March 27, 2014

Risk No One Seems Willing To Stomach

A report from the South China Morning Post. “Underdeveloped second and third-tier cities became a magnet for some of the mainland’s biggest developers after 2009, when the authorities started imposing austerity measures in a bid to rein in runaway home prices. The developers were betting that lower land prices and the huge growth potential in such cities could generate attractive returns, but the influx of property investment led to chronic oversupply problems. As a result, developers have been forced to cut prices, some by more than a third in Changzhou, Hangzhou, Nanjing, Ningbo and Qinhuangdao.”

“The South China Morning Post recently visited the two cities where the first price cuts were seen this year: Changzhou in Jiangsu province, and Hangzhou in Zhejiang. To speed up sales, an unprecedented price war broke out among developers in the Changzhou - which media reports have likened to a ghost town - but many buyers stayed out because of fears prices could fall further.”

“Agile Property and Star River took the lead by cutting prices at their luxury project, Star River, by as much as 36 per cent from the previous launch in December to about 7,000 yuan (HK$8,720) per square metre for bare-shell units. The price for furnished units fell 27 per cent to 13,000 yuan per square metre. ‘The Changzhou government immediately ordered Agile to stop the price-cut promotion in order to avert a severe price war,’ said Yang Quanqiao, a director for development at Centaline.”

“However, the developers sidestepped the government’s warning, replacing the ‘price cuts’ mentioned in their promotional materials with ‘huge preferential offers’ instead.”

China Economic Review. “A quick glance at the numbers shows exactly why Chinese developer Zhejiang Xingrun Real Estate went belly up last week. But it’s important to understand how it ended up in the mess in the first place. One problem for capital-strapped developers in the Ningbo area is that private lenders no longer want to lend to highly risky companies. In fact, they are calling in their loans. The value of property in some areas of Fenghua is decreasing and that trend has lowered confidence in developers’ ability to pay dizzyingly high interest rates.”

“Banks aren’t hot on lending to this kind of developer either. Local bank managers are reportedly being told that they may lend to risky borrowers if they wish, but they will be held accountable. High risk is something no one seems willing to stomach these days – in stark contrast to just a year ago.”

“Xingrun’s woes are still the woes of the local authorities. The default will add US$305 million (RMB1.9 billion) to Fenghua province’s non-performing loan portfolio, pushing up the rate of toxic assets to 5.27% and making it Zhejiang province’s most indebted government, according to calculations by The Economic Observer newspaper. Add Fenghua’s problems to those of the greater Ningbo region. The area reportedly has at least six years of housing stock either sitting empty or under construction.”

From Reuters. “Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong and some are knocking up to a fifth off the price for a quick sale as a liquidity crunch looms on the mainland. Wealthy Chinese were blamed for pushing up property prices in Hong Kong, where they accounted for 43 per cent of new luxury home purchases in the third quarter of 2012, before a tax hike on foreign buyers was announced.”

“‘Some of the mainland sellers have liquidity issues … Their companies in China have some difficulties, so they sold the houses to get cash,’ said Mr Norton Ng, Account Manager at a Centaline Property office close to the China border, where luxury homes costing up to HK$30 million (S$4.89 million) have been popular with mainland buyers.”

“In a Hong Kong housing development called Valais, about 10 minutes’ drive from the Chinese border, real estate agents said between a quarter and half of the 330 houses are now on sale. At the development’s frenzied debut in 2010, a third of the HK$30 million to HK$66 million units were sold on the first day, with nearly half going to mainland Chinese.”

“This month, a Chinese landlord sold a 1,300 sq ft unit at the Imperial Cullinan — a high-end estate developed in 2012 — for HK$19.3 million, 17 per cent less than the original price. The landlord told agents to sell the flat as soon as possible, said Mr Richard Chan, Branch Manager at Centaline Property in West Kowloon. ‘In the past two weeks, those who were willing to cut prices were mainland Chinese. It is going to have some impact on the local property market — that’s for sure,’ he said.”

The Standard. “A warning that local interest rates may rise more sharply and sooner than expected - posing downward risk in the homes market - was sounded by the Hong Kong Monetary Authority yesterday. The HKMA estimated that mortgage repayment under a 20-year contract could soar by 30.2 percent if loan rates jump 300 basis points. And income gearing ratio would increase to 83 percent from 64.1 percent.”

“Reflecting concerns, a homeowner at Grand Promenade in Sai Wan Ho sold a 947-square- foot flat yesterday for HK$16.5 million after slashing the asking price by HK$1.5 million.”

