Joseph update:

St. Joe was picked up by the coppers and charged with vagrancy. His sentence was 30 days in the hole.

Comment by mossypete
2008-02-01 11:46:45

Speaking of paper my clerk just ordered our usual 8 cases of office depot 30% recycled paper ($ 36/case in September) - yesterday it was 135/case - needless to say we shopped around for less expensive paper (lower postconsumer waste content).
I know as a Government worker I’m not supposed to do this (look for better prices) but I come from a small business backround

IS global demand for paper scrap driving up prices


Comment by Lost in Utah
2008-02-01 19:29:17

Do you think the collapse of the dollar balances out the paper demand, is it still cheaper to print in Canada than the US?

Comment by Al
2008-02-01 06:10:30

Hi all from Ottawa. We’re destined for recession, but I don’t think it will be as bad as normal. Alot of the 80% of exports to the US are resources that the rest of the world will be happy to buy. It’ll take awhile to find buyers and supply routes. Our manufacturing (such as it is) will suffer of course.

And remember, geographically speaking, we’re on top! That makes the US our bi**h. ;) If you have any doubt, take a look at what southern Ontario is doing to Michigan.

Comment by Van Gogh
2008-02-01 12:17:09

Great post arsehole. “Hate your next door neighbour, But don’t forget to say Grace”……..

As a fellow (western) Canadian, the best thing that could happen to us out here would be a well placed Nuke directly on Ottawa. Your statement just confirmed that for me with the usual Eastern “Taker” comment.

Comment by aladinsane
2008-02-01 15:57:02

In the U.S., we have the Red State-Blue State divide, in Canada it’s all about the West vs. the East.

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Comment by Lost in Utah
2008-02-01 19:33:50

First of all, what is “normal?” That part of your post doesn’t make sense. Second, what makes you think the rest of the world will not also see a recession? Third, if you can make up for the 80% loss to the U.S., why will your manufacturing suffer? Do they teach logic in Ottawa schools?

Comment by krazy_canuck_
2008-01-31 20:46:07

OK - Is it just me or are there others who are getting sick of politicians and media people coming out and saying, “Yes, times are tough, but I am confident in the ingenuity and character of the American people to get us through these tough times.” I wonder if they are referring to the 65% of the population who signed ridiculous loan agreements and were brainwashed into believing that real estate is the one asset class that can’t depreciate. It’s almost as bad as hearing some TV evangelist telling us to stay happy and let God deal with the current situation..

People - It is time for solutions, not preaching and false hopes.

Comment by lmg
2008-01-31 21:54:54

Alas, the most ingenuity shown by Americans these days appears to be in the development of subprime and option-arm loans, not to mention CDO’s etc.

Comment by yogurt
2008-01-31 22:36:41

Americans may have forgotten how to make cars (and just about anything else) that the world wants to buy, but they’ve done a great job designing IOU’s. Unfortunately I think the product cycle for that sector is coming to an end.

Comment by bill in Maryland
2008-02-01 04:25:58

Last time I checked, Americans still have brains and can retune themselves to become people of reason and produce. I consider myself a doom and gloomer, but I’m not as bearish as the rest of you. We will pull through. I count on interntional productivity to increase as well, as I’m an international investor. I don’t give a hoot about what any single country’s prospects are. America will experience bad years for several years but I certainly would not leave it to go to a country that was not founded on the principles of reason. We have the Declaration of Independence and it’s burned into our psyche. No other nation can boast that. I will profit from my precious metals and my investments in other countries while we Americans as a whole transition from a spectator - spending society into a can do - saving / producing society. And we will.

Comment by Kyle
2008-02-01 17:08:54

founded on the principles of reason

…and currently governed by the GOP on the principles of rejection of reason and science, religious superstition, authoritarian fear and secrecy, and willful ignorance.

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Comment by Bombo_Buster
2008-01-31 20:55:51

Canada will follow sooner than you think. They are in denial and helped by the resources resurgence.

Comment by Bostonian
2008-01-31 21:14:16

So when is Europe’s real-estate bubble going to pop? All we hear in the global meltdown news is about US sub-prime, California flippers, and Florida FBs, etc.

Joe Sixpack can’t bring down this house of cards by himself you know. Where is Pierre Perriere, and Mattias Malzbier in all of this?

