The Housing Bubble

Losing = winning.

Perils still lurk in wake of shutdown deal
Analysis
October 17, 2013 12:00 am
By Zachary A. Goldfarb / The Washington Post

WASHINGTON — The deal Congress reached Wednesday to end the government shutdown and raise the debt ceiling would avert a financial catastrophe but leave the weakened U.S. economy facing new threats.

…while the bipartisan deal ends a period of disruption that has slowed the economy — the shutdown removed more than $20 billion in direct government spending and related economic activity — it creates new perils, setting up other economy-shaking deadlines in just a few months.

It also does almost nothing for the nation’s existing economic challenges, including automatic spending cuts that are worsening high unemployment and a long-term debt challenge posed by mounting costs in health care and retirement programs.

Under terms of the bipartisan agreement, lawmakers in both parties are to spend the next two months trying to hash out a deal to alleviate some of these risks. But there is little optimism that effort will succeed, given that several similar bipartisan initiatives in recent years have failed over discord about taxes and spending.

“The U.S. economy dodged a bullet today. But the reprieve will be short,” Paul Edelstein, director of financial economics at IHS Global Insight, said in an analysis Wednesday. “Democrats and Republicans remain far apart on fiscal policy, and the stage is set for another showdown in January.”

For now, the biggest failure of the deal, analysts say, is that it will keep the government operating for only a few months, with a new need to fund agencies and raise the debt ceiling coming in the first five weeks of 2014. As a result, economists say, consumers and businesses are likely to hold back on spending and investment during the important holiday season, knowing that a similarly economy-shaking political showdown might be right around the corner.

“If people are afraid that the government policy brinkmanship will resurface again — and with it, the risk of another shutdown or worse — they’ll remain afraid to open up their checkbooks,” Standard & Poor’s U.S. chief economist Beth Ann Bovino said in an analysis. “That points to another Humbug holiday season.”
…

Were you expecting any other outcome?

I have said it before and will say it again. Republican party will fold as they always do. No ifs or buts about it…it’s only a matter of when.

The sad thing about it is they get to bloviate in front of TV again in 3 months.

—————————————–

In 2006, in a party line vote the senate passed debt ceiling 52-48. No a single democrat voted for it. Just a think for moment if there were 3 more democrats in the senate we would have had our default in 2006.

So what should we do?

The following has a certain appeal:
1) Repudiate the debt
2) Become energy independent
3) Become self sufficient and make our own stuff. No more “China-Mart”. More living wage jobs == less welfare
4) Withdraw our military from overseas, slash military spending
5) Take care of our own.

U mad, Macbeth?

http://i.huffpost.com/gen/1411800/thumbs/o-RACHEL-MADDOW-570.jpg?2

(^^^ List of things the teabillies were “demanding” to end the shutdown. Not exactly much to be proud of. There was no principled reason for the teabillies to do this.)

The problem is there is not enough money in it for the growers to pay enough to attract the workers.

They would have plenty of workers if they could figure out how to make 1% of the workers wealthy and pay the other 99% nothing. Nobody had to pay the 49ers anything to take the risk of travelling 3000 miles across hostile and unforgiving territory to pan for gold on the off chance of striking it rich.

Plutonium bullion?
Man, the storage costs would be astronomical.

Bill, have you noticed that the premium in India is $100 Oz. There is not enough physical gold in the world. As soon as India is forced by the public to allow gold into the country. We go to the moon.

It’s “sell the news” time — or so the writers at Marketwatch dot com tell us.

At any rate, I wouldn’t get overly excited over any daily asset price moves over the next week or so, as recent U.S. political events may presage a period of unusually high volatility (including both up and down moves).

Futures: S&P 500 -0.1% DOW -0.4% NASDAQ +0.0%
Congress passes debt-limit bill to end U.S. shutdown
Default averted
• ‘Sell the news’ underway, more Washington derp | Stock futures drop

Goldman’s report, a currency play and more Washington derp
October 17, 2013, 6:36 AM
By Shawn Langlois

So, a mere $24 billion later, and it looks like those pinche berrinches in Washington D.C. have finally figured this whole thing out. Until they dust off the same script in a few months.