The Australian Financial Review. “Beijing’s crackdown on widespread bribery, backhanders and high-level gift-giving have been linked to outcomes as diverse as a sharp drop in Swiss luxury watch sales, a spike in demand for four-star hotels, a surge in Australian property prices and a hike in the prices paid for Chinese art. House prices in Sydney have surged more than 14 per cent in the past 12 months, while Melbourne prices are up 12 per cent. Chinese buyers inject about $5.4 billion per year into the Australian residential property market, Credit Suisse analysts say, and are now ­estimated to be buying up to 12 per cent of new housing supply.”

“Young Chinese professional and prospective Sydney home buyer Stella Lu believes the flow of Chinese investors buying Australian property are split into two camps. Young professionals at one end, and wealthy groups who are prepared to pay whatever cost it takes to secure property, and a safe investment, outside of China. ‘We know some people who are developers and they just come here to buy property without even asking the price,’ she says.”

“Lu was vague on the motivation behind wealthy Chinese moving assets to Australia, but a young Chinese-born agent was prepared to elaborate, on the condition of anonymity. ‘As the government in China tries more and more to find out how people earned their money, they want to move their assets and their money to Australia,’ they say. ‘It’s related to corruption. They think they might want to migrate to Australia, but more than anything they just want to put their money somewhere else outside of China.’”

“Privately, industry members are prepared to be more frank. ‘There’s no doubt there’s this motivation to conceal where they got the money from, through investments offshore,’ an unnamed Melbourne property professional dealing in investment site sales says. ‘It doesn’t mean [all of the investors] are corrupt, it just means China is moving to a more regulated political environment and there’s a lot of caution about.’”




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58 Comments »

Comment by Whac-A-Bubble™
2014-03-27 04:07:09

“The developers were betting…”

‘Nuff said.

“However, the developers sidestepped the government’s warning, replacing the ‘price cuts’ mentioned in their promotional materials with ‘huge preferential offers’ instead.”

[Chuckle...]

 
Comment by Whac-A-Bubble™
2014-03-27 04:11:18

Is there a meaningful concept of ‘bank run’ in the era of electronic fiat money?

Comment by Whac-A-Bubble™
2014-03-27 04:17:59

Not to worry: Just like subprime lending in America, circa August 2007, this situation is fully contained.

The Rise of China
China bank hit by multi-day cash run
By Sophia Yan @sophia_yan
March 27, 2014: 3:12 AM ET
Hundreds of customers have taken their money out of a Chinese bank after rumors suggested it was nearing collapse.
HONG KONG (CNNMoney)

Hundreds of people flocked to Jiangsu Sheyang Rural Commercial Bank in China this week to withdraw cash after rumors indicated the bank was nearing collapse.

The details of the bank run, which took place in a coastal province north of Shanghai and lasted at least three days, were reported by state media.

Customers were worried their savings would be lost — a very real concern in China, which has no official insurance system to protect bank deposits.

The panic was so widespread that the bank placed stacks of cash in bank teller windows to reassure customers that it had enough funds to meet demand.

A Reuters journalist reported from the scene that the bank was staying open 24-hours a day, and that the cash needed to satisfy hundreds of waiting depositors was being trucked in by armored car.

Local government officials responded to the bank run in a video statement that sought to reassure customers that their money was safe.

The China Banking Association issued a similar statement that expressed confidence in the bank’s financial health, and warned that rumor mongers would be held legally accountable.

The Sheyang county governor also said the People’s Bank of China would protect depositors, although the central bank hasn’t publicly addressed the situation.

In a pinch, the central bank could tap a credit facility for rural banks that was established in January.

Analysts said the episode highlights the need for deposit insurance in China, a reform that is on Beijing’s to-do list. Doing so should give depositors greater confidence, and help prevent future bank runs.

The government is widely expected to begin work on the issue this year as it seeks to implement financial and economic reforms.

In the meantime, it appears that the immediate risks from this week’s run are contained.

We believe the government will not allow deposit-taking institutions to fail, so this incident will likely be resolved soon without significant repercussions on the financial system,” said Zhiwei Zhang, an economist at Japanese brokerage Nomura.

Comment by Guillotine Renovator
2014-03-27 15:48:50

I will never forget witnessing my first bank run in 2008 when a line of people at Washington Mutual stretched from the front door out into the parking lot.

Comment by Whac-A-Bubble™
2014-03-27 21:42:52

I hadn’t realized WaMu experienced bank runs. Perhaps the MSM failed to describe the situation as such?

