Rivers Of Fools Gold
Readers suggested a topic on relative bubble markets. “Why have property bubbles burst in some countries, but not in others? In Canada there is no sign of even a slowdown. In Europe the Irish bubble has well and truly burst, whilst in the UK prices fell 10% or 15% in 2009 but are now back to all time highs. People are more pessimistic about the economy in London than they are in LA, but London prices keep going.up. So why the huge divergence in property markets?”
One said, “Certainly the areas who had rapid growth based only on building vs growth based on real growth in multiple industries have gone down harder but I think there’s something more to it than that.”
Another added, “Supply and demand. Places like Phoenix, Tucson, Vegas, Orlando… There was never a shortage of buildable land. Lots of supply. There was also very little real demand. Lots of people coming to work, flip, etc, but they didn’t plan on staying long term. Places like coastal CA, Manhattan, London… There has been a lack of buildable land for a very long time. Shortage of supply.”
“People with lots of money but fearing devaluation of said money, are looking for safe haven inflation hedges. Gold, copper, oil, farmland… and real estate in desirable areas with a lack of supply.”
The Associated Press. “China’s richest are increasingly investing abroad to get a foreign passport, to make international business and travel easier but also to give them a way out of China. ‘In China, nothing belongs to you. Like buying a house. You buy it but it will belong to the country 70 years later,’ said Chinese millionaire Su, lamenting the government’s land leasing system. ‘But abroad, if you buy a house, it belongs to you forever.’”
“Alongside increased emigration there has also been a massive outflow of private money from China despite its strict currency controls. The report estimates that rich Chinese — those with assets of more than 10 million yuan — have about 3.6 trillion yuan ($564 billion) invested overseas. ‘The Chinese economy now looks like a massive funnel,’ said Zhong Dajun, director of the non-governmental Dajun Center for Economic Observation & Studies in Beijing.”
From Moneyville. “Hello Toronto. The Chinese are coming — and citizens from the world’s second largest economy are looking for some prime real estate. Chinese investors have been the largest buyers of pricey Central London real estate so far this year. In Sydney, they are credited with buying up to 60 per cent of all properties in new projects. And in Vancouver, they have been blamed for jacking average prices up by 25 per cent year over year.”
“Bank of Canada governor Mark Carney has already said Asian wealth is causing prices to move to ‘extreme’ levels in the Vancouver market, where the price of a standard bungalow is more than a million dollars. But while Vancouver has been getting the lion’s share of attention, Toronto has not escaped notice.”
“‘As Beijing reins in wildly overheated domestic residential markets, the middle class moves its growing wealth offshore into havens such as Canada, Australia and more specifically into Metro Vancouver and Toronto,’ said a recent report by Vancouver-based consultancy Landcor. ‘In China, real estate has long been regarded as a secure bet.’”
“At the spring launch, Johnson Cheng, sales manager at Peter Street condominiums in the city’s entertainment district, targeted the Asian market by taking out advertising in Chinese newspapers. After most of the units had been sold, he advertised in mainstream media. He estimates that an astounding 55 to 60 per cent of the buyers in that project were Asian investors. Most of the sales went to mainland Chinese buyers, some of whom were bused in on real-estate ‘tours’ to view properties.”
“It isn’t unusual for some investors to buy two or three condominiums at a time when visiting the city, said Cheng. ‘You get to see Niagara Falls, and in between you can go shopping for a condo,’ said Cheng.”
“Kitty Zhu, 24, bought two luxury downtown Toronto condominiums in the same building with her father earlier this year. She is living in a third property she bought last year.’The prices in Toronto are getting higher, but they are still okay when you compare it to China or Hong Kong,’ said Zhu.”
The Wall Street Journal. “In Miami, an invasion of foreign buyers inflated a speculative real-estate bubble that burst disastrously. Condominium values plunged, foreclosures soared and glitzy condo developments stood half-empty. Toronto is a long way from Miami, but the condominium boom north of the border has begun to evoke ominous comparisons, even among real-estate agents.”
“About 40,000 additional condominium units are under construction, including 16,000 set to hit the market next year. ‘There’s more supply coming than the market really needs, unless we have a stronger economy than we have today,’ says independent housing economist Will Dunning.”
From News.com. “Buying a home in Australia’s most populous state has become ’simply unachievable’ for some, real estate experts have warned. In a major blow to those looking to get on the property ladder, the NSW Government has scrapped stamp duty concessions for 80 per cent of first-home buyers. From January 1 next year, newcomers to the property market will no longer be able to avoid having to pay transfer title charges on existing homes under $600,000.”
“Real Estate Institute of NSW president Wayne Stewart said: ‘Australia weathered the last global financial crisis because the property market was invigorated. Yet those lessons have been ignored today.’”
“Martin Real Estate managing director Jeremy Martin added: ‘Between now and January rivers of gold will flow but after the party there will be a hangover.’”
The Age. “The number of first-time buyers entering the market has fallen to its lowest level in seven years despite the 20 per cent discount becoming available about five months ago. New figures also show the savings on offer - amounting to $5800 on a house at the median price of $565,000 - have been cancelled out by price rises in the city’s more affordable areas over the past year”
“The failure of the cuts to fuel buyer interest has been blamed on Melbourne’s long-running housing affordability crisis. ‘First home buyers are being very cautious about the fact that the market is in a downturn right now,’ said Louis Christopher, managing director of SQM Research.”
“James Champion, who has been looking for a first home for more than two years, believes his best option is to wait and see. The 34-year-old IT manager considers the stamp duty cuts and first home grants to be ‘fool’s gold’ that can whip up buyer interest but actually make housing even more unaffordable. ”I think housing in Australia is just excessively overpriced at the moment. I’d probably start to have a fairly good think about it if [price falls] got to 15 or 20 per cent,’ Mr Champion said.”
The Kensington & Chelsea Chronicle. “Property values in the Royal Borough have soared by 17.5% over the past 12 months, driven up by overseas demand and a short supply of housing. Robert Barlett, chief executive of the estate agents, said: ‘This month’s results highlight that the chronic shortages in prime central London are forcing prices higher in these areas, with average prices in Kensington and Chelsea breaking the £1m mark for the first time, and foreign investment into the capital is still at the forefront of driving price growth.’”
“One first-time buyer, Elizabeth Brewer, 29, has been saving for the past four years with her partner to try and buy a home in North Kensington. Miss Brewer, currently renting a flat in Fulham, said: ‘We have been saving for years to try and get a deposit together, but it feels like a bit of a cat and mouse game. We get a bit closer to having a deposit, and the goalposts move as house prices go up. We’re really stretched to what we can afford, but North Kensington is the kind of area we want to look in, as that’s where we work.”
“‘I’m not surprised that the average price in the borough is now £1m - I’m just surprised it wasn’t there already.’”
“House prices in Kensington and Chelsea are at their highest point ever, on average, but those in London as a whole are 2.5% below their highest ever point, which was set in February 2008.”
This Is Money. “Prices of new-build properties in London residential hotspots are predicted to more than double in the next four years, according to an upmarket estate agency. The biggest increase, of 140 per cent, would see a £300,000 property explode in value to £720,000.”
“It says prices in central London have risen 36 per cent since their low after the credit crunch and banking crisis two years ago. Nationally, the recovery has been far more modest. Figures from Halifax suggests house prices are down 2.6 per cent on a year ago. The agency’s analysts believes an improvement in the jobs market - particularly in the City - will underpin the market, together with increasing numbers of foreign buyers.”
“London house prices plunged in 2008 but saw a sharp recovery in 2009 and 2010 as bonuses returned for bankers and as a plunge in the pound again the euro and other currencies made Britain attractive to foreign buyers.”
“Grainne Gilmore, head of UK residential research at Knight Frank, dismissed suggestions that London’s property bubble might burst, saying the market will be supported by buyers with cash and less affected by changes in the availability of credit. She told Reuters: ‘We definitely wouldn’t class what is happening at the moment as a bubble … The fundamentals of the market in London are quite different to what they were in the rest of the UK [before the property crash].’”