Overworked senators, in a touching display of pride over solving the crisis they created themselves, celebrated by breathlessly congratulating one another. Investors celebrated by pushing the Dow up more than 200 points. Today, however, “sell the news” is underway. Taking some profits only makes sense after that rally, but there could be more at play than that. After all, this is the proverbial can-kicker, and it could turn out to be the worst-case scenario.
…

Hello Bill. It does not look like my earlier comment will post, so I will repeat. Have you seen the premium on gold in India? The world has a shortage of physical gold and a glut of paper gold. For those that wonder how does this fit in a housing blog. The suppression of gold is the other side of the coin to the propping up of the housing market. The people printing money to make houses and stocks appreciate must not allow gold show that inflation is being caused by their printing. They suppress gold by selling gold that they do not own on the futures market. The interesting thing is more of the PTB seem to be getting on the other side of the trade and while still manipulating the trade, they seem to understand that they cannot hold gold much longer.

It looks to me like we are witnessing a QE3 extension rally in Treasuries and gold. If correct, this development should also (in principle) help keep the stock market on a permanently high plateau.

Oct. 17, 2013, 9:46 a.m. EDT · CORRECTED
Fed’s Fisher urges Congress ‘to get act together’
By Greg Robb

WASHINGTON (MarketWatch) - Congress should get its act together because financial markets “are restless,” said Richard Fisher, the president of the Dallas Fed, on Thursday. “The bond market is beginning to show us the back of its hand,” Fisher said in a speech to the Economic Club of New York. Fisher said that Washington can’t look for the Fed to solve all of the economic ills “through ever-expansive monetary policy.” That would only make the situation worse, he said.

Mickey and Minnie J6P won’t be happy when Pluto has all the money. That’s effin Goofy.

Too early, many mistakes but two substantive changes: return=retire and will=would.

Obamacare took 500 billion from the seniors medicare

“In fact, AARP representatives say that Medicare will become stronger once the ACA is fully in effect. “Medicare’s guaranteed benefits are protected in ways they hadn’t been protected in the past,” says Nicole Duritz, AARP’s vice president for Health Education and Outreach.” yahoo dot com

it has already angered the seniors

“Stop Obamacare and keep the government out of my Medicare!”

and rich

They’re always “angry” when having to contribute to the country that enabled them to be rich.

and will soon anger the young.

Until they get sick.

and asks the healthy twenty year olds to subsidize the sick middle age people

Kind of like Blue Cross. Or a family. Or a society. Oh yea, kinda like all the other civilized countries. every one except USA until the ACA.

Everything will be fixed with higher taxes!

But Republicans always took a beating trying to make the two systems long term viable because it meant taking away the oversize return.

——————–
BS. There have been many ideas pushed to improve the viability of social security, including removing income caps (caps at around $110k) but Republicans haven’t been gung-ho about trying that out. They only seem to be intrested in either making it optional, removing the business-copay, or privatising it.

Ponzi scheme?

Isn’t Social Security a ‘pay as you go’ system?

“Obamacare ……asks the healthy twenty year olds to subsidize the sick middle age people”

Funny, since that was the paradigm back when insurance costs were incidental instead of a painful proportion of take home pay.

DAGONG DOWNGRADES US TO A- FROM A
By Christopher Langner
Thu Oct 17, 2013 4:02am EDT

SINGAPORE, Oct 17 (IFR) - Chinese rating agency Dagong has downgraded the United States to A- from A and maintained a negative outlook on the sovereign’s credit.

The agency suggested that, while a default has been averted by a last minute agreement in Congress, the fundamental situation of debt growth outpacing fiscal income and GDP remains unchanged. “Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future,” Dagong said in a press release.

Dagong’s ratings are hardly followed outside of China. The agency also classifies most countries it follows very differently from major agencies such as Moody’s, Standard & Poor’s and Fitch.

For instance, like the major agencies, Dagong rates Norway Triple A. However, the US was rated A and the United Kingdom has an A+ rating with Dagong, while Moody’s for one, has the UK at and the US at Aaa, the highest level on the New York-based agency’s scale.

Yet, the Chinese agency is not alone in pointing out that the creditworthiness of the United States is not as good as it once was. Yesterday, Fitch put the Triple A rating it gives to the US under negative watch.

In August 2011, Standard & Poor’s downgraded the US to AA+ after a protracted debt ceiling debate in Congress brought the government to the verge of a shutdown.
…

to extort bribes out of people with money?

The same thing happened with movie ratings. Rotten Tomatoes is a joke, overrun by shills.