At any rate, I do recall when our WaMu branch bank was subsumed by JPMorgan-Chase.

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Comment by Whac-A-Bubble™
2014-03-27 06:02:45

Fool Me Once
No wonder these Chinese citizens just started a bank run
By Lily Kuo @lilkuo March 26, 2014
Locals waiting outside Jiangsu Sheyang Rural Commercial Bank in Jiangsu province. Reuters/Carlos Barria

Hundreds of Chinese citizens are swarming rural bank branches in eastern China demanding to withdraw their deposits, after rumors that the county’s largest bank was on the verge of collapse. Such panics in China, where banks operate under an implicit guarantee from the government, are extremely rare.
+
Responding to rumors that Jiangsu Sheyang Rural Commercial Bank, Sheyang county’s largest bank (link in Chinese) with 44 branches, is in financial trouble, depositors have been flocking to branches in at least three villages since March 24. Another bank in the farming county, the Rural Commercial Bank of Huanghai, was also bombarded with wary savers wanting to take their money out, according to state media.
+
Residents waited in droves in the rain outside bank branches to take their money out. Armored vehicles have been carting in fresh loads of currency. The bank has remained open for longer to serve customers withdrawing money over the past three days.

 
Comment by Whac-A-Bubble™
2014-03-27 06:04:53

Thomson Reuters March 25, 2014 6:18pm
Banks in Chinese city show stacks of cash to reassure depositors
By John Ruwitch

YANCHENG, China (Reuters) - Rural banks in China’s eastern city of Yancheng stacked piles of cash in plain view behind teller windows to calm depositors queuing at bank branches for a third straight day on Wednesday following rumors that they had run out of cash.

According to residents of Sheyang county, which includes Yancheng, panic began on Monday with a rumor that a branch of one local bank turned down a customer’s request for a 200,000 yuan withdrawal. Banks declined to comment and Reuters was unable to verify the rumor.

The affected institutions are tiny compared with the scale of China’s financial sector, and the rush for cash appears to be an isolated incident so far. Rumors also found especially fertile ground there after a failure of less-regulated three rural credit co-operatives last January.

Yet the news caught nationwide attention, reflecting growing public anxiety as regulators signal greater tolerance for credit defaults.

Miao Dongmei, who runs a baby supply store opposite the branch of the Jiangsu Sheyang Rural Commercial Bank first targeted by depositors said she kept money at the bank, but did not join the stampede.

However, she said she had seen other customers carrying baskets full of cash out of the bank branch, while armored cars kept pulling up to deliver fresh loads of currency.

Sheyang bank employees told Reuters that some branches had been open 24 hours over the past two days.

A visit to one branch showed tellers had stacked bricks of yuan notes immediately behind the glass, piled above head level, and assembled cash piles the size and height of a double bed in the back to show there was enough to go around.

SPREADING SENSE OF CRISIS

 
Comment by Whac-A-Bubble™
2014-03-27 06:06:12

Asia Markets
Small Chinese Lender Reportedly Hit by Bank Run
Official Says ‘Everything Is Normal’ at Jiangsu Sheyang Rural Commercial Bank
March 25, 2014 7:57 a.m. ET

BEIJING—A rural lender in China’s eastern Jiangsu Province was hit by a bank run after rumors emerged about a possible bankruptcy, the state-run China News Service reported.

The bank run occurred Monday at a branch of Jiangsu Sheyang Rural Commercial Bank in Yancheng, according to the report.

A bank official who gave only her surname as Tang told The Wall Street Journal that “everything is normal” and depositors can withdraw as much money from the bank as they want.

 
Comment by Whac-A-Bubble™
2014-03-27 06:12:17

How rumour sparked panic and three-day bank run in Chinese city
By John Ruwitch
YANCHENG, China Thu Mar 27, 2014 10:53am IST
A man reads an announcement by the Rural Commercial Bank of Huanghai in one of the bank branches in Yancheng, Jiangsu province, March 26, 2014. REUTERS/Carlos Barria

(Reuters) - The rumour spread quickly. A small rural lender in eastern China had turned down a customer’s request to withdraw 200,000 yuan.

Bankers and local officials say it never happened, but true or not the rumour was all it took to spark a run on a bank as the story passed quickly from person to person, among depositors, bystanders and even bank employees.