Comment by VIrgule
2008-01-31 21:41:10

Not sure there is a European real-estate bubble. Britain, Ireland, Spain, the Netherlands, Norway and Denmark definitely did, and in those countries the bubble is popping right now. We’re maybe 6-12 months after the US. I don’t know if any other European countries had a bubble, does anyone know?

Comment by nhz
2008-02-01 04:27:34

yes, there certainly is a European bubble in the sense that all over Europe (except Germany and maybe some nooks and crannies of the continent). Pricegains vary strongly though from country to country, because RE taxation, subsidies, supply/demand and other factors are very different depending on country. Also, some countries like Netherlands were early (around 1990), others joined the party only after 2000 (mostly newer EC countries because of the ECB money spigots).

I don’t think ANY of the EU bubbles is popping yet, there is NO EU country that has significant (like at least -10%) declines in average sales prices; except maybe Ireland, I’m reading different opinions about that. UK and Netherlands are flat to slightly negative now after 10-20 years of average double-digit pricegrowth. Keep in mind that the gains in Europe are big compared to the US, so 10% down is NOTHING really. Also, most EU governments interfere more with the housing market than the US government, and they will use even more tricks to stop the bubble from bursting (= slow the process).

Comment by lmg
2008-01-31 21:56:37

Would be interested in hearing if some of the RE bubbles that may be developing in the smaller East European countries like Romania are poppin’.

Comment by nhz
2008-02-01 04:30:11

no chance, many of those countries have relatively recent RE bubbles and as long as the ECB money keeps pouring in their RE markets will be well supported. Only when the older EU bubbles pop completely they might get into trouble. Most buyers there are not locals but people from Old Europe who are investing their equity gains abroad.

Comment by Mike G
2008-02-01 17:22:09

Bulgaria has skyrocketed in the last five years in the capital and beach areas with cheap flights to western Europe.
Prices are way beyond the local earnings, it’s pretty much EU money and tourism driving the bubble.
Plenty of places the foriegn money hasn’t touched, but most foreigners probably wouldn’t be interested in those as an investment or a residential proposition.

Comment by Awaiting Bubble Rubble
2008-01-31 23:20:07

I would like to hear about French real estate conditions, particular Paris and Aix-en-Provence.

Comment by Awaiting Bubble Rubble
2008-01-31 23:35:32

If anybody has any insights into the French real estate market, particularly Paris and Aix-en-Provence, I would love to hear more.

Comment by nhz
2008-02-01 04:20:08

Paris has always been extremely expensive; in good areas think $ 1 million for a small 1-bedroom apartment (similar to UK, NYC etc.). There are cheaper places of course, like the Banlieu ;-(
Provence is relatively expensive too (similar to CA probably). Outside the few hotspots French RE prices are certainly better than in UK and Netherlands (2-3x lower), but they too have increased a lot over the last 10 years.

Comment by Awaiting Bubble Rubble
2008-02-01 11:36:21

I actually have a small place in Paris. If you know how the market is this spring compared to last spring, that would be really helpful to me. I am contemplating selling.

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Comment by nhz
2008-02-01 13:12:23

sorry, no idea - I guess Paris is a market on its own, separate from the rest of the country. But if you don’t need it I suggest you sell it, don’t think there is much upside room for prices …

Comment by measton
2008-01-31 21:22:40

Here’s some interesting FED data suggesting that non borrowed reserves held by banks are collapsing. I believe their reserves are then composed of money borrowed from the FED?? or Foreign gov/investors??

Look at the change from Dec to Jan


Comment by Awaiting Bubble Rubble
2008-01-31 23:33:59

Interesting observation. What does it mean?

Comment by housing hanky panky
2008-02-01 03:59:34

Debt deflation

Comment by measton
2008-02-01 00:50:50

Deterioration of the commercial real-estate market will lead to rising losses and bank failures in the near future, a leading US banking regulator said on Thursday.


Comment by ugh
2008-02-01 03:31:00

Yes, it means the banks have NO money and must borrow to maintain their reserves.

Grim, very grim.