“More Americans are reaching their 60s with so much debt they can’t afford to retire. All kinds of debt held by this age group have risen, but the big problem is mortgages. Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20% had secondary mortgages, including home-equity lines, according to research group Strategic Business Insights’ MacroMonitor. That was up from just 22% and 12%, respectively, in 1994.”
“A few years ago, homeowners in their 60s with big mortgages could sell their homes for a profit and buy smaller places or rent. But the drop in housing values means that many homeowners have little equity, and some now owe more than their houses are worth. People with problems aren’t just those who took subprime loans or spent foolishly on lavish lifestyles. They are people from all backgrounds, including some with six-figure incomes.”
“‘We have gotten into this ‘debt’s OK’ mentality and it is going to be very hard to get out of it,’ says financial planner Greg Heller of Heller Capital Resources in Los Angeles, who says he has wealthy clients in their 50s with problems.”
“Many have little choice but to keep working. Christine Shiber, a 59-year-old Methodist minister in California’s Bay Area and her husband borrowed to buy a home and for their children’s education, something many Americans have done. They divorced in 2007 and sold the home, repaying debts. But Ms. Shiber needed a place to live. In 2008, she took out a fresh mortgage to buy a condominium. The down payment, together with her son’s college costs, used a big chunk of her remaining savings.”
“Soon, Ms. Shiber realized that she wasn’t making ends meet. She had trouble paying credit-card bills and started running a balance. Her 2001 Ford Focus needed a big, unexpected repair. She borrowed against her retirement account. ‘I imagine I’ll be working until I’m 70,’ says Christine Shiber, a 59-year-old Methodist minister in California’s Bay Area.”
“Rob Salvaggio of Glencoe, Ill., won’t turn 50 until later this month, but he already is expecting a financial hit when he retires. Mr. Salvaggio, who works for a real-estate manager, once dreamed of retiring at 55, but his mortgage, auto and credit-card debts are so high that he is aiming now at something more like 65. Because of heavy monthly debt payments, his wife has stopped contributing to her 401(k) and he is making only minimal contributions to his. ‘We aren’t going to be able to maintain or increase our standard of living in retirement,’ he says. ‘We are going to go backwards.’”
“Now, to provide stability for her son, they are determined to remain in the neighborhood where they live, even though it is expensive. When the landlord took back their rental home, they decided to buy another home, take on a mortgage and cut back on retirement savings. ‘We all agreed that it wasn’t the optimal idea,’ he says, although he hopes his home’s value will rise, permitting him to sell at a profit when he retires.”
“I imagine I’ll be working until I’m 70,’ says Christine Shiber, a 59-year-old Methodist minister in California’s Bay Area.”
Oh the horror!
“Mr. Salvaggio, who works for a real-estate manager, once dreamed of retiring at 55, but his mortgage, auto and credit-card debts are so high that he is aiming now at something more like 65.”
What does guy think? That we live in Greece.
I know several people working well into their late 60’s and early 70’s, without complaint. I’m convinced it’s keeping them healthy. Most people’s retirements are sedentary, or at least much less active, leading to declining health.
Working to 70 sucks… only… if u HATE your job.
Solution: Work at a job that u LOVE!!
If u don’t already… u’re doing something wrong.
Not everyone can be a rock star or pro skateboarder, timmy.
That’s good point. If eveyone worked at something thay loved, a lot of necessary work wouldn’t get done.
This is where competitively set wage rates can help. If there is a job nobody wants to do — say, trash hauling — or which requires a lot of training and candlepower to do — say doctoring — then the market is supposed to pay a premium for the skills. Conversely, a job everyone wants and/or can do (not sure of a good example?) would tend to pay less, due to a glut of workers competing for positions.
So my advice to anyone who is trying to decide what to do in life is to pick a vocation which (1) you enjoy, (2) is in demand, (3) provides a highly valued skill or service, and (4) is not that easy for others to either do or to acquire the skills to do.
The “market” doesn’t appear to be working. If it did, a lot of those jobs like trash hauling would have higher pay.
Mike .. rap music was katrina flooded on america to keep the pipline full of barely functional people who would love to be a low paid “career” street sweeper.
“If it did, a lot of those jobs like trash hauling would have higher pay.”
You can loosely the supply side of the labor market by four job categories:
1) (enjoyable, many qualified)
2) (not enjoyable, many qualified)
3) (enjoyable, few qualified)
4) (not enjoyable, few qualified)
If demand is the same, Category 1 jobs will pay the least, Category 4 jobs will pay the most, and Categories 2 and 3 will land in the middle. Trash hauling would probably fall into Category 2 for most people; these jobs will tend to pay less than Category 4 jobs. And Category 3 is where you want to be, unless it is too hard or expensive to obtain the qualifications.
I’d say CEO jobs are in category 1, and should be paid the least. As much as they try to build up the fairytale, most of these people aren’t any more qualified than most of us on the HBB. I’ve worked for some pretty rich people, and when you get to know them well, it’s a bit like pulling aside the curtain and revealing that “The Wizard of Oz” is just like most human mortals.
HAH!
Excellent, Montana.
Christine Shiber, a 59-year-old Methodist minister in Ca…
Truly a non-job.
I don’t agree with this comment. Leading a church of any size is a very demanding job, and that doesn’t include officiating at weddings and funerals.
Totally agree with you! I grew up as a PK, and I can assure any doubters that my dad worked very hard, especially considering the pay scale. And if the work as a protestant clergyman is hard, imagine serving as a Mormon bishop; they typically hold down a full-time job, plus serve a second full-time job as a clergyman.
Unfortunately like most cults work that way, you have to keep working to keep feeding the coffers.
“…non-job….”
Wrong.
It’s one thing to remain active during one’s later years and another to continue working at the same high pressure, stressful (but good paying) job you had when you were younger, assuming you can hang onto it. That is something that is on my mind as I enter my 50’s and I am looking to transition into a less stressful QA Engineer position for my latter career years.
Some might think that being a minister is an easy job, but I know a few and I know that its no cakewalk. There is a lot more involved than preaching on Sunday and on the Protestant side of the aisle there is no shortage of candidates to fill a spot. I have a good friend who has been unemployed in his profession for over a year since he was fired from his previous ministerial position by the “senior pastor”. And he was fired because his adult son changed denominations. He was given a few months severance in exchange for “leaving quietly”.
High stress is the opposite extreme and also a killer. Somewhere in between seems to work best.
My wife and I were in New York City in 1995. Somewhere, I passed a man in his 50’s. In his eyes I could see that he had the job he dreamed about in his 30’s , that he excelled at when he was in his 40’s and that he now tired of.
“Christine Shiber, a 59-year-old Methodist minister in California’s Bay Area and her husband borrowed to buy a home and for their children’s education, something many Americans have done. They divorced in 2007 and sold the home, repaying debts. But Ms. Shiber needed a place to live. In 2008, she took out a fresh mortgage to buy a condominium. The down payment, together with her son’s college costs, used a big chunk of her remaining savings.”
So this is how the modern Shepherds behave; one has to wonder what life-advice they offer their flock?
Well let’s hope that she has enough sense to give out financial advice.
I meant to say “enough sense not to give out financial advice”.
I much agree with your post. 70 is young. I have been meeting more and more septuagenarians working in engineering. One drives a nice looking Corvette but admits he has to pry himself out of it all the time
I’m 52 and still listen to metal (not the growler metal of course), live like a college student, and travel a lot like a youngster.
My App of all apps for droid is going to capitalize on flexibility. It’s to be multi-lingual too.
“I much agree with your post. 70 is young.”
Your mileage may vary. If you are blessed with a good set of genes sure, but I see lots of obits in the paper where the deceased was in their 60’s or even younger.
And then there is the question of being able to hang onto a non menial job after turning 60. A lot of people lose their mental acuity when they get older and we’ve gone and offshored all the “easy” jobs they could have done. Most oldsters can’t hustle as hard as someone 20 years younger which is probably why I rarely see oldsters stocking shelves at WalMart.