Savers feared the bank in Yancheng, a city in Sheyang county, had run out of money and soon hundreds of customers had rushed to its doors demanding the withdrawal of their money despite assurances from regulators and the central bank that their money was safe.

The panic in a corner of the coastal Jiangsu province north of Shanghai, while isolated, struck a raw nerve and won national airplay, possibly reflecting public anxiety over China’s financial system after the country’s first domestic bond default this month shattered assumptions the government would always step in to prevent institutions from collapsing.

Rumours also find especially fertile ground here after the failure last January of some less-regulated rural credit co-operatives.

Jin Wenjun saw the drama unfold.

 
Comment by Guillotine Renovator
2014-03-27 15:50:54

Not to worry, I heard everything is ‘contained’ in China.

 
 
Comment by Whac-A-Bubble™
2014-03-27 04:22:03

“A warning that local interest rates may rise more sharply and sooner than expected - posing downward risk in the homes market - was sounded by the Hong Kong Monetary Authority yesterday. The HKMA estimated that mortgage repayment under a 20-year contract could soar by 30.2 percent if loan rates jump 300 basis points. And income gearing ratio would increase to 83 percent from 64.1 percent.”

My read on this:

1) Lenders are building risk premiums into mortgage lending rates, to cover the perceived increase in default risk.

2) This never happened in the U.S. because the Fed acted to suppress risk premiums in mortgage lending rates.

Is this on target, or am I missing it?

 
Comment by Housing Analyst
2014-03-27 05:08:55

“A house is a depreciating asset and a loss that never stops losing”

You better believe it.

 
Comment by taxpayers
2014-03-27 05:57:45

yahoo reports us home prices 3rd month down

ning com poop

Comment by Whac-A-Bubble™
2014-03-27 06:07:23

Sounds like lots of all-cash Chinese investors are soon to discover they caught themselves falling knives.

 
Comment by Housing Analyst
2014-03-27 06:30:45

Step away from the edge of the open cut excavation or you’ll get swallowed whole.

Sincerely,
OSHA

 
 
Comment by (Still) Waiting for the Fall
2014-03-27 06:06:23

701 properties in Volusia County, FL are now under the direct ownership of Fannie and Freddie.

64 Bank of America
128 Wells Fargo
56 Suntrust
75 Deutsche Bank
32 Citi
61 TD Bank
81 Bank of New York
… and the list goes on.

I’m beginning to think HA may be right.
Whooda thunk it?

Comment by Housing Analyst
2014-03-27 06:17:54

It’s not a matter of being “right”. It’s the truth.

Comment by doom
2014-03-27 08:44:35

The truth???

Truth is, in a capitalist society there is always winners and losers, in any era, in any time capsule you want to visit.

Foreclosure’s, small business failures, car loans gone bad you name it. THE WORLD IS A REVOLVING CREDIT SCAM, it is all about money in and money out, no secret to it.

You watch out for your own opportunity in life, when the deal looks good go for it, a persons or companies misfortune is another persons chance to take advantage and make money.

You should stop blogging and go out and look for a bargain, make some money so you can enjoy a nice car or house, you waste a lot of time looking for the negative.

O

Comment by Ben Jones
2014-03-27 09:00:48

‘THE WORLD IS A REVOLVING CREDIT SCAM…you waste a lot of time looking for the negative’

Pot, meet kettle.

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Comment by doom
2014-03-27 09:29:00

All I can say is on my death bed I had it all nice cars, very nice homes, eating at great dinner houses, retiring,living the good life in the South West.

Nobody wins the game in the end Ben, we hope heaven is the ultimate panacea, I don’t know.

What I do know is America is always the place to be and invest in, look out for your own opportunity, ups and downs always are in play in life, reading and worrying about others problems leads to your problems.

 
Comment by Guillotine Renovator
2014-03-27 15:52:43

The shilling is absolutely N A U S E A T I N G .

 
Comment by rms
2014-03-27 21:48:40

“All I can say is on my death bed I had it all nice cars, very nice homes, eating at great dinner houses, retiring,living the good life in the South West.”

If true you’ve done well for someone seriously lacking in grammatical skills. Thus, I’m not buying your storyline.

 
 
Comment by Housing Analyst
2014-03-27 10:11:05

Yes. 25 million excess empty and defaulted houses is the truth.

Why so grim? Cheer up.

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Comment by Ben Jones
2014-03-27 06:31:22

‘A bubble could form in the U.S. economy even as the Federal Reserve unwinds its accommodative policy, a top U.S. central banker said on Thursday, adding policymakers’ ability to spot them had improved substantially.’