Comment by New Zealand Renter
2008-01-31 21:57:29

Grrr! This has to end. A “Real Home of Genius”, one bathroom, ancient sheet iron roof and clapboard siding. Totally NOT a Richistani trophy property. No London hedge fund manager will live here. Tiny lot, not possible to tear down and use the land to build a McMansion. No water view. Isolated peninsula location remote from a decent supermarket or medical care. Value based on comparable rent or family income of the local serfs is possibly as high as $150k, max. How much does the seller want for this “Cutie Pie Cottage?” Click and see.


Comment by Blue Skye
2008-01-31 22:34:48

What does one do for a living in NZ to afford such a humble dwelling?


Comment by New Zealand Renter
2008-02-01 00:17:11

See, Russell is not all Rock stars, Royalty, and Rothschilds. Note the undersized front door. Some modern Kiwis would have to turn sideways and wiggle to slip through that one.

The people currently renting this place probably are making the Russell median household income of $42,000. Most likely that would be a couple each working at minimum wage of $11.25 per hour. If Trevor works 40 hrs at the petrol station and Jill works 32 hrs at the cafe they will reach median income.

Likely rent is only $300 per week. Even so, our Kiwi couple have to spend 37% of gross income on their humble rental housing. It is good that the Russell climate is fairly mild because that house would be uninsulated and have no heating system. If they plug in an electric heater, their budget will be further stressed by the high electric bills. If they have to drive a two hour round trip to Whangarei to shop, they will have to buy petrol at $1.70 a liter.

Note that based on the theory that no smart landlord wants to carry a property with less than 10% yield, the house is valued at $156k based on full time occupancy. If Trevor and Jill want to buy this house, even the $156k would be 3.7 times their income. These types of properties honestly need a 75% haircut.

So what does one do to afford this sort of property? First you get a MEW when you refi the primary home in Auckland. Then you get a 100% stated income flipper loan to buy the investment property. And you hope for a greater fool to come along. I am so hoping that some of these investors get to meet Mr. Joshua Tree this year!

Comment by nhz
2008-02-01 04:35:16

Note the undersized front door.
but what do you expect in Hobbit country ;-)

regarding 10% yield: Dutch owners (specuvestors) are happy at the moment with 2-4% yield. As long as the property keeps appreciating, nobody cares about yields; most of them don’t even care about renting out the property, why bother if it pays the rent itself by appreciating?

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Comment by New Zealand Renter
2008-02-01 14:10:11

Bilbo Baggins’ front door was properly wide in the middle to accommodate the Hobbit figure. This door is not only short, but very narrow. That is a problem for many modern Kiwis.

Comment by ugh
2008-02-01 03:29:15

That’s insane. it’s like a SF Bay area price.

Comment by New Zealand Renter
2008-02-01 14:12:45

Shameless bump.

Come on folks, a few more clicks and this palace will soar to the top of the front page on the Russell MLS as “most popular”. Bwahahaha!

Comment by aladinsane
2008-02-01 16:02:04

You should consider Dunedin, in the South Island.

It looks like NZ used to look like 25 years ago, and is reasonably priced, compared to the insanity of the north of the North Island.

Comment by baeksu
2008-01-31 22:42:29

In Korea, there has been a lot of coverage of the U.S. ’subprime’ crisis in the msm, especially after it started affecting the stock markets in Asia. My main problem with the reporting is that even though they seem to have heard of the real estate bubble popping in the U.S., no one is asking whether the same can happen in Korea.

Housing prices here are sky high. I know people who live in 700-900 sq. ft. apartments in Seoul that cost close to 1m USD. This in a country with a median household income of less than 50k.

Prices keep going up, and everyone still thinks renting is “throwing money away”. While most people buy their houses with no financing (thanks to the insane accumulated savings families here have), no one is asking what the opportunity cost of sinking so much equity into a house is.

The incoming president is going to throw some fuel to the fire, as he has promised to cut down real estate taxes. He used to be the president of Hyundai Construction, and he made his millions in real estate speculation during the 1970s and 1980s. So things are going to get a lot worse during ‘08.

Personally, our hh income is above average, but right now we can’t afford to even spit in the direction of Seoul. I keep telling my wife that in a few years, after the dust settles, we will be able to buy a house in the city. That is assuming, of course, that the new president doesn’t take the whole economy down with his policies (his nickname is ‘bulldozer’, so I’m a little worried).

In recent months, I’ve also visited some other Asian regions (Dubai, Hanoi, Kuala Lumpur), and the only place that didn’t have a housing bubble was Yangon, Myanmar. But that was only because no one over there has any money to build or buy.

