International Bits Bucket For February 3, 2008
Please post items of interest from outside the US here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Direct question to Mr. HOZ
are you long FCO.TO for under $0.42?
cuz Im gettin long at $0.64
No, avg is higher than $0.42 CAD
try a backround search on the “proverbial” front runners long positions, and the keys to the kingdon are theirs.
Haliburton at 33 vs DOW CHEMICAL at 38?
wheres Tobaccco, Alcohol, Nuke-u-lar, Oil…..
hmm, whose holden the Cobalt?
somebodey stoll my battery.
Canadian ABCP market is still frozen
http://lfpress.ca/newsstand/Business/2008/02/01/4805757-sun.html
I’ve been crazy busy with work during the day this week, what have I missed ? I caught the rate cut, obviously, and I am not happy about that. Any advice for the hated saver?
Bank of Sealy. Seriously.
Banks are running on borrowed reserves. If there was a run it would be panic in the streets.
Check it out
http://www.federalreserve.gov/releases/h3/Current/
Blog monster ate my post.
Banks are borrowing reserves. If there was a run on them they have no money to pay.
Chose your strategy based on that.
Question: How does one measure the financial integrity of a bank or credit union?
Where should he go and what should he look for?
Here?
http://www.bauerfinancial.com/home.html
“…they have no money to pay…”
I thought they had a printing press?
So does Zimbabwe
From San Diego, this makes me sick:
http://tinyurl.com/2o4can
“It will be a tremendous help. It will help large groups of homebuyers, including military families … ” Morafcik said. “This will be a huge stimulus of the economy. This is needed now.”
How dare she play the “military family” card. Welcome back from Iraq, here is a $700,000 albatross to hang around your neck and ruin your family and children’s futures.
We don’t need over priced housing for ANY families, they should keep the limits in place so the military family this realtor is so worried about can purchase an affordable home.
Ok, another look at the madness of New Zealand real estate. For those suggesting that the less fashionable parts of South Island are less bubbly, some nasty numbers. I am sure some people are very happy to live there, but I would be hard pressed to think of a more dismal place than Invercargill. Like North Dakota, it is a taste few acquire. In the early 19th century it was convenient to sealers working the sub antarctic islands and that tells you what you need to know.
From the website of reinz.co.nz:
Invercargill median home price:
December 2001 = $66,100
December 2007 = $200,000
That’s right, even this gloomy southern outpost more than tripled real estate prices in just 6 years. Yes the houses are cheap(er) than North Island, but there are good reasons for that. The median house in Invercargill is a ancient, tiny, delapidated POS. This has been a global debt bubble that has nothing to do with the intrinsic value of real estate at all. It isn’t different anywhere.
For your enjoyment, look what a modern (similar to an American starter home) 3/2 house in Invercargill costs. Considering the environment, and local economy this is highway robbery:
http://www.realestate.co.nz/709285
and heated with a woodburner.
Hey NZ renter, bubblicious territory over here in West Australia too. Check out this little charmer:
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104571917&f=100&p=10&t=res&ty=&fmt=&header=&cc=&c=59575409&s=wa&tm=1201966832
I am not shocked by the POS house, as whole small towns in New Zealand look like that. But since when did a quarter acre section become a “massive block” suitable for subdivision? Sounds like they are selling the section more than the structure. Oh, I forgot, Australia is running out of land as the whole continent isn’t big enough for 20 million people.
Running out of land nonsense. USA has over 300m people and yet 90% of the land is rural/farmland.
That was sarcasm
It was only a few years ago that there was talk of a ’serial arsonist’ in Invercargill, but it was just people torching houses that were impossible to sell and claiming the insurance. There’s a lot in the papers about an economic boom for Southland, but how much of that is a phantom boom based on people desperate to buy anything anywhere to get into the real estate market?
Now for something completely different from midsummer downunder:
“A real estate agent invited to be a prize in a charity bachelor auction was later urged to pull out when organisers heard he was gay.”
http://www.stuff.co.nz/4384278a10.html?source=email
As for the name, I am not making it up. If you don’t know what Lingham means, google it.
If I knew he was gay, I would bid for his services as a gag gift for my wife.
But a Realtor? I am not so certain I can accept that.