There is a graphic with percentages by state:

http://www.washingtonpost.com/local/education/poverty-increasing-in-public-schools/2013/10/16/94defd76-36d9-11e3-80c6-7e6dd8d22d8f_graphic.html

Only New Hampshire is below 30%

“washington post - study: poor children are now the majority in american public schools in south, west:”

See: Birth statistics by IQ

And the issue here will become quite obvious. The higher your income and IQ, the fewer children you are likely to have. And, of course, income and IQ are becoming more and more correlated every year. So, by proxy, children become more and more the prerogative of the lower classes of this country.

Unless something changes substantially over the next few decades, that number will just continue to rise. Even so, it’s shockingly high today. 50% of children are in poor families? The number of poor households is nowhere near 50%!

most of the white people who have kids i know back in my hometown in the MS delta are homeschooling their kids.

ft dot com
Last updated: October 16, 2013 5:42 pm
Treasuries risk losing superpower status
By Michael Mackenzie in New York and Ben McLannahan in Tokyo

As any comic book superhero knows, with great power comes great responsibility. Yet the world’s foremost economic superpower is failing to heed this maxim, with potentially grave long-term consequences for US Treasury bonds.

True, US borrowing costs remain at historic lows. And, on the face of it, with a deal reached on the US debt ceiling, all looks well among foreign investors, who hold nearly half the Treasury’s $12tn in marketable debt.

But the crunch point in the political debate over the debt ceiling – and the threat of default which Warren Buffett likened to unleashing “poison gas” – has only been deferred. And, to the annoyance of big Treasury holders such as China and Japan, this is the third round of fiscal wrangling since 2011.

With Washington set to vote on a deal late on Wednesday to extend the debt ceiling by several months, the point at which the US runs out of money to meet obligations to bondholders is only likely to be delayed to February 2014.

All of which fans fears that we are near a pivotal moment when foreign investors could adopt a harder line on buying Treasuries.

“The world has seen enough of Washington’s dysfunction and while a retreat from Treasuries can’t happen in one fell swoop, it’s a thought process that has already begun,” says Eric Green, economist at TD Securities.

“You can’t blame them, the US hasn’t demonstrated a capacity to manage its reserve role, it’s a privilege we are abusing.”

“I wouldn’t be at all surprised if the long-term unexpected consequence of the debt ceiling debate is that the Chinese government, and maybe others, conclude that they are overly reliant upon the asset class and thus must wean themselves off Treasuries slowly, over a decent period of time,” says Gary Jenkins, founder of Swordfish Research.

“Such a move would result in less demand for Treasuries, which considering the probability of the US getting a handle on their finances would not be good news for US borrowing costs,” says Mr Jenkins.

As it stands, foreign investors account for $5.59tn of the $12tn in outstanding US Treasury debt, according to the most recent data from the Treasury. China leads the way with holdings of $1.28tn, followed by Japan at $1.14tn.

In the year to July, China increased its holdings by $117bn, while Japan bought an additional $15bn, according to the US Treasury data.

A gradual retreat by sovereign wealth funds, reserve currency managers and other central banks in the coming years, would probably come at a time when the Federal Reserve starts pulling back from its massive bond-buying efforts that have kept Treasury yields low.
…

Lest this story seems moot, note we may get to relive the debt ceiling showdown as soon as February 2014.

What could happen if the U.S. defaults?
Here’s an update on default talks in Washington.
By Andrew Tangel and Walter Hamilton
October 15, 2013, 11:15 a.m.

NEW YORK – The prospect of a U.S. debt default has unnerved investors, corporate executives and foreign leaders.

What’s so troubling about Congress failing to raise the nation’s debt ceiling by Thursday? Here are basic facts about the debt ceiling and the potential consequences of a default.

What is the debt ceiling?

The debt ceiling is a borrowing limit, similar to the spending cap on a credit card.

It places a lid on how much the United States can borrow by selling Treasury bonds. The federal government routinely spends more than it takes in through taxes and other income, forcing the Treasury Department to sell bonds to finance routine governmental operations.

Failure to raise the debt ceiling could prevent the government from having enough money to pay its bills.

Creditors such as Social Security recipients and Treasury-bond investors would be paid eventually. But failing to make timely interest payments to bondholders would be a default.

Why is the debt ceiling issue so important?

The ability of the U.S. to pay its debts on time is a critical symbol of the nation’s financial sturdiness and reliability.

Treasury bonds have long been considered “risk-free,” a testament to the strength of the U.S. economy and the belief that, no matter what, the United States would make good on its IOUs.

T-bonds are a building block of the global financial system and a benchmark for transactions across the globe. For example, home mortgage rates closely track the yield on the 10-year Treasury note.