Comment by nhz
2008-02-01 04:37:21

thanks for reporting, interesting to hear a bit more from that part of the world.

don’t worry about the new president, he will probably just speed up the inevitable.

Comment by Professor Bear
2008-01-31 23:38:03

‘Vultures’ circle companies at bargain prices
By Francesco Guerrera in New York

Published: January 31 2008 22:04 | Last updated: January 31 2008 22:04

Cash-rich financiers including Warren Buffett, Wilbur Ross and Ron Perelman are preparing to pounce on US companies hit by the financial turmoil – moves that could herald a new era of “vulture investing”.


Comment by sleepless_near_seattle
2008-01-31 23:45:27

I think this qualifies as international.

Rogers: “It’s going to be much worse”

Comment by Professor Bear
2008-01-31 23:47:10

Prepare to read something laughably stupid to anyone with blog smarts. The reason so many American homeowners are behaving so unpredictably is not because the lending industry showered them with big enough loans to hang themselves, financially speaking, then wrapped those in the guise of low initial monthly payments whose reset amounts wouldn’t matter because real estate always went up by 20 pct a year or more? Nope — it’s a new era now, and hence consumers are behaving in ways that rocket science financial models could never have possibly predicted.

Last year’s model: stricken US homeowners confound predictions
By Krishna Guha and Gillian Tett

Published: January 31 2008 19:01 | Last updated: January 31 2008 19:01

When Ray McDaniel, president of Moody’s, addressed a debate in Davos last week, the mood was so hostile that some speakers joked that he was brave to appear “without a bodyguard”.

No wonder. As the credit squeeze persists, ratings agencies are being forced to downgrade thousands of securities, after failing to foresee the recent wave of defaults, particularly in subprime loans. On Wednesday night alone, Standard & Poor’s downgraded more than 8,000 residential mortgage-related securities worth some $534bn (£268bn, €360bn).

These downgrades have triggered bitter recriminations, amid a wave of losses at asset managers and banks. “Much of the money lost has been held by people who held AAA securities [that were downgraded],” points out Wes Edens, head of Fortress Investment Group, a big hedge fund. “That has caused a tremendous loss of confidence.”

But the downgrades have also left policymakers and analysts scrambling to determine what has gone so badly wrong. As this search intensifies, some economists are starting to suspect that the answer lies in a striking recent change in American household choices – a shift that could have important implications for policymakers and investors alike.

In particular, it seems that mathematical models used to predict future default rates, based on past patterns of losses, have gone wrong because they did not adjust to reflect shifts in household behaviour. Or, to put it another way, financiers have been tripped up because they ignored one of the most basic rules of investment, which is usually found in product literature: the past is not always a guide to the future.

“There has been a failure in some of the key assumptions which supported our analysis and modelling,” Mr McDaniel admits. “The information quality deteriorated in a way that was not appreciated by Moody’s or others.” Mortgage borrowers, in other words, did not behave as expected.


Comment by Professor Bear
2008-01-31 23:55:36

“But another explanation is that people with high loan-to-value mortgages no longer felt as strong an incentive to maintain payments when house prices started to fall – even if they were able to. This is because of the negative equity phenomenon – where house prices have fallen below the value of the loan or will soon do so.”

Who’d've thunk that holders of mortgages which reset to levels which put a severe strain on the family budget and whose underlying collateral is dropping in value like a rock might want to hand back the keys to the bank? This has never happened before in history — IT’S A COMPLETELY DIFFERENT UNFORSEEABLE UNPRECEDENTED NEW ERA IN LENDING!

P.S. Try not to get stucco by catching a falling knife before home prices bottom out.

Comment by CA renter
2008-02-01 01:39:52

Not only that…as you know, we have the “homeownership” myth: buying a house will suddenly turn irresponsible, financially illiterate, bankrupt “renters” into responsible, well-mannered, neat, tidy homeowners — you know, neighbors who don’t embarrass you. ;)

Contrary to that popular beilief, it was the fact that mostly responsible people (good incomes, steady employment, savings, etc.) were able to buy a house in the past. It’s obvious these people would be more community-oriented, clean, “good neighbors,” etc.

With the zero-down, neg-am, NINJA crowd; there were no barriers to entry.