The other day, while I was riding the bus, one of the passengers mentioned that it was his 45th. birthday. The other passengers got into a “I’m the oldest passenger on the bus” conversation. I was excluded from the conversation, because the other passengers had sized me up as being young. Turned out, I was the oldest (63) passenger on the bus.
Nice!
I’m beginning to think the retire at 55 was meant for heavy chain smokers since they would be drawing on ther pensions for a short time.
But then all those dang do gooders non smoking ads screwed up the actuaries pretty badly.
“Places like coastal CA, Manhattan, London… There has been a lack of buildable land for a very long time. Shortage of supply.”
They aren’t making any more land in Japan, but the ’supply shortage’ nonetheless didn’t prevent their real estate bubble from imploding for two straight decades.
Next.
But I doubt that wealthy foreigners want to live in xenophobic Japan and I doubt the Japanese want them anyway.
FWIW, it’s only the most desireable areas in Coastal Cali, NY or London where the foreign richies are buying. And as others have pointed out in some of those areas prices continue to rise. Not in the sub or exurbs of course, but that’s not where the richies are buying. Of course someday they will run out of richies.
You missed my point, which is that a (perceived) land shortage created by millions and millions of people living in a land-limited area offers no protection against price collapse in the aftermath of a real estate bubble.
But since you brought it up, I expect the international tide of bubble-crazed investors to eventually recede in much the same manner that the tide California investors receded from their Idaho and Arkansas real estate investing opportunities. This bubble is epic, and its aftermath will touch every corner of the globe with developed real estate markets.
I expect the international tide of bubble-crazed investors to eventually recede
So do I. But for now the richies will bid up prices in very select markets. And while Japan has a shortage of land, few non Japanese wish to live there. I would expect the Chinese to be especially unwelcome in Japan and they know it. Heck, even repatriated ethnic Japanese people find Japan to be an unwelcoming place.
The high prices in the select markets are fueled by lack of supply and high demand by those with money they want to get out of China. But I agree that this too will end.
“But I agree that this too will end.”
Most likely in the aftermath of the eventual collapse of the Chinese real estate bubble…
The Financial Times
September 11, 2011 12:17 pm
Asia: take note of other property bubbles
By Edward Chancellor
The authorities believe they can legislate away housing bubbles. In the US, they have introduced “macro-prudential” rules to protect banks from future real estate busts. Several Asian governments are deploying a variety of measures to dampen their own red-hot property markets. Yet only sound monetary policy can deliver us from the devastating cycle of real estate booms and busts.
The age of the subprime “liar loan” is over for good. The Dodd-Frank Act requires minimum mortgage downpayments, makes it illegal for banks to lend to people with dodgy credit records, and limits the maximum size of mortgage loans relative to household income. Regulators also want banks to adopt counter-cyclical measures to bolster their reserves.
…
The truth is that the Spanish real estate boom, like that in the US, was produced by excessively low interest rates. Its central bank was ultimately powerless to act because interest rates were set by the European Central Bank in Frankfurt. Parts of Asia, which peg their currencies to the US dollar, face a similar dilemma today. The Federal Reserve has maintained zero interest rates for the third year in a row. For Asian members of the unofficial Dollar Bloc the result has been negative real interest rates. Low rates are fuelling housing booms across the region.
…Economists at Standard Chartered have created a ‘Bubble-O-Meter’ that uses strong house price inflation, above trend mortgage growth and negative real interest rates to identify property bubbles.* Their model suggests the real estate markets of Singapore and mainland China are in a similar frothy state to Hong Kong’s.
The respective authorities have all instituted measures to cool their property markets. In Hong Kong and Singapore, they have reduced the maximum loan-to-values, increased the amount of land available for development and raised stamp duty for condo-flippers. Beijing has gone further. Over the past couple of years, the People’s Bank of China has raised bank reserve requirements nine times. Chinese banks have been ordered to restrict lending to real estate developers. Households face a limit on the number of properties they can acquire. Beijing also plans to provide some 36m affordable homes over the next five years.
The trouble is that when interest rates are too low, eager borrowers invariably find ways to evade restrictions. In China, a shadow banking system has filled the vacuum left by the banks’ retreat. Much of this unconventional credit finds its way into the real estate market.
Nor will increasing the supply of properties prevent a harmful bubble from forming. On the contrary, it could well make the aftermath more painful. Spain, Ireland and to a lesser extent the US all witnessed high levels of housing construction during the past decade. These building booms left a terrible wreckage. Both Ireland and Spain ended up with more than a decade’s worth of housing oversupply. It has taken the US five years and counting to absorb excess supply of new homes.
The current property booms in China, Hong Kong and Singapore have much in common with those across southeast Asia in the mid-1990s and in the periphery of Europe in the past decade. In all cases, dollar pegs and a currency union took the control of interest rates away from the local central banks. Low rates inflated property bubbles. Institutionalised prudence did not save Spain. Asian policymakers should take note.
* Asia – Bubbly Housing Concerns, Standard Chartered, 6 September 2011
All RE is overpriced. Some a little, most a lot.
But prime areas will fare better long term.
Prime areas have farther to fall short term.
In my previous experience the undesirable places always fall more. And even if say La Jolla fell more than Chula Vista or Santee it will still be unaffordable for 99% of all San Diegans.
“In my previous experience the undesirable places always fall more.”
But of course, this time is different, as the runup in property prices by a factor of 3X or so over the course of a decade was historically unprecedented. Sans government intervention, one would expect a crash of similar magnitude. Whether government intervention to prop up high-end areas like La Jolla will continue is the wild card in this equation; if it ends or sufficiently erodes, and if the Chinese and other foreign investors lose interest or the means to invest there, La Jolla prices will fall just as hard as if not harder than they did anywhere else.
But you are correct about one thing: It will remain considerably more expensive to live in La Jolla than, say, Chula Vista or Santee, no matter by how large a percentage La Jolla home prices decline.
I suspect that many homes in La Jolla, especially the highly desireable ones on the oceanfront or with ocean views on Mt.Soledad are owned by richies who don’t have mortgages, unlike the wanabees in the “La Jolla Village” area and in other less desireable parts of La Jolla. The richies will probably hang on to their homes for the rest of their lives unlike the wannabees.
“The richies will probably hang on to their homes for the rest of their lives unlike the wannabees.”
But these guys will not live forever, and when they transcend to the next existential realm, many of their homes will have to be sold. Good luck finding a sufficient number of rich buyers to absorb all the high-end inventory that is destined to hit the market over the next three decades in La Jolla and similar locales.
“many of their homes will have to be sold.”
They also might stay in the family.
Comment by Cantankerous Intellectual Bomb Thrower©
2011-09-11 09:39:19
Prime areas have farther to fall short term.
————–
Totally agree with this.
Exactly. Look at the underlying money supply expansion. It’s nothing to do whatsoever with land shortage.
In California several decades back (just after the first “Earth Day”), environmentalists encouraged California to keep a lot of the Pacific coastline off limits of development. While I’ve always been a capitalist, I know that law has done a lot of good to California. It kept much of the central coast beautiful and unspoiled, has tremendously helped the tourist industry, and of course helped increase the property values of the families who were already in those places generations ago. Those families were the real winners who would never ever think of leaving the state of California, or of leaving the central coast.
‘In China, real estate has long been regarded as a secure bet.’
It was that way for a very long time in California and also, once upon a time, in Japan.
‘In China, nothing belongs to you. Like buying a house. You buy it but it will belong to the country 70 years later,’ said Chinese millionaire Su, lamenting the government’s land leasing system. ‘But abroad, if you buy a house, it belongs to you forever.’”
Oh, Jeebus, someone please tell me how I can hustle these guys.
Make a new line of designer purses/watches/clothing/etc. Call it “Palmy’s Own” and charge 1000 dollars for a plain white T-shirt.
Become a realtor in Vancouver?
Crikey, I could become a realtor here, for that matter. We’ve got ‘em in this area, I began to see an influx at the local home improvement stores about three, four months ago.