‘James Bullard, president of the Federal Reserve Bank of St. Louis, also told an investment conference in Hong Kong that while there was a risk of keeping rates too low for too long, he did not think the Fed was doing that.’

“I don’t see an immediate bubble now, but maybe one would form as we are trying to remove policy accommodation in the years ahead, because that’s what happened in the 2004-2006 period,” Bullard said.’

‘He told the Credit Suisse investor conference he did not see anything in the magnitude of the previous tech or housing bubbles, and he repeated his view that bubbles can form even when monetary policy is being tightened.’

‘In the interview with Reuters Television, Bullard said property markets in China have reached “concerning” levels. “That seems unhealthy to me and it needs to be unwound. Chinese authorities are very aware of this, but it’s always worrying how it’s going to play out in the way ahead.”

http://finance.yahoo.com/news/fed-policies-effective-room-debate-002515280.html

Comment by snake charmer
2014-03-27 07:43:49

Apart from the content of Bullard’s statements, which are either willfully or breathtakingly ignorant, why are Federal Reserve governors speaking at “investor conferences” in Asia?

On that note, I saw that Bernanke banked a cool $250,000 for his first post-Fed speech, in Dubai, one of the world’s foremost examples of misallocation of resources into real estate. In forty minues he made more money than his annual salary as Fed chairman. It’s all good!

Comment by Whac-A-Bubble™
2014-03-27 08:39:13

I wonder if the speaking fee is somehow connected to 2009 bailouts?

Dubai’s bail-out
The outstretched palm
Abu Dhabi bails out its neighbour. What will it ask in return?
Feb 26th 2009 | From the print edition

THE Jebel Ali port in Dubai boasts of being the largest man-made harbour in the world. Its “quad-lift” cranes can hoist four 20-foot containers at once. The port’s second terminal will raise its capacity to 14m containers. But plans for a third terminal look premature. Dubai is suffering from a slump in the trading, lending, holidaying and profiteering that buoyed this remarkable emirate for so long.

On February 22nd Dubai was hoisted out of its financial trouble by its oil-rich neighbour, Abu Dhabi. The central bank for the United Arab Emirates (UAE) bought $10 billion-worth of Dubai’s five-year bonds. The bail-out confirmed everyone’s assumption that Abu Dhabi would not let the second-biggest member of the UAE fail. But its benefactor waited long enough to plant a seed of doubt in people’s minds. In recent weeks, the spreads on credit-default swaps for securities issued by Dubai’s government and several of its biggest corporations have widened alarmingly, if a little hysterically.

 
 
 
Comment by Ben Jones
2014-03-27 06:46:13

‘SouthGobi Resources Ltd., a coal miner in Mongolia, is seeking additional financing to avoid a default on $250 million in debt, hurt by low prices and weaker-than-expected demand from Chinese buyers. Based on forecasts for 2014, SouthGobi won’t have enough cash flow to meet obligations including interest payments on debentures held by China Investment Corp., the Vancouver-based company said yesterday in a statement.’

‘SouthGobi, controlled by a Rio Tinto Group unit, operates the Ovoot Tolgoi coking-coal mine, which lies about 40 kilometers (25 miles) from Mongolia’s border with China. Prices for coking coal have fallen to a three-year low amid slowing economic growth in China, the biggest market for the steelmaking ingredient, and an increase in supply from Australia.’

“We expected a pick up and we haven’t been seeing that,” President and Chief Executive Officer Ross Tromans said today in an interview in Hong Kong. “Liquidity issues in China affect how much people are buying. It’s noticeable that some of them don’t have as much liquidity as they’ve had in the past, and that’s had an impact because they’re also waiting for their customers to pay them.”

 
Comment by Ben Jones
2014-03-27 06:57:20

‘We know some people who are developers and they just come here to buy property without even asking the price…As the government in China tries more and more to find out how people earned their money, they want to move their assets and their money to Australia…It’s related to corruption. They think they might want to migrate to Australia, but more than anything they just want to put their money somewhere else outside of China.’

‘There’s no doubt there’s this motivation to conceal where they got the money from’

I wonder if Interpol reads this blog? Or the CIA? Because this has probably been the largest money laundering event in history.

Comment by Ben Jones
2014-03-27 07:01:27

‘Even foreigners blame foreigners for inflating house prices. Just as London complains that buyers from Russia and Europe are pushing up prices, Australia is charging China with causing a property bubble. Unlike Britain, the Aussies have launched a government inquiry.’