He’s fugly though! Oh well, a realtor and fugly. What are the odds?
Well, he should not have ‘pulled out’ as IF he is a good decorator or hairstylist on the side.. then I would bid.
But, seriously, what is with that hair cut/ and coat/tie?
I wouldn’t want to auction myself out as people think they “own” you for the night and can do what they want
I work in Liverpool population approximately 400,000. Yesterday one of my work mates showed me a regeneration booklet for the city. It was bragging about the amount of construction work being carried out or planned in the city centre. We had multiple hotels, a new museum, restaurants, night clubs and pubs and residential accommodation. Being a sad individual I started to count up the number of flats/apartments they where planning to build, it came to over 8,300 no taking into account applications that just stated they planned to build but had not worked out how many there would be.
Given the stats for Liverpool
Population
Learn more
Liverpool City Council Average
Total Population: 439,476 49,138,831
% aged 0-19: 26.3887% 25.0533%
% aged 20-34: 22.1819% 20.3654%
% aged 35-49: 20.6136% 21.2733%
% aged 50-64: 15.5492% 17.4191%
% aged 65+: 15.2666% 15.8889%
› See full population figures
These figures are from the first release of the 2001 Census data, released in September 2002.
Liverpool City Council Average
Average gross weekly pay 421.60 450.83
2006 Annual Survey of Hours & Earnings. Based on residents in the local authority area. The median figure is displayed.
and the facts that the average apartment costs circa £140,000 I wonder where the FB’s are coming from.
“and the facts that the average apartment costs circa £140,000 I wonder where the FB’s are coming from.”
The same answer as every other “special” place:
1) All the rich boomers want to retire there (a Beatles connection?)
2) Equity locust specuvestors from ___(London) are looking for the next big thing
3) Foreign investors think Liverpool is cheap compared to ___(Richistan)
Liverpool should be a sea of vacant decayed housing. I am stunned to read that over the past 60 years, the population of Liverpool has been cut in half. That level of depopulation is worse than even Detroit.
Carry traders giving up
“It was fun while it lasted, but the carry trade - maybe the world’s biggest leveraged bet - is rapidly fading from the scene.”
“The practice of borrowing in currencies with low interest rates, such as the Japanese yen or Swiss franc, and plonking the money into something with a higher rate, such as the New Zealand dollar, or something you just hope will go up, has been estimated at up to US$1 trillion ($1.28 trillion) in value.”
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10490203
I don’t think the carry trade is ending; if that were true currencies like NZ$ should be falling - but the Kiwi dollar has been appreciating by several % against euro currency over the last few weeks.
probably Ms. Watanabe is switching some of her debt positions from yen and Swiss francs to US dollars …
Agree. AUD just rose above 90c US for the first time since November. I thank Ben Bernanke, gold hawks, and probably the yen carry trade.
Oh I don’t know about that.
I’m doing OK with my carry trade with Zimbabwe, so far.
Rhode(sia) Trip
I watch the real estate market in Prague closely. I currently rent a large flat in a premium location (Prague 1, riverbank) for 10 euro/sq.m./month. A recently refurbished building around the corner, without the view I have, is offering flats for sale for 5000 euro/sq.m. for a similar size. So, the rental multiple is 500 to 1. That is before 9% VAT, which has to be paid on sales, but not on rentals. This in a city where the average gross salary is about $1,400/month.
Everyone I know who knows the market well agrees that there is a bubble in Prague - we’ll see how long it takes to crash.
I’d be very interested in hearing anyone’s thoughts on buying in Marbella on Spain’s Costa del Sol. It’s been a buyer’s market for a few years, certainly has some negatives but it appears to have some significant plusses as well. Any suggestions? Thanks.
plusses? plenty of choice for buyers in a few years, for sure
I guess the plusses I was referring to include lots of coastline and the warmest winter climate in all of Europe. But it’s certainly overbuilt with a lot of surplus unsold properties
Anyone know how bad the situation in Ireland is going to be?
There’ll be a buyers mutiny.
How bad do you think it can get when 1 is 7 houses is vacant?