Yep. I saw one of these Chinese infestors on the golf course, of all places. He didn’t have golf clubs, either. He was, presumably, snooping around at houses for sale. Why are we letting all of these people into the country?
My guess: Part of the big behind-the-scenes plan is to let a lot of foreigners make all-cash real estate purchases while prices are at a temporarily high (govt-engineered) plateau. When prices later resume falling, it will be foreign knifecatchers who take the next hit, not U.S. citizens.
Something like this happened to Japanese investors who bought U.S. real estate circa 1990…
Why are we letting all of these people into the country ??
Money ??
“Money ??”
Oh, ok. So, we want to make things even more difficult for our working poor?
Do you really think that Goldman Saks or AIG give a rats a$$ about the working poor ??
“Do you really think that Goldman Saks or AIG give a rats a$$ about the working poor ??”
They don’t care if we live or die. Well actually they want us to live so they can harvest more plasma from the drone.
“They don’t care if we live or die.”
Just so long as the entire plankton population doesn’t go extinct, Gollum will do just fine.
“Do you really think that Goldman Saks or AIG give a rats a$$ about the working poor ??”
When did Goldman Sachs take charge of immigration policy? Was it during one of Lloyd Blankfein’s dozen or so trips to the White House?
When did Goldman Sachs take charge of immigration policy ??
The context of the discussion was about (your quote) “Chinese Infestors” and your question was why we let them in…My response was “Money”….Goldman Saks (all major lenders really) does benefit by any foreigners coming in with cash and mopping up some of the excess inventory…Your concern was about the “working poor” I assume in being able to afford these high priced houses…I suggested that GS does not give a rats a$$ about the working poor…
Who says they have green cards?
What I have read is that they will later bring the pregant wife to the house and have her give birth to their anchor baby in an American Hospital. After that the Green Card should be a snap.
Get rid of your xenophobia.
Asian people are exactly the people we want to come over - if they have the money to pay their entire way, and particularly if they are educated.
Even if they are tourists - Asian tourists make the tour industry in Alaska stay afloat. Go there in the summer and see for yourself. I was in an observation coach and I was the only non-Asian in that coach between Anchorage and Denali.
I guess you prefer we get Somalians (without $) to come over, but not Chinese with $?
Maybe they have kids, Bill. Asian students are driving the natives away from the better schools because of the intense academic ambition. Hard to have a mellow HS career with all that cramming going on.
Good point. Sadly the people who are not first or second generation Asians react to it by fleeing instead of by competition. This includes third or more generation Asian-Americans.
Comment by Cantankerous Intellectual Bomb Thrower©
2011-09-11 08:16:48
My guess: Part of the big behind-the-scenes plan is to let a lot of foreigners make all-cash real estate purchases while prices are at a temporarily high (govt-engineered) plateau. When prices later resume falling, it will be foreign knifecatchers who take the next hit, not U.S. citizens.
Something like this happened to Japanese investors who bought U.S. real estate circa 1990…
——————
Yep!
BTW, I also agree that letting foreign speculators buy up real estate not only harms American workers (who’ve already been decimated by the foreign workers), but it also is a threat to our security and sovereignty.
So I don’t get the Chinese land leasing part. I googled and see that cities lease land for developments but I thought they meant apts, projects-type places. Is all the land leased there?
Is it sort of like these “affordable” condos they’re building everywhere for 100k but you don’t have common ownership in the land?
In China, with very few exceptions, there are no property taxes nor capital gains taxes.
Yesterday I said I told a poster that the NYC bubble had probably burst “enough” and that Id explain in this thread. My reasoning applies to these other markets as well. It’s mostly about time. The decades of REOs in the wings in NY, the overbuilding of condos, and the weak economy guarantee a drop in prices there, for many years to come. So if you are looking for a return to historical averages or a return to cheap, NYC should get back to something like that. But my point is that by the time it does actually bottom, he probably won’t remember caring, or will have a more important worries.
When I first started this blog, I tried to look search the internet for material from the Texas oil/RE bubble. There isn’t a lot out there. Then it occurred to me, there were no PCs back then. Some have reported that house prices fell for 15 years in Texas. But the overall economy when through an even longer roller coaster.
There were these bumper stickers back then that said, “Dear Lord, please give me one more boom and I promise not to piss this one off!” I knew people that got these; it was how everybody kinda missed those crazy years. All the people I knew that had these bumper stickers have been dead for 20 years. Those cars have been melted down, probably made into cars again and melted once more. My point is to explain how much time passed for these house prices to hit bottom. I think it applies to these markets in China or NYC or London or Australia.
We think, bubble - pop - low prices. That isn’t how it goes, IMO. What got prices to fall for 15 years in Texas was an economic depression, that in human terms never seemed to end. But it did. By that time, nobody had bumper stickers about the boom any more. The boom days aren’t even talked about much, because of the dark period associated with it.
I’ve never been that caught up in market bottoms or even lower house prices with this global bubble. What spooked me in 2004 was the craziness and how much it reminded me of Texas back in the 70s-80’s. That not many remembered or brought up how this could end. This bubble is much larger; no one can say how long it will take to play out. But just to put it in perspective; by the time Beijing condos “really” hit bottom, there may not be HTML anymore. The people reading here may not even remember the HBB. This is one reason why my main interest is how to survive the economic fall-out of this bubble. And I work hard to make comparisons to Japan and public policy. Because if we go down the wrong road here, we could be all suffering in a lousy economy for a long, long time. Until those children playing down the street are all grown up, with kids of their own. Maybe longer, who can say?
“And I work hard to make comparisons to Japan and public policy”
About a year ago while channel surfing I stumbled upon a documentary about clinical depression in Japan. One of the causes of it was the overall lack of economic opportunity for the “non superstar” people.
It profiled an office building that was converted in tiny living quarters and was populated by people, many with college degrees, who worked at menial jobs. Attending a 2nd tier university was described as a waste of time, which explains why so many young people attend cram schools in the hope of passing the entrance exams (no SAT’s or ACTs in Japan) of the more elite schools like Tokyo University. I suppose that in years past that the 2nd tier Japanese grads would have worked at jobs that were ousourced to China. Now they work in low paying retail jobs.
The parallel with the situation here in the USA is eerie to say the least. We already have tons of college grads who can’t find non-menial work.
I met a college educated guy here in Flagstaff who is a refugee from Austin. He told me the day he decided to leave Texas was when he applied for some low paying position, only to find out there were 5 other applicants with MBAs.
It is interesting that you mention how hard it is for people to find work.
As we all know how true this is. My question is: Why is it that with unemployment so high, does our government insist on currently allowing 1 million new immigrants into our country each year, to compete for jobs with Americans”?
Since this is the anniversary of 9-11, I would ask the same question about our Southern border. “After the 9-11 terrorist attack, why did George Bush and the Government insist on leaving the entire Mexican border open and unprotected and allow 1 million + illegal immigrants into the U.S.A.?”
I think it is obvious to all that cheap labor is policy number 1 for our elites.
The elites love illegal alien workers. They work cheap, don’t complain about not getting health care or 401k matches. The never file OSHA reports or complain about sexual harassment. Whats not to love about them?
Remember, its not Democrat vs Republican - its us vs them.
A recruiter tried to get me in some embedded software work recently in Austin. I did not care at the time to ask for the hourly, since I’m not interested in jumping ship for now.
I’m having too much fun where I am currently working, even though it’s hardly any overtime. And my supervisor has told my job shop that he wants to keep me consulting at his company “forever if possible,” his quote. My Los Angeles buddy says his company had so many cuts that consultants are now cheaper than direct hires and they might get me back in L.A. to work on a follow-on project I worked on there. I told him not until I see this Tampa project through - May.
Would be fun to be “Bill in Los Angeles” again, but the office location could be moved to Orange County…”Bill in Orange County.”
Spot on about Japanese with college degrees. One thing I find admirable about the Japanese is the dignity of labor. Everyone including the ones employed in low paying jobs (mainly hourly and seasonal) do their jobs with a smile on their faces. One cannot say that in America!