‘Australian prices rose 15 per cent last year with the average Sydney home now costing more than £400,000 – not far behind the London average. Ordinary Australians are complaining about being squeezed out of the market, forced to live in the suburbs and doomed to a lifetime as ‘generation rent’ while foreign-owned homes stand empty. It is the London market repeated on the other side of the world.’

‘And there are gloomsters Down Under predicting that the Australian bubble is about to burst with house prices halving. Well that would mean a lot of burned Chinese fingers.’

‘The Aussies have launched a government inquiry into how foreign buyers have inflated their housing market. Cosmetic and belated measures may well follow.’

Comment by snake charmer
2014-03-27 07:46:28

“Cosmetic and belated measures may soon follow.” You can say that again. This will be the kind of government inquiry designed to cover up facts rather than find them.

 
 
Comment by scdave
2014-03-27 07:33:08

Because this has probably been the largest money laundering event in history ??

I agree…As I stated many, many months ago…I believe Polly disagreed suggesting it was too difficult to launder money through property acquisitions….Even if these guys lose money due to price drops, they are still way ahead of the game thats why maybe some just don’t care what they are paying…Dirty money in…Clean money out…

 
Comment by Neuromance
2014-03-27 07:47:03

I wonder if Interpol reads this blog? Or the CIA? Because this has probably been the largest money laundering event in history.

The FIRE sector has an explicit exemption from this type of money laundering:

“The Patriot Act made it illegal for individuals or businesses in the U.S. to accept money generated by corruption abroad, deeming it as being complicit to money laundering. But in doing so, the law exempted hedge funds, realtors and escrow agents, and made it possible for foreign officials to use American lobbyists, lawyers and university officials to get around the money laundering ban.”

content.time.com/time/world/article/0,8599,1964306,00.html

Comment by Neuromance
2014-03-27 10:24:32

And the reason for such a remarkable thing are not new:

“”IN THE early 1950s, when travelling in Europe, Mancur Olson was puzzled why West Germany was blossoming economically, while Britain was floundering. Germany had lost the second world war, while Britain was a victor. The two countries were similar in many important ways. Why, then, the difference in performance?

The conclusion was striking… In any human society, he said, parochial cartels and lobbies tend to accumulate over time, until they begin to sap a country’s economic vitality. A war or some other catastrophe sweeps away the choking undergrowth of pressure groups. This had happened in Germany and Japan, but not in Britain, which, although physically damaged in the war, had retained many of its old institutions.”

http://www.economist.com/node/115687

Comment by taxpayers
2014-03-27 12:00:15

uk was and is going socialist—see Atley

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Comment by Blue Skye
2014-03-27 10:37:08

“the largest money laundering event in history”

Is the USA China’s “Swiss Bank Account”?

 
 
Comment by Ben Jones
2014-03-27 07:07:29

‘Mac Bank has its proprietorial China steel mill survey out and the news is poor. Steel profitability has literally collapsed. Any steel mill default will trigger renewed panic selling of the huge port pile and downside gapping in spot iron ore. Australian iron ore equities continue to trade on a cloud of hope.’

 
Comment by Ben Jones
2014-03-27 07:11:08

‘A Chinese man has gone on a killing spree following a family dispute over property, leaving six people dead in a village outside Beijing. The 34-year-old, identified only by his surname Zhao, stabbed several people with a knife on Thursday (local time) in Wanghua in Huairou, a suburban area of the capital, before being overpowered by police, the Beijing Public Security Bureau said.’

‘Six people died and an unspecified number of wounded were being treated in hospital, police authorities said on a verified account on Sina Weibo, a Chinese equivalent of Twitter. Initial investigations showed the incident was triggered by a dispute over family housing assets, the statement said.’

‘Property prices in Beijing have been skyrocketing in recent years and a typical two-bedroom apartment in the city can easily cost $188,000 or more. Land in the surrounding rural area is also becoming increasingly valuable as the city expands. The real estate boom has seen a rise in family disputes over assets.’

‘A Beijing man was executed last year after being convicted of murdering his nephew in 2011 due to a “family property dispute”, previous Chinese media reports said.’

 
Comment by Ben Jones
2014-03-27 07:31:16

‘cutting prices at their luxury project…by as much as 36 per cent from the previous launch in December. The price for furnished units fell 27 per cent’

In other news, there is a run on silk banners and bamboo poles at local stores.

Comment by Blue Skye
2014-03-27 10:46:40

They will likely still report extraordinary GDP growth despite collapsing price and demand.