I know of people who were not able to get a savings account at any bank because their credit was so bad. All of a sudden, during the height of the boom, they were “approved” for a $300K+ loan. I wouldn’t loan them $50, if I expected to be paid back. They’ve already walked away from a couple of homes. Any wonder?

Comment by Professor Bear
2008-01-31 23:57:41

The graphs that accompany the linked article bode ill for the U.S. economy’s near-term outlook.

Comment by Professor Bear
2008-02-01 00:05:16

Here is a post on another dumb soon-to-be-discredited theory.

Buyers, not savers, caused America’s deficit
By Richard Duncan

Published: January 31 2008 19:33 | Last updated: January 31 2008 19:33

It is clear from Alan Greenspan’s autobiography, The Age of Turbulence – chapter 18, “Current Accounts and Debt” – that the former Federal Reserve chairman misunderstood the causes and underestimated the consequences of the extraordinary growth in the US’s current account deficit. Today’s policymakers must see through his mistaken analysis and adopt policies to restore balance to the global economy.

According to Mr Greenspan, the deficit was caused by the high savings rate of countries with current account surpluses, combined with their inability to find sufficiently attractive domestic investment opportunities. High savings and unattractive investments at home, occurring at a time of declining “home bias” in investment, resulted in a massive increase in investments from those countries into US assets, we are told. In other words, high savings abroad resulted in increased consumption in the US.


Comment by Wheatie
2008-02-01 05:17:47

I think Greenspan still believes in a flat earth too. If people would have been operating on their Microeconomics schooling instead of the fantasy of Macroeconomics, we would all agree on why we are in this mess.

I have an Econ major and I have come to the conclusion I got all the truth in Micro Econ 101 and the rest of my major was fantastical theory.

Problem is you cannot make money selling books on obvious truth.

Comment by Professor Bear
2008-01-31 23:59:29

The Short View: Bear market rallies
By John Authers, Investment Editor

Published: January 31 2008 20:08 | Last updated: January 31 2008 20:08

Even bears think stocks are in for a rally. Albert Edwards, the legendarily bearish global equity strategist at Société Générale, said on Thursday that investors should raise their allocation to equities.

For many, this was a stunning development. But Mr Edwards was careful: he is predicting a “bear market rally” and not a rally. The distinction is more than semantic. For this reason he remains strategically bearish, and believes the S&P 500 will eventually fall 50 per cent from its high. But he does suggest raising equity allocations from 35 to 45 per cent – still well below the norm.


Comment by Professor Bear
2008-02-01 00:29:46

Sounds like he is about to drop into the gaping maw that just opened up in the ground beneath his feet. Looks like tomorrow will be another very green day for U.S. stocks.

Standard & Poor’s casts doubt on MBIA rating
By Aline van Duyn in New York
Published: February 1 2008 02:00 | Last updated: February 1 2008 02:00

Standard & Poor’s reignited fears about the financial strength of bond insurers yesterday, warning it could cut the AAA credit rating of MBIA amid concerns that the company might not be able to boost its capital quickly enough to offset future losses.

“The magnitude of projected losses underscores our view that time is of the essence in the completion of capital-raising efforts,” S&P said in a statement, released after the stock market closed in New York.

The move came just hours after MBIA’s top executives sought to reassure investors that MBIA was on track to shore up its capital base and that it was likely to retain its triple-A credit ratings.

Gary Dunton, chief executive of MBIA, admitted that the world’s largest bond insurer had “made mistakes” and underestimated the risks associated with guaranteeing bonds backed by risky mortgage assets.

The ground has literally opened up below us for all in the industry,” Mr Dunton said.


Comment by nhz
2008-02-01 04:38:41

please, please, please professor … there is plenty of room for these US items in other threads.

Comment by ronin
2008-02-01 08:53:55

“The ground has literally opened up below us for all in the industry,”

I’m not buying it. Literally? Come on. That’s the lamest excuse ever.

Comment by measton
2008-02-01 00:41:03


Feb. 1 (Bloomberg) — Merrill Lynch & Co. agreed to pay Springfield, Massachusetts, $13.9 million to settle a dispute over collateralized debt obligations it sold the city that plunged in value.