The other facet of the documentary was the overall denial of clinical depression in Japan. The affected gulp their prozac and try to cope in a society that tells them that there’s nothing wrong with them. The people interviewed didn’t have those Colgate smiles plastered on their faces.
“The affected gulp their prozac and try to cope in a society that tells them that there’s nothing wrong with them.”
Dark chocolate, coffee and wine also work quite well, and are cheaper and likely more enjoyable to consume than Prozac.
Dark chocolate, coffee and wine also work quite well, and are cheaper and likely more enjoyable to consume than Prozac.
YMMV. What works on one person, doesn’t workd on another. Which is why psychiatrists randomly prescribe mood altering drugs until they find one that works for their patient.
I know a few people who tried the diet and exercise route and it didn’t work for them.
The suicide rate is also very high in Japan.
YMMV, indeed: Go Google up “treatments for depression” and you won’t find chocolate mentioned anywhere.
“Everyone including the ones employed in low paying jobs (mainly hourly and seasonal) do their jobs with a smile on their faces. One cannot say that in America!”
I noticed a significant difference in attitudes among retail personnel when we moved from New Jersey to Washington state, so YMMV.
Comparing the large cities in America (LA, San Fran, Houston, Dallas, Chicago) with large cities in Japan (Tokyo, kyoto, osaka…)
Japanese themselves are aware of the suicides and depression - it seems that one could take a sliver of information and generalize - perhaps the documentary did that to highlight the truly sad part of Japanese society.
In general, I find that Japanese are more happier with their station in life. Now obviously, there are the greedy ones that are never happy! But that is true in any country…
Here in my neck of the woods, prices have bottomed enough for me to purchase that “concrete shack” I used to talk about in my early days of posting on this blog. In this area, we’re there, more or less.
However, I find I’m just not willing to pull the trigger at this time and I’m also eyeballing the Asheville, North Carolina area. Although if you look, you may find a bargain or two there, for the most part, that’s an area that hasn’t bottomed yet. I was actually shocked, I tell you, shocked at some of the prices, in comparison to this part of Florida. It’s not like Western North Carolina is wildly desirable, but it is more desirable than Florida, weather-wise. It really has no commerce or industry to speak of, other than tourism and medical care (for the retirees). In that respect, it’s similar to Florida. For families, it’s a much better place to raise kids, but the jobs aren’t there and if they were, then the area probably wouldn’t be what it is. Its topography sort of prevents it becoming a major area for jobs.
So, prices will take a while longer to bottom in Western NC. But in the meantime, one can always find a bargain if one looks.
‘Here in my neck of the woods, prices have bottomed enough for me to purchase that ‘concrete shack’ I used to talk about in my early days of posting on this blog. In this area, we’re there, more or less.’
IMO, places like Florida will be better off than NYC, where prices are still not falling very fast. Of course, in the media view, Florida is a disaster and NYC is charmed. We’ll see who is right.
It also seems predictable that by the time NYC home prices are clearly in serious decline, Detroit’s economy will be experiencing rebirth. As we learned during the bubble years, All Real Estate is Local.
I still see Naples, FL prices being very bubblelicious.
In the New Tampa and Tampa Palms areas, there are some million dollar houses in gated areas, but there are some fine looking $250,000 houses that look not significantly less decent.
But then New Tampa has some famous or infamous recent criminal events, such as the mother of those teens who shot and killed them both and failed in killing herself. Then about the delinquent high school kid who seriously threatened to bomb his high school the first day of class and is now being tried as an adult. And the 28 year old math teacher who had consensual sex with a sixteen year old student of his, and of course not to forget the three siblings from the region who shot at a Zepherhills policeman and went on a crime spree to Georgia and were finally caught in Colorado.
The ironic thing is that New Tampa and Tampa Palms are very clean and modern areas. So it’s not really the environment that causes people to go into crime.
if we go down the wrong road here, we could be all suffering in a lousy economy for a long, long time ??
Lost Decade ?? Decade’s ??
Interesting thoughts Ben…The “new normal” has been thrown around a lot over the last few years…I believe the quote started with Pimco…
And, if in fact we have a “new normal” then the the lost decades I suggest are not lost at all…If we have a new normal, then the “old normal” is never coming back…
Like you said; “This is one reason why my main interest is how to survive the economic fall-out of this bubble”…
There is definitely hope and belief that we will “bounce back”. Year after year auto industry analysts keep predicting that sales will soar “next year” back to the old levels and they adamantly refuse to recognize that stagnant wages and skyrocketing car prices will make people keep their cars much longer.
“But my point is that by the time it does actually bottom, he probably won’t remember caring, or will have a more important worries.”
I note that as of late, the serial bottom callers seem to have abandoned their by now familiar mantra, ‘The housing market will reach a bottom by the end of the year.’ It seems to have collectively dawned on all the MSM-favored real estate experts that no bottom is in view.
“All the people I knew that had these bumper stickers have been dead for 20 years. Those cars have been melted down, probably made into cars again and melted once more. My point is to explain how much time passed for these house prices to hit bottom. I think it applies to these markets in China or NYC or London or Australia.”
‘the serial bottom callers seem to have abandoned their by now familiar mantra’
I think about people in places like Detroit. I’m not saying all of the US will be like that, but pointing out that the ultimate bottom for house prices probably isn’t foremost on their minds now.
I distinctly remember me saying on HBB back in 2006, 2007, 2008 that 2012 will be the RE bottom. I think I was wrong. 2017? I doubt it unless we get rid of the establishment Keynesians. 2023? Possibly.
Nobody could have seen “extend and pretend” coming.
I think you’re absolutely right, Ben. It seems many people were thinking, even assuming, the bust time-frame would be the same as the boom time-frame. 7 years up, 7 years down sort of thing. That’s definitely not the case. I can easily see many areas taking 15, even 20 years for prices to get back to sanity. People are still paying $400k for a piece of raw land in the Seattle area.
In Hawaii, east side Big Island, they’re paying 40-50k for a half acre. Very few jobs though. No a/c, no snow either. I see people in their 60’s ad 70’s almost managing on Social security and ebt here.
And, Ben, as you know, I do remember Houston in the 80’s and 90’s. The downturn in prices was pretty fast, 2-3 years. Hanging out on the bottom was about 12 years. The high tech stock bubble kept people focused elsewhere than real estate for another few years.
I sold in Houston in 2003 and came to Hawaii. Erroneously thought they would not keep interest rates so low so long (that someone would be acting responsibly) - still waiting. And was grateful for this blog when I found it in the fall of 2004.
‘Houston in the 80’s and 90’s. The downturn in prices was pretty fast, 2-3 years’
The only chart I’ve seen was for the whole state, and most of the decline was the first 3 years. Then a long glide down the rest of the way. Of course, there are a lot of markets in Texas, and I know of some towns that are still at 80’s prices.
I bet if you asked Texans who are old enough to know, they wouldn’t remember what year house prices hit bottom. By then most of us had more important things to think about.
Comment by GrizzlyBear
2011-09-11 08:16:56
I think you’re absolutely right, Ben. It seems many people were thinking, even assuming, the bust time-frame would be the same as the boom time-frame. 7 years up, 7 years down sort of thing. That’s definitely not the case. I can easily see many areas taking 15, even 20 years for prices to get back to sanity. People are still paying $400k for a piece of raw land in the Seattle area.
—————-
It probably WOULD have worked out like that *IF* they hadn’t meddled in the housing/mortgage markets. Because of the Fed/govt interventions, they’ve now put us on a long-term decline, and many of us will probably never see the end of it, IMHO.
It’s the bailouts that have pushed this out so far. If things were left to heal themselves, I believe we’d be much closer to a bottom than we are in our current state.
I’d like to add that when you have price distortions in real estate for 15 to 20 years you’ve not only lost affordability, but a few decades of solid economic development as well. High real estate prices drive business away.
High real estate prices drive business away ??
We had that threat from industry back in the late 80’s…They put huge pressure on ABAG (Association of Bay Area Governments) to increase the housing stock because it was so expensive to buy or rent….