 
 
Comment by Ben Jones
2014-03-27 07:43:55

‘Yale economist Robert Shiller believes financial-market bubbles may not be all bad, and that taking manipulative steps to prevent them would defeat the purpose of free markets. “Profits are an important motivator. So in the long run, it’s hard to say bubbles are really bad,” said Shiller, a Nobel laureate who is famously given credit for predicting both the dot-com stock collapse and the 2008 housing market meltdown.’

“Take the Internet bubble of the 1990s. What that did was it generated a lot of start-ups, some of them foolish. Some of them failed but others survived. So is it a bad thing?”

‘In Shiller’s view, there may have been no logical choice other than letting the dot-com bubble and housing market bubbles play themselves out. “What would the alternative be? I’m thinking we would have been better off if we had tamed those bubbles, but I’m not really sure. We certainly don’t want to do Draconian things that would upset the whole system to prevent bubbles”

This is a perfect example of how the media sets up someone as the go-to guy on a subject, who can then be relied upon to defend the establishment.

Comment by snake charmer
2014-03-27 07:53:37

Has he relocated to Colorado? We shouldn’t “take manipulative steps to prevent” asset bubbles? How about not taking manipulative steps to start them in the first place?

Oh wait, that would invalidate Fed policy for the last two decades. Very poorly played by Mr. Shiller.

Comment by Ben Jones
2014-03-27 08:24:32

‘Every month that Gregory Zbylut pays $1,300 toward his law school loans is another month of not qualifying for a decent mortgage. Graduates who can immediately begin building equity in housing or stocks and bonds get more time to see their investments grow, while indebted graduates spend years paying principal and interest on loans. The standard student loan repayment schedule is 10 years but can be much longer.’

‘Zbylut, an accountant-turned-attorney in Glendale, Calif. He’s been chipping away at nearly $160,000 in student debt since graduating in 2005 from law school at Loyola University in Chicago. Now 48, the tax attorney estimates he could have $150,000 to $200,000 in a 401(k) had the money he’s paid toward loans gone there.’

“I’m sitting here in traffic. I’ve got a Mercedes behind me and an Audi in front of me and I’m thinking, ‘What did they do that I didn’t do?’” Zbylut said by cellphone from his Chevrolet. He’s been turned down twice for the type of mortgage he needs to buy a home big enough for himself, the fiancee he would have married already if not for his debts and her 10-year-old son.’

“I have more education and more degrees than my father, as does she than her parents, and yet our parents are better off than we are. What’s wrong with this picture?” he said.’

Nothing Greg, according to Shiller. You just aren’t a big enough debt donkey! Now get out there and foam the runway for the banks!

Comment by Whac-A-Bubble™
2014-03-27 08:42:19

“I’m sitting here in traffic. I’ve got a Mercedes behind me and an Audi in front of me and I’m thinking, ‘What did they do that I didn’t do?’” Zbylut said by cellphone from his Chevrolet.

Maybe they rent and bought decent cars instead of overpriced debt shacks? (That’s what I did, anyway…)

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Comment by Colorado Renter
2014-03-27 08:50:27

Although I have no debt, I can relate to the tax attorney looking around at all of the perceived wealth, wondering what he’s doing wrong. I’m in my mid-30s, I have an engineering degree, and am an airline pilot. My fiancé is a paramedic, and we have no kids. We almost bought a house in the Denver suburbs last year (Wheatridge), but after getting into multiple bidding wars I said screw it. We’re now renting, as I’m absolutely convinced the prices are completely out of control.

I look around at everybody around us, with new cars, mortgage, kids, lots of toys and vacations, and I just don’t get it. Are people really going into a bunch of debt for this stuff??

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Comment by snake charmer
2014-03-27 10:09:25

Yes. They are going into debt. I remember 2006; I could not believe how many people drove Escalades in Tampa, which like much of Florida (”get paid in sunshine”) is notorious for low pay. I could not believe how many people had children in private school. As it turned out, home equity was paying for those things and others.

For middle-class people, borrowing against inflated assets is substituting for income, and has been for awhile. At a prior job where I had access to such information, I always was surprised that people would take out loans against their 401(k) accounts.

 
 
Comment by Colorado Renter
2014-03-27 08:52:40

Although I have no debt, I can relate to the tax attorney looking around him at all of the perceived wealth, wondering what he’s doing wrong. I’m in my mid-30s, I have an engineering degree, and am an airline pilot. My fiancé is a paramedic, and we have no kids. We almost bought a house in the Denver suburbs last year (Wheatridge), but after getting into multiple bidding wars I said screw it. We’re now renting, as I’m absolutely convinced the prices are completely out of control.