The money will reimburse Springfield for the cost of the so-called CDOs, securities tied to loans, mortgages and other debts that have been battered as more U.S. homeowners failed to make mortgage payments. New York-based Merrill said it agreed to refund the money after discovering the purchase was made without the city’s consent.

Without the city’s consent?? What doesn’t make sense about this article. I think they made an error and it should read “Without the city’s informed consent” Did the city find documents that revealed Meryl knew they were selling them a flaming bag of dog crap?

Comment by raiter
2008-02-01 01:04:02

i moved to uruguay, south america from bubble infested east bay california in 2006. refreshing move in a lot of ways. it’s like going back in time– maybe europe of 50 years ago.

However, even humble Uruguay, it seems, is subject to foreign inflows of specuvestors.

uruguay is dwarfed by its neighbors argentina and brasil and suffered a lot during argentina’s problems earlier this decade. they are all starting to recover now. whether they can run countercyclical to the north’s problems like they did in the 1930’s…we’ll see.

uruguay RE in the cities and tourist destinations has started to heat up. However, rent to buy ratios haven’t gone haywire like California. The reason (i think) is that RE loans are very very rare.

regardless, equity locusts from EU and govt money (montevideo is a capital city) floats the purchase prices of better homes and apartments WAY above local medians.

RE is priced in USD (for purchases) because of a distrust in the UY peso…but in the last year the dollar has lost close to 20 % against the peso! That has made it easier for equity locusts from EU to come in.

Most of the nicer homes owned by locals have been owned for decades by one family.

kids live with their families way into their 20’s (even though university is free) because median rents are more than median salaries for the 20 somethings.

Other than montevideo, punta del este is a well-known beach resort and a magnet for the south american flash trash in our summer. it’s also a magnet for foreign investment as foreigners can easily own land here and enjoy the same protections as locals. it is especially desirable for overtaxed argentines and brasilians as the bank secrecy laws in uruguay are VERY strong.

outside of these two hotspots, Uruguay is known for prime cattle raising lands.

in the countryside, RE can be incredibly cheap — 10-20k for a small family home w/ land.

Comment by bill in Maryland
2008-02-01 04:35:40

I wonder how many people here would feel safe to move to Indonesia, as opposed to staying in the United States? And why wouldn’t you move to Indonesia (recall the bombing in Bali several years ago by Al Quaeda terrorists). That is why I am skeptical of moving to countries with weak military or no military, especially countries with no legacy of individual rights.

Comment by nhz
2008-02-01 05:19:11

US citizens are far less popular nowadays in Indonesia (or almost any other muslim country) than in countries like Uruguay, Argentina, Ecuador etc. I think countries with weak or no military are usually (not always) the most safe, except maybe for visitors from countries with whom the local population has some axe to grind, or people who show too clearly how wealthy they are.

Comment by yogurt
2008-02-01 06:59:05

Third World countries with strong militaries use them, with few exceptions, against their own people far more than against any external threat. They are there to protect the ruling classes, not the ordinary people or you, unless you’re rich enough for their social circle.

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Comment by Zhang Fei
2008-02-01 15:25:57

Feeling safe and being safe are different things. I have a Malaysian acquaintance who lives stateside. She talked about how a successful sibling was kidnapped twice in Malaysia. She personally knows half-a-dozen people who have been mugged there over the past several years. And these are people who live in professional enclaves - the upscale suburbs of Malaysia. Despite having lived stateside in NYC for decades (including the murder capital period), this acquaintance knows of no period in which crime in NYC has approached crime levels in Malaysia. And she lives in an area of NYC I would describe as borderline.

Comment by Zhang Fei
2008-02-01 15:45:06

nhz: US citizens are far less popular nowadays in Indonesia (or almost any other muslim country) than in countries like Uruguay, Argentina, Ecuador etc.

I don’t know about other Muslim countries, but Americans are pretty popular in Indonesia. The Indonesian bogeyman is Australia, which helped detach East Timor from Indonesia about a decade ago. Each country has its own parochial perspective, of course, but the fact is that the US and Indonesia have a lot of interests in common. Ultimately, from a big picture standpoint, it is in Indonesia’s interest to have the US around to deter any Chinese attempt to enforce its claim to the entire South China Sea - and all the islands in that sea.

nhz: I think countries with weak or no military are usually (not always) the most safe, except maybe for visitors from countries with whom the local population has some axe to grind, or people who show too clearly how wealthy they are.