The local municipalities responded by changing their general plans to allow residential construction in formerly industrial zones….North First street in San Jose is a prime example…Hundreds of of thousands of units were built in response to that pressure from Industry…Particularly next to transit or job centers (Cisco for example)…
And guess what…The rich got richer…All the big boys who controlled all that industrial land that was worth $2. per square foot got a immediate 5X increase (or more) in the value of their land due to the general plan changes…
The people reading here may not even remember the HBB.
I’d have to be dead or at least have Alzheimers. Once I’ve put this much time into something I never forget it. If I get Alzheimers it’s more likely this will be the crap I’ll be rambling about in 50 years and nobody will know what the heck I’m talking about.
Mumble mumble…pureed peas again?…mumble mumble…REALTORS ARE LIARS!
People will think it’s a form of Tourettes.
“I’d have to be dead or at least have Alzheimers.”
Seems like once the reasons which keep us coming here to post are history, there is no reason we can’t have regular HBB reunions to rekindle the memories until all of us are so far gone into geezerhood that we are no longer capable of boarding an airplane.
We definitely have to stay in touch with our fellow HBB’ers. We have such a great group of people here.
I’d have to be dead or at least have Alzheimers. Once I’ve put this much time into something I never forget it. If I get Alzheimers it’s more likely this will be the crap I’ll be rambling about in 50 years and nobody will know what the heck I’m talking about.
Mumble mumble…pureed peas again?…mumble mumble…REALTORS ARE LIARS!
People will think it’s a form of Tourettes.
Waaaaay to funny Carl but true. In the same way, I’ve put much time and mental energy into this to ever forget.
“Because if we go down the wrong road here, we could be all suffering in a lousy economy for a long, long time.”
I think that’s the road the ptb already picked.
Ben- Would do you think history will record this as a Depression, or a turning point when we became a Banana Republic?
Stratch the word “would”. I needed coffee.
IMO, the PTB are looking out about as far as their nose. I’ve long said we should be working toward a post bubble economy, not trying to turn back the clock and pretend this all didn’t happen.
Some perspective; guys my age remember stuff like cars. I knew guy who drove a Maserati to high school at 16. Another guy wrecked a Lotus when he was 18, and had a new one a week later. I knew a girl who got her early drivers permit at 15 and her parents bought her two new matching Mercedes, different colors or course. So when I read about these young rich Chinese buying multiple condos in Toronto, I’m not surprised or impressed.
Back in the boom, Texas had the most millionaires, best colleges, our pro football franchise was “Americas Team”. Heck, Playboy magazine even reported we had the prettiest college girls! Most relevant; everybody wanted to live there. The biggest shot to the gut was how far we had to fall. But Texans were ultimately better off, if more humble, after this bust.
The US may lose its reserve currency status out of this. IMO, that’s a a curse and good riddance. But it will have consequences. Better to know big changes are coming and be prepared.
Thinking about time and bubbles led me to look back on how long this has been going on:
March 2005. ‘A report reveals the price of hundreds of properties across Sydney on sale since before September have dropped by as much as 40 per cent. ”We have come down a long way and want to sell. We’d never have put it on the market if we had known it would be like this’. Ms Allen said the family hadn’t considered an auction as it would be embarrassing, with the neighbours coming through and no one bidding.’
May 2005. ‘Shanghai’s new middle classes, every bit as obsessed by rocketing property prices as their British counterparts, are suddenly asking if the bubble has finally burst. After years in which prices rocketed out of all proportion to Shanghaiers’ still lowly incomes, the last month has seen the first falls being reported by local media. Speculative investors have plunged into the market from elsewhere in China, Hong Kong, and further afield. There have even been private investors from Britain and Ireland willing to take a gamble. Prices rose by 19 per cent in the first three months of this year alone.’
‘I think the overall correction will be in the region of 10 to 20 per cent,’ said Sam Crispin, a British property consultant in Shanghai.’
April 2005. ‘The survey found many investors displayed worrying signs of amateurism when it came to managing their investments. (It) seemed to show two opposing property markets had developed in New Zealand - pessimistic owner-occupiers and optimistic buy-to-rent investors. KPI editor Gez Johns said: ‘The most striking fact is that more than 50% of current and potential investors seemingly couldn’t give a stuff about what the economy is doing.’
‘Of those surveyed, 53% admitted to never having done a chattels valuation, and 46% owned their rental property in their own name rather than in family trusts or loss-attributing qualifying companies. It found that 47% used equity in their homes to buy their rental properties. 47% bought their first home before they were 30 and 3% said they were 20 or younger. More than a quarter were aiming for tycoon status by owning 10 or more properties.’
May 2005. ‘A unit of U.S.-based General Motors Acceptance Corp. is offering Canadian home buyers the nation’s first fixed-rate, interest-only mortgage for up to 80 percent of a house’s value. The product will get borrowers into bigger homes, as they can take on a mortgage that is 17 percent larger than one that also calls for the payment of principal.’
‘And a story on home equity loans; ‘The amount of home equity extracted by U.S. property owners surged to $705 billion in 2004, with most of the money put toward buying new residences, repaying credit-card debt, and funding home-improvement projects. More homeowners are using the cash to purchase investment properties–2.2 million in 2004.’ That last number is more than all the new homes built in the US.’
March 2005. ‘The power of the market is evident in England where a multi-year boom in house prices is unraveling. ‘The ratio of completed sales to the numbers of property on estate agents books fell to 27%, its lowest level since 1996…Buyers are holding back expecting prices to go lower, and properties are sticking.’
‘The strong psychology of a mania is playing out in reverse, along with headlines like this, Panic selling as house prices slide. And the fear of paying too much is taking over,”it is now a buyers’ market as people can pick and choose from a rising number of properties.’”
May 2005. ‘If you go back to the mid-1980’s, Spain has had the most rapid price increase in housing of any large country in the world,’ said Michael Ball. As prices continue on their vertiginous path, however, Spaniards are starting to talk about a ‘burbuja,’ Spanish for bubble. ‘Second homes also fuel the Spanish market. ‘If there’s going to be a crash, it’s likely to be in these coastal areas,’ Mr. Ball said.’
‘With this atmosphere of euphoria tinged by foreboding, Spaniards are like partygoers with one eye on the clock. Storefront real estate brokers have sprouted up all over Madrid, peddling everything from dingy apartments for $189,000 to elegant villas for $3 million and higher.’
March 2005. ‘Farrukh Saleem is worried about the price of real estate in his country along with a stock bubble. ‘A couple of years ago, a 500-sq-yard residential plot in Islamabad was priced at an average of Rs4 million. It now fetches up to five times that amount. In March 2003, the KSE-100 Index stood at 2,400 points. It now stands at four times that.’
‘When the price of land goes up only landowners become rich (no more than two percent of our population actually owns shares or land). A nation only becomes rich when the “price of labor” (salaries) goes up, and that unfortunately isn’t happening in Pakistan.’
April 2005. ‘The number of buy-to-let mortgages in the UK has soared from 28,700 in 1998 to 526,200 last year. As a last gasp, a number of the off-plan agents are pushing overseas property in places such as Spain and Florida. Gambling on new schemes in faraway markets is the stuff of madness. The room for error is huge.’
‘There’s a good chance you or someone you know owns a second home abroad. You may even unwittingly own a stake in a Guangzhou office block, via your pension fund.’
“…the PTB are looking out about as far as their nose.”
How long a nose would it take to extend all the way to November 2012?
“The US may lose its reserve currency status out of this. IMO, that’s a curse and good riddance. But it will have consequences.”
What fate awaits debt-ridden countries which don’t enjoy the advantages of a reserve currency?
Greece Announces New Property Tax
by The Associated Press
September 11, 2011
Greece’s cash-strapped government said Sunday that it would impose a new property tax on top of existing austerity measures in order to combat a revenue shortfall.
Finance Minister Evangelos Venizelos said the tax will be levied over the next two years and will cost citizens an average of euro4 ($5.53) per square meter (10.76 sq. feet).