“Treasuries are the basic bedrock of the financial system,” said Nicholas Colas, chief market strategist at ConvergEx Group, a brokerage in New York. “The risk-free rate is the most important notion in public finance, because everything builds up off of that.”
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Is China the canary in the coal mine ? ;

https://www.google.com/search?q=Blackrock+China+Home+Prices+Fall&espv=210&es_sm=119&source=univ&tbm=nws&tbo=u&sa=X&ei=IPBfUqOwKoagiQKs8IDQBw&ved=0CDcQqAI

It’s to demonstrate to the world that we Americans are financially prudent.

Just another neo-con(dem/republican duopoly) scam. And don’t forget…. it’s for international consumption primarily but it serves to bolster the false believe that there is a difference between these two scumbag outfits.

They don’t always raise it.

If the US population were to flat line or even shrink then the concept of a debt ceiling would make sense but when the population is expected to continue growing then a better metric would be a ratio of debt to income (tax receipts). I don’t think a debt to GDP is a valid metric because there are too many non-economic items embedded in the GDP.

Does Rasmussen have a prediction yet for the outcome of the 2016 Presidential Election?

it is the same old bought and paid for politicians.

is this why dylan ratigan got fired:

https://www.youtube.com/watch?v=CU2B_HgyKNU

Santelli / Ratigan on the next ticket?

our differences only make us stronger

if you don’t want your kids going to a school full of ms-13, you are racis

I doubt it will happen. They have to “win” in next legislative battles….immigration reform is dead until 2015 IMO.

Lifestyle 10/16/2013 @ 2:53PM
Shutdown Hasn’t Hurt October Asking Home Prices So Far

Trulia’s Chief Economist Jed Kolko took a close look at asking home prices in the first half of October to see if the shutdown of the federal government has had an effect. As it turns out, prices are up 1% versus September nationally. Locally, prices changes are no different in metros more dependent on the federal government, like Washington DC, compared with metros less directly affected by the shutdown.

How has the two-week shutdown of the federal government affected home prices? The main sales-price indexes won’t tell us until 2014: homes going under contract in October will close in November (or later), and November sales prices will get reported starting in January. But the Trulia Price Monitor shows how asking prices – a leading indicator of sales prices – are trending almost in real time, adjusting for both the mix of listed homes and for seasonality. This morning we analyzed asking prices between October 1 and October 15.
…

Government shutdown pinches home builders
A worker installs a roof on a home under construction in New Paltz, N.Y. (Mike Groll / Associated Press / October 16, 2013)
By Don Lee
October 16, 2013, 10:46 a.m.

WASHINGTON — The government shutdown, now in its third week, is pinching the housing market — but just a little.

A key index of home builders’ optimism slipped to 55 this month, from 57 in September, the National Assn. of Home Builders said Wednesday. The survey was conducted during the first 10 days of the month.

But that was a relatively small drop. The latest reading is still close to the highest level since early 2006, and analysts say the paralysis in Washington has had less of a hit on the market than some feared, so far anyway.

One worry was what would happen with furloughs at the Federal Housing Administration, which insures about a quarter of all single-family home purchases. Though some delays have been reported, private insurers have stepped up to offer quicker approvals and to accept paperwork that was meant for FHA loans, says Celia Chen, a housing analyst for Moody’s Analytics.

Nor has the limited staffing at the Internal Revenue Service hampered activity much, says David Crowe, chief economist of the home builders group. In some cases, lenders are using other sources to confirm income data, he says. And Fannie Mae and Freddie Mac are letting lenders put off IRS verification.

As long as Congress resolves the debt-ceiling problem and reopens the government soon — and hopes of a deal were rising Wednesday — “I think we’ll be back on an upswing because the fundamentals are still there,” Crowe said.
…

Short term? Maybe.

Long term? No. Except to the extent the Republicans lost their ability politically to oppose Yellen (if they were even going to do so anyway).

In other words, no effect on housing, and even if you think there was a short-term effect, that is pretty much irrelevant in the grand scheme.

“Only” slumping by 4%+ = stability?

Losing = winning

So what’s the deal? Are we going to have this movie repeated early next year? Please say it ain’t so.

Well what do you expect? Elect a socialist as president and the government takes over the job of calculating inflation.

Patience Liberace patience.

If he’s not picky about his Metro stop, I’m sure he can find something in Southeast.