I look around at everybody around us, with new cars, mortgage, kids, lots of toys and vacations, and I just don’t get it. Are people really going into a bunch of debt for this stuff??

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Comment by doom
2014-03-27 09:15:18

Not everybody (Colorado renter) who has a expensive cars or house is in debt. My wife and I have two house paid off and 4 cars paid off all from real estate investing for over 38 years.

You say you are a airline pilot and your wife is a paramedic. If your credit is 720 or better why can’t you buy a home? We lived in Denver several years ago west of Denver. Still many homes there that can be bought in the $300k range you should qualify.

You say prices are out of control, my friend prices are always out of control if you don’t qualify for a loan, when we bought in Denver in 1993 we paid $299k for 5000 ft house back then it was considered high, we sold it for $589k 3 years later out in the Morrison area.

You look hard, you will find a home you can afford, make sure it is the best zip code you can afford and go for it, renting only makes the landlord richer, I know I also was a landlord and loved renters.

 
Comment by Colorado Renter
2014-03-27 09:20:35

We do qualify for the loans to buy a house, but I just don’t think the houses are worth what people are paying. Prices in Denver have already surpassed the 2007 peak, and I really think people are getting in over their heads again.

I agree it’s possible to have nice cars and no debt. I have two cars, and lots of toys for the mountains (snowboards, mountain bikes, etc.). I paid cash for all of it. I pay off my cards every month. But how common is that? The latest statistics I’ve seen show that revolving credit card debt is going back up again…

 
Comment by doom
2014-03-27 09:37:03

You have done things right for sure, look I don’t know who you are but you seem to be and have a level head that is good.

Again don’t worry about other folks just about you and your wife. Denver is a tough place for Real Estate I agree, it goes thru many transitions. You must buy right in the Denver market, you could get hurt.

I don’t have the time right now, let me look at a few choices in Denver metro area.

 
 
Comment by Denver Renter
2014-03-27 08:58:46

Although I have no debt, I can relate to the tax attorney looking around him at all of the perceived wealth, wondering what he’s doing wrong. I’m in my mid-30s, I have an engineering degree, and am an airline pilot. My fiancé is a paramedic, and we have no kids. We almost bought a house in the Denver suburbs last year (Wheatridge), but after getting into multiple bidding wars I said screw it. We’re now renting, as I’m absolutely convinced the prices are completely out of control.

I look around at everybody around us, with new cars, mortgage, kids, lots of toys and vacations, and I just don’t get it. Are people really going into a bunch of debt for this stuff?? We often feel like we’re doing something wrong with our low key, debt free lifestyle. It’s definitely not normal around here…

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Comment by Housing Analyst
2014-03-27 11:00:11

Sit tight my friend. If you buy a house in the current environment, you’ll lose a lifetime of earnings from which you’ll never recover.

 
 
 
 
 
Comment by Denver Renter
2014-03-27 09:00:50

Sorry for the duplicate posts… They weren’t showing up on my end at first.

 
Comment by doom
2014-03-27 09:01:00

I bought my first house at 22 years old in Simi Cal ($19,950) when folks were putting $1 down. I waited till they got foreclosed on, swoop in, fixed it up, and a year later sold it for $59,950.

Ever since, I never regretted dropping out of college, I wasn’t going to be a lawyer or doctor my baseball career was going nowhere. I invested in other folks misfortune, in any era, at any time money is to be made?

Comment by Blue Skye
2014-03-27 10:50:57

I’m thinking you dropped out of grade school. Just a feeling.

 
 
Comment by Housing Analyst
2014-03-27 10:50:04

Paso Robles, CA Housing Prices Crater 21%; Inventory Explodes 157%

http://www.movoto.com/paso-robles-ca/market-trends/

 
Comment by Housing Analyst
2014-03-27 10:54:53

Walnut Creek CA Housing Prices Dive 35% On Rising Inventory

http://www.movoto.com/walnut-creek-ca/market-trends/

Comment by Puggs
2014-03-27 17:53:03

Kicked in the walnuts.

 
 
Comment by Housing Analyst
2014-03-27 10:58:12

Sausalito, CA Housing Prices Collapse 48%; Housing Demand Evaporates

http://www.movoto.com/sausalito-ca/market-trends/

 
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