Predicting the situation in Ireland — it’s hard to say–we are starting to bleed jobs, and are definitely heading into choppy waters. I think everyone is expecting housing values to decrease at least 10% this year. McWilliams, clever and cuddly Keebler elf, appears to be angling for job as professional contrarian. Ireland’s biggest threat is an employment shock — lending standards never descended into the insanity they did in the U.S. Even at the peak of the boom, no one could get a loan without proof of income and job. How bad will things get? Who knows. In today’s Sindo, Mark Coleman argues sensibly for tax cuts, investment in the National Development Plan (infrastructure), and public spending restraints in lieu of interest rate decreases.
http://www.independent.ie/opinion/analysis/cutting–rates-would-fan-the-flames-while-rome-burns-if-anyone-is-to-blame-for-the-looming-crisis-in-the-global-economy-it-is-the-worlds-central-banks-writes-marc-coleman-1280050.html
http://www.nytimes.com/2008/02/03/nyregion/03property.html?em&ex=1202101200&en=f4f952d7c869b89d&ei=5087%0A
Home Prices Start to Dip, Recalling ’90s Slump
By PATRICK McGEEHAN
The U.S. Economy: Remembering the Past Could Help Fix the Future
http://seekingalpha.com/article/62692-the-u-s-economy-remembering-the-past-could-help-fix-the-future
“…EU authorities have carried out a covert rescue of the Spanish mortgage banking system…”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/28/bcnspain128.xml
of course, we are NOT allowed to call this a bailout with EU taxpayer money
privatize the gains, socialize the losses.
Houston…….we have a problem…….Sheeeeet
http://research.stlouisfed.org/fred2/series/BORROW?cid=122
What’s up with that $15 bn spike? Seems like it just dropped out of the clear blue sky…
By George, it did just drop out of the clear blue sky!
2007-01-01 0.211
2007-02-01 0.030
2007-03-01 0.054
2007-04-01 0.079
2007-05-01 0.103
2007-06-01 0.187
2007-07-01 0.262
2007-08-01 0.975
2007-09-01 1.567
2007-10-01 0.254
2007-11-01 0.366
2007-12-01 15.430!!!
I assume the $15 bn spike is due to the implementation of the TAF. What is the implication? For instance, do these monies have to be repaid?
Look at the Fed’s bank reserve data:
http://www.federalreserve.gov/releases/h3/Current/
Notice that ‘non-borrowed reserves’ have fallen to -$8 billion. On the far right, notice the amount of new borrowed reserves. This has NEVER happened - the historical data is available on link above. In effect, the aggregate equity of our banks has vanished.
This is serious. The fed is desparate to keep credit flowing.
So it really is different this time…
Welcome to Fed rates below the level of inflation. The powers that be have decided to play this out like Japan did with Zombie banks and corporations limping along for a decade or more in the red.
I guess you could say that the winners in the deal are the workers who would otherwise be fired and that the losers are everyone holding currency.
Japanese currency was the best place to be for them in the early 1990s, as falling prices of homes and consumer goods imply real appreciation on the currency. I am less optimistic this will happen here, as BB seems mortally fearful over the prospect of deflation.
ninemsn in Australia are running a poll
Vote: Is Australia about to experience a mortgage crisis?
Yes…….35681
No……..7598
Interesting……ummm
Odds ratio = 35681:7598 = 47:10
Subjective probability of a mortgage crisis = 47/(47+10) = 82 pct chance
We are headed off to New Zealand on “free” tickets, from credit card miles…
“free” except for $300 tax, per person.
The games a dying corp’s plays…
Loan market in ‘disarray’ after Harrah’s upset
By Stacy-Marie Ishmael and Henny Sender in New York
Published: February 3 2008 22:04 | Last updated: February 3 2008 22:04
The leveraged loan market begins the week in “disarray” following the collapse of efforts to syndicate $14bn of the debt used to finance the $27.8bn buy-out of Harrah’s Entertainment, bankers say.
The group of banks backing buyers Apollo Management and Texas Pacific Group are having trouble selling on the leveraged buy-out debt to third parties. With the bulk of the debt remaining on their books, the banks are sitting on a sizeable loss.
http://www.ft.com/cms/s/887a7576-d28d-11dc-8636-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F887a7576-d28d-11dc-8636-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
SOL time for monoline rescue plan?