Debt-crippled Greece urgently needs to keep a program of cutbacks on track to secure the continued flow of international rescue loans — worth euro219 billion ($302.6 billion) — protecting it from catastrophic bankruptcy.
Over the past 20 months, the Socialist government has cut pensions and salaries while raising taxes and retirement ages. But its efforts to cut back while reviving a fast-contracting economy amid record unemployment have faltered, sparking new market distress.
Speaking after a three-hour cabinet meeting in Greece’s second-largest city of Thessaloniki, Venizelos said the new property levy — in addition to public sector reforms announced last week — will make up for lagging revenues this year.
“The levy and the reforms are enough for us to pull through, but that also depends on the response of Greek society,” he said. “It will be sufficient for us to achieve our targets.”
…
Street clashes as Greek PM continues support for austerity plan
Police in Greece have fought with stone-throwing protesters during demonstrations against the country’s austerity measures on Saturday.
Officers also used tear gas to stop angry crowds who gathered as Prime Minister George Papandreou addressed the nation on the economic crisis.
Al Jazeera’s Simon McGregor-Wood reports.
…
Italy flags potential for further cuts
(AP) – 1 day ago
MARSEILLE, France (AP) — Italy’s finance minister says his country may have to take further austerity measures on top of massive spending cuts currently making their way through parliament.
…
Italians dump mussel shells to protest austerity
Published on Sat, Sep 10, 2011 at 22:30 | Source : Reuters
ROME (Reuters) - Demonstrators dumped mussel shells in front of Italy’s parliament on Saturday, accusing politicians of squeezing workers with an austerity package while clinging to their privileges like mussels cling to rocks.
The several hundred demonstrators were led by popular Italian comedian Beppe Grillo, who has become an anti-establishment cult figure because of his campaigns against Prime Minister Silvio Berlusconi and the centre-right government.
“I am going to dump these here, in the biggest waste dump of mussels, that is, our parliament. I am hoping they will eventually go away,” Grillo said as he led the demonstrators to parliament from a rally in nearby Piazza Navonna.
The mussel shells had names of parliamentarians written on them.
…
Austerity is failing say world leaders as we gear up for more
Despite evidence, Noonan to persist with €4bn in cuts and taxes in budget
By JODY CORCORAN
Sunday September 11 2011
The Government is determined to press ahead with cuts and taxes of up to €4bn in the Budget at a time when policymakers throughout the world are seriously questioning the wisdom of austerity alone to deal with a debt crisis which is crippling global economies.
After the chaotic events in Europe on Friday, which have thrown the financial markets into fresh turmoil, it has become evident that the insistence of Germany on austerity alone is no longer supported by an influential majority in the eurozone and elsewhere.
…
A new round of the same old mistakes
Normal political service will resume next week, while Europe slips further into recession, writes Jody Corcoran
Sunday September 11 2011
THIS is as good a time as any to remind people that nothing has changed, not really, certainly not for the better; if anything, events have conspired elsewhere to make matters worse. Europe is on the brink of recession.
But still, politics as we have come to expect will resume on Wednesday; that is, TDs and senators will return from holiday, to greet each other warmly, to do what they think they have the authority to do — authority they do not have — and always, as ever, to seek out personal advantage.
…
Throughout the country the domestic economy will be, not on its knees, but on its face in the dirt, ground down: unemployment will top 500,000, emigration will only then start to take off in earnest and there will be the stirrings of great social unrest which will not develop.
While all of this is going on, the Government will say that we must cut further, deeper, for longer because that is what the EU has told us we must do and, you know, they’re European and sophisticated, like — they must know what they are talking about.
All together now, in the key of G: austerity, me boys, austerity. The IMF will eventually cut the crap: it will say, unequivocally, that enough is enough. You can cut no more. This is suicidal. When it does, the EU, what is left of it, will look at each other, shrug, turn out their palms and say, but of course, this is true, we knew this all along.
…
My Greek link above doesn’t seem to work. But it’s not very hard to find similar ones:
Greece rocked by riots as up to 60,000 people take to streets to protest against government
By Mail Foreign Service
Last updated at 5:15 PM on 11th March 2010
…
Street clashes as Greek PM continues support for austerity plan
Why do I begin to doubt the newest Greek austerity measures will not suffice to ‘calm the markets’?
“Why do I begin to doubt the newest Greek austerity measures will not suffice to ‘calm the markets’?”
Wait for the riots in Portugal, Spain and Italy. Talk about “spooked markets”.
I’ve recently been working in London and staying in a hotel. Over the years it’s been instructive to try to work out from which country the hotel staff come from (they don’t tend on the whole to be British). A few years ago the male staff tended to be Arab/Eastern European and the female staff Eastern European. The staff mix is changing now and your starting to see more staff from Portugal/Spain/Greece and surprisingly in the hotel I was in Italy. It would appear that there’s little chance young people will stay around to pay their parents debts. I off course could be totally wrong and they may well be sending the money home to pay the Banksters.
Interesting insights, frankie. Thanks for sharing!
“Greece’s cash-strapped government said Sunday that it would impose a new property tax on top of existing austerity measures in order to combat a revenue shortfall.”
That tax bill is actually a lien on your real property; either you or a new owner will eventually pay it.
Ben-Thank you. I’m digesting the historical record and perspective.
‘Ms Allen said the family hadn’t considered an auction as it would be embarrassing, with the neighbours coming through and no one bidding.’
This is a lingering misconception which needs to be laid to rest, IMO. The ONLY possible reasons an auction would result in no bids are (1) insufficient advertising to attract buyer interest; (2) the home is truly not worth buying, at any price north of $0; or (3) the seller announces a reserve price above market value.
If the home is worth purchasing at some price, the auction is widely publicized, and the seller is willing to accept whatever price the market will bear, sale by auction is pretty much a sure thing. You can even auction homes on Ebay with a modicum of effort. And in case (2), there is no reason the owner could not work out a deal to pay somebody to take the home off his hands.
Prediction: Within the next decade, even Megabank, Inc will resort to Ebay as a means of unloading millions of homes for which it is unable to find local buyers.
BwaAHHAHHAHAHAHAHAHHAHAHAHAHAHAHHAAAAAAAAA!!!!!
Which is exactly what the FHFA should mandate with all the govt-controlled REO inventory. There is no other way for the government to maximize their returns.
Ben, I have been reading and occasionally contributing to this blog since it started.
I just want to take a minute to mention that I think your comments are the most helpful, well thought out, and poingnent commentary I can find anywhere.
A lot of you guys are great, and a bunch of you probably agree with me. Ben rules.
Also noted…your comments are fairly scarce–so that my lead to some of my perceived value!
“The US may lose its reserve currency status out of this.”
And what will replace it? Is there even one central bank that pegs to gold?
End cold grip of Austerity on us all
Sunday September 11 2011
When US President Barack Obama launched his stimulus plan last week he warned that America could not wait for real solutions to the Great Disruption. Would that it was the same here. Instead, as certain sections of the US governing class, at least, attempt to create a sense of ‘morning time in America’ our ancient political regime struggles blindly through a crepuscular fog of austerity in the hope that it might lead us somewhere good.
Obama may believe 14 months of economic stasis is too long. In contrast, like those World War One generals who believed no sacrifice was too great. . . for the troops, we are expected to embrace ‘La Belle Dame of Austerity’ for a further three mind-numbing years. The Government claims its hands are tied by an ECB that finally showed its true colours last week courtesy of Jean-Claude Trichet’s claim that Germany’s little banking echo should be congratulated for its role in maintaining German price stability for longer than any other period since World War Two.
As we serfs were given the brusque message to “continue to do all you can to embrace competitiveness” a braver government might have echoed Obama’s views and said it was time to stop the ECB circus, cut taxes and invest in real infrastructure as distinct from elevated public sector wages. They would have echoed Obama’s warning that an unemployment rate of 9.1 per cent in America is “an urgent time” and told the German footstools of the ECB that when we sell off our semi-state deadwood we will use the resources of the Irish taxpayer to develop an Irish stimulus package.