Goldman Sachs compensation cutting surprises analysts
October 17, 2013, 9:42 AM
Bloomberg
Goldman Sachs CEO Lloyd Blankfein

That Goldman Sachs Group (GS -2.00%) reported a big drop in fixed-income revenue — 44% to be precise — wasn’t a big surprise.

What was a surprise was that it slashed compensation expenses by 35%.

“It was the comp accrual that really surprised us,” said Brennan Hawkins, analyst at UBS, in his initial read on earnings.
…

They cut the expendables.

The expendables: The business schools churns ‘em out then Wall Street burns ‘em out.

Which just goes to prove once more, WINNING = LOOSING for Teabillies.

Our contractors have been working (and getting paid!) during the partial shutdown.

And we actually hired two new staff this week

Feds drool, contractors rule!

This brings us to debates about the pension liabilities that are threatening California’s future finances.”

higher taxes ahead or maybe they will be called fees ?

We can only hope this ballot initiative is successful:

http://www.mercurynews.com/politics-government/ci_24316652/san-jose-mayor-others-push-statewide-pension-ballot

In short:

In private industry, a business can’t change what you have already earned toward your pension, but they can decrease how that benefit grows in the future.

In public industry, they can’t change what you have already earned AND the public can’t decrease how your benefit grows in the future.

So, if you start out earning 2.5% of your annual salary as your pension in the future and you work for 10 years, you will have earned a pension payment equal to 25% of your salary upon retirement. However under the current law, the government cannot reduce the 2.5% to something lower for the rest of your career…you are grandfathered in to the 2.5% rate.

I’m assuming this is why Jerry Brown didn’t try to take away the ability for current employees to “spike” their pension…they get to keep their ability to spike, no matter how repulsive, and even though their “spiking” might not happen for another 20 years.

Thanks for posting this. I’ve been following Reich recently. I had him all conflated with Larry Summers, which sort of jaundiced my view of him, but I’ve been listening to his interviews and I think he’s possibly one of the most important economists of our time.

Income/wealth inequality in the USA is my favorite topic of discussion on HBB.

I have been predicting for years now that it will only get worse.

The squad reiterates its correct prediction that within a generation, less than 15% of the USA population will enjoy at or above what could be considered a middle-class lifestyle.

The future belongs to Lucky Ducky

A realtor said that?

Are realtors liars?

no slow down in gov spending so DC RE is moving along

CA and Brazil. Two steaming $hitholes.

That CNG has failed to catch on has always been a puzzle to me. Here in Texas the only passenger car available for years was a Honda Civic (which was only sold in limited markets). Sales were slow and I think they stopped selling them after 2012 because I don’t see any 2013/14 models listed. Chicken and egg problem I think. They need a cheap home compressor station to break through I think.
Good luck GM.

Last year, out of 14.5 million new cars and trucks sold in the United States, just 20,381 ran on natural gas, estimates Dave Hurst of Pike Research. For context, automakers sold at least 50,000 plug-in electric cars.

From Detnews 10/1/13:

DETROIT, MI- General Motors Co. will offer bi-fuel compressed natural gas versions of its 2015 Chevrolet Silverado and GMC Sierra heavy-duty pickup trucks, officials announced today.

The Detroit-based said the heavy-duty trucks and all-new dedicated compressed natural gas versions of the 2014 Chevrolet Express and GMC Savana full-size passenger vans, should be available in 2014.

The obstacle so far has been few available CNG fueling stations. CNGprices DOT com has maps of stations where the general public can fuel up. One in my area is selling CNG for $1.95 gge (gas gallon equivalent pricing). The bi-fuel capability will allow many more drivers to have the option to save ALOT on fuel costs, depending on where they live & how far they usually travel.

I don’t know what the proper etiquette is…as a general rule, I try to leave $ out of family situations to the greatest extent I can, so I would try to NOT talk about it. However, if he brings it up, you can either go the easy route and donate a small sum, or go a harder route and decline.

However, there is a middle ground:

We are being hit with a similar situation where some good friends are on the fundraising committee for the school where both of our kids go. They are trying to hit us up for a larger donation than we made last year (when we donated anonymously).

She asked recently whether they can “count on us” for our donation. Our response is going to be that “we intend to donate this year, and haven’t determined the amount, but in any event, we wish to keep our involvement and level of donation anonymous.”

I would have said that much without reading it.