Setback for monoline rescue
By Henny Sender and Aline van Duyn in New York
Published: February 3 2008 22:04 | Last updated: February 3 2008 22:04
Leading private equity firms are unlikely to participate in any recapitalisation of Ambac and MBIA, increasing the pressure on banks to come up with a rescue package for the troubled US bond insurers.
A number of firms, including Bain Capital, Carlyle Group, Kohlberg Kravis & Roberts and TPG, have looked at investing in the cash-strapped groups, which guarantee the value of everything from municipal bonds to the most complicated mortgage securities. These investors have all concluded that the risks are far too great, according to people familiar with their thinking.
EDITOR’S CHOICE
Loan market in ‘disarray’ after Harrah’s upset - Feb-03
Regulators to scrutinise rating agencies - Feb-03
Stock market woes take toll on hedge funds - Feb-03
Banks link to solve bond insurers crisis - Feb-02
Thain says bond insurers bail-out unlikely - Jan-31
MBIA reports record loss - Jan-31
http://www.ft.com/cms/s/3028204a-d291-11dc-8636-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F3028204a-d291-11dc-8636-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Hedge fund analyst — care to offer an update from the trenches?
Stock market woes take toll on hedge funds
By James Mackintosh
Published: February 3 2008 19:21 | Last updated: February 3 2008 20:40
Last month was the worst for hedge funds since the August 1998 crisis that presaged the collapse of Long Term Capital Management, according to data from Chicago-based Hedge Fund Research.
The average fund tracked by the HFRX index lost more than 2 per cent in January, with event-driven funds, which include activists, the worst hit with a 3.39 per cent loss.
EDITOR’S CHOICE
Analysis: Hedge funds show resilience - Jan-28
Guide to hedge funds imminent - Jan-31
Hedge funds find there is nowhere to hide - Jan-27
http://www.ft.com/cms/s/0927784e-d285-11dc-8636-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F0927784e-d285-11dc-8636-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F887a7576-d28d-11dc-8636-0000779fd2ac.html
My conjectures about the Fed’s problem now versus in 1998:
1) There was only one LTCM
2) Bailing out LTCM gave lots of financial wizards the idea that hedge funds that grew big enough automatically qualify for too-big-to-fail insurance
3) Consequently, the hedge fund industry has grown to a siz where there are so many too-big-to-fail entities that the situation is too-big-to-bail
4) SOL
Spectre of defaults rises amid tight lending
By David Oakley, Capital Markets Correspondent
Published: February 3 2008 22:02 | Last updated: February 3 2008 22:02
Heavily indebted European and US companies are facing growing financial difficulties because they cannot refinance their borrowings due to the continuing closure of the credit markets.
Companies’ inability to borrow is raising the spectre of defaults, particularly among the most highly leveraged companies in sectors such as property that have been hardest hit by economic uncertainty.
EDITOR’S CHOICE
Traders believe debt markets will get worse - Jan-24
Bank and corporate bond issuance falls - Jan-16
Bearish start as investors stay in hibernation - Jan-08
http://www.ft.com/cms/s/01f50c0a-d283-11dc-8636-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F01f50c0a-d283-11dc-8636-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F887a7576-d28d-11dc-8636-0000779fd2ac.html
Scrutinisers face further scrutiny
Regulators to scrutinise rating agencies
By Chris Giles and Gillian Tett in London and Jeremy Grant in Washington
Published: February 3 2008 18:14 | Last updated: February 3 2008 18:14
Financial regulators from the world’s leading economies were to meet in Amsterdam to thrash out ideas to address the deficiencies of credit rating agencies that have been exposed in the current financial turmoil.
The meeting, organised by the International Organisation of Securities Regulators, comes as finance ministers and central banks cast around for consensus on the right regulatory response to the continuing credit crisis.
EDITOR’S CHOICE
Stock market woes take toll on hedge funds - Feb-03
Banks link to solve bond insurers crisis - Feb-02
Thain says bond insurers bail-out unlikely - Jan-31
MBIA reports record loss - Jan-31
US bond insurers expected to fall further - Jan-29
Fed quiet on bond insurers rescue - Jan-28
http://www.ft.com/cms/s/5d6ff934-d281-11dc-8636-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F5d6ff934-d281-11dc-8636-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F887a7576-d28d-11dc-8636-0000779fd2ac.html