I think any relationship is incidental. European countries have weak militaries because they fall under the American nuclear umbrella. But they are relatively safe because European countries, like all developed countries, have relatively honest and efficient bureaucracies geared towards providing services to the population. A lot of African, Latin American and Central Asian countries have weak militaries because they can’t afford the weaponry. But they are crime-ridden because they have corrupt rent-seeking bureaucracies geared towards generating income for bureaucrats who may have paid bribes to the people responsible for hiring them.

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Comment by watcher
2008-02-01 07:11:00

I lived for a year in Malaysia and felt safer than in the US, honestly. Indonesia is a bit less safe but I wouldn’t be afraid to live there.

Comment by nhz
2008-02-01 04:41:46

I heard that Ecuador has just started to work with mortgages, probably only for people with better jobs or big downpayment. Once this starts there is lots of upside room for RE prices; probably the situation in other South American countries is a bit similar.

Comment by Mugsy
2008-02-01 05:37:51

Lots of condos for sale in Manta, a small fishing city on the coast. Not the safest place in the world but if you need to live somewhere on the cheap ($40K for a 2/2 condo near the beach) then it’s a consideration. I’d see lots of ex-pat New Yorkers down there in the grocery stores. Many of the folks speak passable english and lots of them have lived in the US and brought many US style conveniences back with them including obesity and a high rate of diabetes ;)

Comment by Lafayette
2008-02-01 07:15:38

I live in the SF bay area and was thinking of Uruguay to retire.
Can you expand on your experience down there. What places would you recommend.

Comment by In Colorado
2008-02-01 09:25:43

I think that for some people the show stopper will be getting decent healthcare in such locales.

Comment by Mike G
2008-02-01 17:18:08

Uruguay, Brazil and Argentina have decent first-world-standard healthcare for the wealthier portion of the population who can pay for it. Maybe not out in the sticks, but if you’re reasonably close to where the elite live or vacation you’d be OK.

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Comment by raiter
2008-02-04 05:24:40

i realize the chance of you looking back at this link is slim, and the chance of getting this links through is as well…but my personal blog is www dot fubarrio dot com and there is an english forum on living in uruguay at www dot sociedadsouthron dot net with a LOT more information than my blog.

Comment by yogurt
2008-02-01 02:22:21

China’s Inflation Hits American Price Tags

“SHANGHAI — China’s latest export is inflation. After falling for years, prices of Chinese goods sold in the United States have risen for the last eight months.

Soaring energy and raw material costs, a falling dollar and new business rules here are forcing Chinese factories to increase the prices of their exports, according to analysts and Western companies doing business here.”

Actually that first sentence doesn’t quite say it all. China is really recyling its inflation back to its point of origin - the US, a consequence of its attempts to fix its currency against the USD.

Comment by yogurt
2008-02-01 02:24:28
Comment by Zhang Fei
2008-02-01 15:55:49

yogurt: China’s latest export is inflation.

China is hoping to export inflation. What it may end up exporting is jobs - to Vietnam, Indonesia, India, Pakistan, etc. Nike doesn’t have to have its sneakers glued or sewn together in China. Dell doesn’t have to have its screwdriver factories (for assembling desktop and laptop PC’s) in Fuzhou, China. And 99 cent stores that sell nail clippers and mechanical pencils don’t have to buy from Chinese manufacturers - they can just as easily buy from Indonesian or Vietnamese manufacturers. Most importantly, Chinese manufacturers themselves don’t have to continue operations in China - they, too, can move their plants to Indonesia or Cambodia.

Comment by watcher
2008-02-01 07:08:12

euro inflation:

Eurozone inflation has surged to a 14-year high of 3.2 per cent, strengthening the European Central Bank’s case for resisting interest rate cuts even as the region’s growth slows.

In spite of sharp cuts in US interest rates by the Federal Reserve, the ECB is widely expected to leave its main interest rate unchanged at 4 per cent after its meeting next week.


Comment by watcher
2008-02-01 07:09:24

asian inflation:

Feb. 1 (Bloomberg) — Inflation is accelerating in Asia as South Korea, Indonesia and Thailand join regional counterparts in reporting rising prices that are making it harder for their central banks to follow the U.S. in cutting interest rates.


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