As a professional woman in SV, my wife bought the book, and I don’t think has read it. My wife bought it because she was surprised at some of the things Sandberg was saying in interviews (and wanted to see if the book reflected the same–which my wife thought unrealistic, or not). Candidly, I think my wife is frustrated with the whole idea that a woman and mother can “have it all” (being a professional and mother). Something has to give.

In my wife’s experience, being a mother DOES impact professional development, even if you “lean in”. My wife has been very successful for a few important reasons: 1) she busts her *ss; 2) she speaks her mind at work, where others might hold their tongue for fear of upsetting someone; 3) when opportunities arose for her to “get her foot in the door” to a different role at her work, even if she was already busy, she took the opportunity and seized the opportunity to get her hand into another role; and 4) see #1.

She has a pretty damn cool position currently, which I personally think is pretty impressive since she took 3 real maternity leaves (6 months each).

My wife would say: 1) As a professional and mother, you can’t have it all, and you’ll drive yourself crazy if you think you can…you will always feel like you are not doing all you can in one realm (work) or the other (home life)…get over it, it’s the reality of being a working mom; 2) No one will look out for your professional career except you, so take ownership of it, be an advocate for it, and work your butt off to advance your own career; and 3) Be respectful of everyone (”advancement at all costs” is off the table), because it’s a small world, and purposefully stepping on toes to get ahead will come back to haunt you.

LOLZ on “career advice”. Everything comes down to having three types of capital: financial, political, technical. Can anyone guess how it all fits together?

Those with the money, own it. Those with the political connections, run it. Those with the technical ability, work for the owners and the bosses. And if you don’t have any of the three types of capital? You’re out of luck, as there is a glut of unskilled labor in the world, most of it willing to work cheaper than you.

All “career advice”, from high school on is about building one or more of those three types of capital. What more do you need to know?

“According to Shiller, house prices were 100 times the income of ordinary people in Shanghai, meaning that these people would need to work for 100 years to buy an apartment. In this case, the reason why they still wanted to buy an apartment was their expectation that house prices would continue to rise. This gambling mentality was leading them into completely irrational buying decisions.”

Hopefully they can keep that Chinese housing bubble pumped up on a permanently-high plateau at 100 times income forever. If it ever collapses, the result will make the U.S. housing bubble collapse, including failures of Lehman Brothers, Fannie Mae, Freddie Mac, Washington Mutual, Bear Stearns, Countrywide, Ameriquest, Wachovia, New Century, etc etc etc, look like a picnic in the park by comparison.

I suggest 100-year mortgages to provide the financial means to pay off homes over a century-long, multiple generation time horizon.

“With U.S. real estate prices falling, many people had lost their houses or been forced to leave their hometown to seek work. At the same time the U.S. debt ratio had reached the highest level ever. Shiller worried that the same thing would happen in China.”

Why is this a big concern? Isn’t this losing of homes and leveraging up of households to the utmost possible degree exactly what the banksters want?

Does anyone besides me recall when U.S. Treasury Secretary Henry Paulson visited China’s leaders to offer helpful financial advice? One can’t help but wonder whether whatever information was shared helps to explain the one hundred to one ratio of Shanghai home prices to incomes we see today.

Maybe not tomorrow, maybe not next week, but some time soon, THIS SUCKER’S GOING DOWN.

Do the Chinese real estate investors realize they are borrowing a page from Japan’s real estate investing playbook of the early-1990s, just before prices collapsed?

JPMorgan Sells Chase Manhattan Plaza in NYC to China’s Fosun
By David M. Levitt & Kelvin Wong - Oct 17, 2013 10:16 PM PT

JPMorgan Chase & Co. (JPM) has agreed to sell 1 Chase Manhattan Plaza, the tower built by David Rockefeller, to Fosun International Ltd., the investment arm of China’s biggest closely held industrial group, for $725 million.

Fosun, which invests in properties, pharmaceuticals and steel, is buying the 60-story, 2.2 million square-foot, lower Manhattan tower, according to a statement it filed to Hong Kong’s stock exchange.

China’s developers and companies are expanding in overseas property markets as the government maintains curbs on housing at home to cool prices. Greenland Holding Group Co., a Shanghai-based, state-owned developer, this month agreed to buy a 70 percent stake in a residential and commercial real estate project in Brooklyn.

“There’s a lot of excess capital in China that needs a way out at the moment,” Simon Lo, Hong Kong-based executive director for Asia research and advisory at property broker Colliers International, said in a phone interview today. “Also, by investing in markets like New York, they believe they can gain from the recovery of the U.S. economy and real estate market.”
…