That, however, calls for a politics of imagination rather than the cap tipping towards the Financial Times, ECB and IMF. Nothing epitomised the need for such a radical approach more than the chill tone of barely suppressed terror in the voices of the workers of Waterford. They know that, now more than ever before, in this country when you become unemployed you fall off the ledge.
It is a measure of the desperation being engendered by the collapse of the domestic economy that a recent scheme where murals were painted over deserted shop fronts was highly commended. We might once have been taught in a disparaging way about the old British Empire’s status as a nation of shopkeepers but the escalating decline of the High Street is the most visible example of how the ethos of austerity is creating an economic and psychological wasteland.
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I find it interesting how, in contrast to America’s RNC-led brigade of Obama bashers, this writer looks up to Obama’s example as an improvement on Eurozone government leaders’ policies. A ready acceptance of proposals from the international bankster community to subject their own citizens to harsh austerity measures, which are more likely to produce riots than economic growth, doesn’t seem much like effective leadership.
P.S. Where are the RNC trolls today? They seem to be missing in action. Perhaps they are all busily feigning piety in Sunday worship services.
Probably attending 9/11 rallies.
Likudniks don’t worship. They bow to the altar of violence and hatred.
—-Realtors Are Liars®—-
A liar.
Yes Realtors are liars. You’re learning quick Cupcake.
“Perhaps they are all busily feigning piety in Sunday worship services.”
+1×10^6 Great post to start the week!
Governor Perry = Pharisee
Matthew 23 (King James Version)
Then spake Jesus to the multitude, and to his disciples,
Saying The scribes and the Pharisees sit in Moses’ seat:
All therefore whatsoever they bid you observe, that observe and do; but do not ye after their works: for they say, and do not.
For they bind heavy burdens and grievous to be borne, and lay them on men’s shoulders; but they themselves will not move them with one of their fingers.
But all their works they do for to be seen of men: they make broad their phylacteries, and enlarge the borders of their garments,
And love the uppermost rooms at feasts, and the chief seats in the synagogues,
And greetings in the markets, and to be called of men, Rabbi, Rabbi.
But be not ye called Rabbi: for one is your Master, even Christ; and all ye are brethren.
And call no man your father upon the earth: for one is your Father, which is in heaven.
Neither be ye called masters: for one is your Master, even Christ.
But he that is greatest among you shall be your servant.
And whosoever shall exalt himself shall be abased; and he that shall humble himself shall be exalted.
But woe unto you, scribes and Pharisees, hypocrites! for ye shut up the kingdom of heaven against men: for ye neither go in yourselves, neither suffer ye them that are entering to go in.
Woe unto you, scribes and Pharisees, hypocrites! for ye devour widows’ houses, and for a pretence make long prayer: therefore ye shall receive the greater damnation.
Woe unto you, scribes and Pharisees, hypocrites! for ye compass sea and land to make one proselyte, and when he is made, ye make him twofold more the child of hell than yourselves.
Woe unto you, ye blind guides, which say, Whosoever shall swear by the temple, it is nothing; but whosoever shall swear by the gold of the temple, he is a debtor!
Ye fools and blind: for whether is greater, the gold, or the temple that sanctifieth the gold?
And, Whosoever shall swear by the altar, it is nothing; but whosoever sweareth by the gift that is upon it, he is guilty.
Ye fools and blind: for whether is greater, the gift, or the altar that sanctifieth the gift?
Whoso therefore shall swear by the altar, sweareth by it, and by all things thereon.
And whoso shall swear by the temple, sweareth by it, and by him that dwelleth therein.
And he that shall swear by heaven, sweareth by the throne of God, and by him that sitteth thereon.
Woe unto you, scribes and Pharisees, hypocrites! for ye pay tithe of mint and anise and cummin, and have omitted the weightier matters of the law, judgment, mercy, and faith: these ought ye to have done, and not to leave the other undone.
Ye blind guides, which strain at a gnat, and swallow a camel.
Woe unto you, scribes and Pharisees, hypocrites! for ye make clean the outside of the cup and of the platter, but within they are full of extortion and excess.
Thou blind Pharisee, cleanse first that which is within the cup and platter, that the outside of them may be clean also.
Woe unto you, scribes and Pharisees, hypocrites! for ye are like unto whited sepulchres, which indeed appear beautiful outward, but are within full of dead men’s bones, and of all uncleanness.
Even so ye also outwardly appear righteous unto men, but within ye are full of hypocrisy and iniquity.
Woe unto you, scribes and Pharisees, hypocrites! because ye build the tombs of the prophets, and garnish the sepulchres of the righteous,
And say, If we had been in the days of our fathers, we would not have been partakers with them in the blood of the prophets.
Wherefore ye be witnesses unto yourselves, that ye are the children of them which killed the prophets.
Fill ye up then the measure of your fathers.
Ye serpents, ye generation of vipers, how can ye escape the damnation of hell?
Wherefore, behold, I send unto you prophets, and wise men, and scribes: and some of them ye shall kill and crucify; and some of them shall ye scourge in your synagogues, and persecute them from city to city:
That upon you may come all the righteous blood shed upon the earth, from the blood of righteous Abel unto the blood of Zacharias son of Barachias, whom ye slew between the temple and the altar.
Verily I say unto you, All these things shall come upon this generation.
O Jerusalem, Jerusalem, thou that killest the prophets, and stonest them which are sent unto thee, how often would I have gathered thy children together, even as a hen gathereth her chickens under her wings, and ye would not!
Behold, your house is left unto you desolate.
For I say unto you, Ye shall not see me henceforth, till ye shall say, Blessed is he that cometh in the name of the Lord.
DNC troll alert.
— sigh—
Cantankerous Intellectual
You’re a great contributor. Thank you.
Nye za schto.
September 2, 2011, 2:44 PM ET
Demand for Food Stamps Remains High
By Sara Murray
The number of Americans receiving food stamps dropped in June from declining disaster assistance, but there’s still little sign of waning demand for the food assistance program.
Food stamp rolls declined by 0.5% in June to a still-high 45.2 million, the Department of Agriculture said Friday. It was the first decline since October 2008 and likely reflects declining disaster assistance to states like Alabama rather than improvements in household finances.
Alabama was hit by tornadoes in late April that sent the number of food assistance recipients soaring in May. Because disaster-assistance declined in June, it lowered the national tally. The number of recipients in the food stamp program, formally known as the Supplemental Nutrition Assistance Program (SNAP), may continue to rise in coming months as families continue to struggle with high unemployment and other natural disasters.
“As we continue to create jobs and grow the economy, we anticipate that participation in SNAP will decline, which is everyone’s goal,” the USDA said in a statement. “However, future participation in SNAP will likely be impacted by state natural disaster requests as American families continue to recover from recent storms.”
In June, 14.6% of the U.S. population relied on food stamps. Food stamp rolls have risen 9.5% in the past year, though recent months show the pace of growth is slowing.
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I live in Vancouver and I do not believe that it’s all rich Chinese buying all the properties here. It’s definitely not, we have the highest mortgage loan approvals as a percentage of GDP in the country!
(www.theeconomicanalyst.com//content/mortgage-crazy-look-loan-approvals-province)
While the MSM likes to tell us that “the Chinese are coming, buy now or be priced out forever!” I think this is just a scare tactic. Meanwhile, average families pile on the debt (in Vancouver, it’s not uncommon to see a couple with $120k/year household income with a house that cost $800k-they rent out the basement to make the mortgage payments).
When the market crashes, it won’t be the relatively few foreigners who bought at the top who bring down the market-it will be Joe Schmoe with the massive mortgage who can’t make the payments and has to sell now.
PS-Inventory has been building in Vancouver in recent months, more on the market, fewer sales for sure. Also, in the rest of the province, the real estate market has been classified as “dead”-some areas have seen price declines of 25% already over the past few years (Okanagan) and there’s a couple years of inventory on the market in many areas. It WILL happen in Vancouver too-it will be bad.