The Housing Bubble

Slowing Chinese economy likely to pinch US, too
May 11, 2014
Last updated: Sunday, May 11, 2014, 1:21 AM
By PAUL WISEMAN and JOE McDONALD
THE ASSOCIATED PRESS
A government billboard with the words “China Dream Is My Dream” near a construction site in Beijing. One analyst offers this reminder: “China is the second-largest economy on the planet.”

* Before cheering problems overseas, Americans should remember that economies are connected

WASHINGTON — After watching China narrow the U.S. lead as the world’s largest economy, Americans might be tempted to cheer signs that the Chinese economy might be stumbling.

But in an interconnected global economy, bad news for one economic superpower is typically bad news for another — even a fierce rival.

“It hurts,” says Mark Zandi, chief economist at Moody’s Analytics. “China is the second-largest economy on the planet. If growth slows there, it affects everybody.”

Zandi estimates that each 1 percentage point drop in China’s economic growth causes as much damage to the U.S. economy as a $20-a-barrel increase in oil prices: It shaves 0.2 percentage point off annual U.S. growth.

That isn’t catastrophic. But to regain its full health nearly five years after the Great Recession officially ended, the U.S. economy needs whatever help it can get.

A sharp slowdown in China also threatens the 28-member European Union, which outweighs even the United States if measured as a single economy. China is the EU’s second-largest export market behind the United States.

A stream of economic news from China has been rattling financial markets. Chinese manufacturing slowed in April for a fourth straight month. A Chinese lending bubble, driven by overbuilding, is stirring alarm. China’s growth in the January-March quarter slowed to 7.4 percent compared with a year earlier. It was its slowest quarterly growth since the 2008-09 global crisis.

For most economies, 7.4 percent growth would qualify as explosive. The U.S. economy hasn’t grown as fast as 7 percent since 1984. But for China, a still-developing economy that clocked double-digit growth through much of the 2000s, the latest figures qualify as a slump.

And Americans and Chinese are linked ever more tightly economically.

They buy each other’s products, invest in each other’s markets, visit each other’s tourist attractions. U.S.-China trade in goods last year totaled $562 billion. China is the United States’ second-biggest trading partner and the No. 1 source of U.S. imports, according to the Congressional Research Service.
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Chinese developers pull back as property downturn hits economy
By Clare Jim
SHANGHAI Thu May 8, 2014 5:04pm EDT

A garbage collector walks past residential and office buildings in construction, in Hefei, Anhui province, April 3, 2014.
Credit: Reuters/Stringer

(Reuters) - China’s efforts to cool its property sector look to have been more effective than intended, as a sharp drop in construction activity and falling prices threaten what had been one of few firing engines of the world’s second-largest economy.

Developers know the market is struggling — their inventory is rising and prices are falling — but expect that authorities will relax their tight grip on the sector in coming months.

The government has long made it clear that economic growth would moderate as it tries to reform the economy. But by keeping the pressure on property too long, analysts fear the fallout will be more severe than anyone had expected.

“To us, it is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be,” Nomura analysts said in a report.

New housing starts in the first quarter fell 25.2 percent compared to a year ago, Nomura calculated, as tighter credit conditions, oversupply and falling prices undermined the market.

They estimated the property slump could take a full percentage point off China’s economic growth this year, knocking it below 7 percent for the first time since 1990. The government is targeting growth of about 7.5 percent.

The downturn really gained traction in late 2013 after more than four years of government efforts to tame record home prices and avoid an asset price bubble. Authorities also wanted to channel money towards consumption and productive investments.

“When sales slow and there are still inventories, the development momentum can moderate slightly; there’s no rush,’ said Adrian Chan, assistant to the chairman at Guangzhou R&F properties (2777.HK).

Chan said the developer has no plans to revise its project pipeline and full-year sales target, but others are feeling the pressure from credit curbs and chronic oversupply in some cities.

In March, government officials told Reuters that Zhejiang Xingrun Real Estate Co, based in the coastal city of Ningbo, was on the brink of bankruptcy.

On Thursday, Guang Real Estate Group Co, based in the southern city of Shenzhen, said it had failed to deliver some properties to homebuyers on time due to financial pressures.

OVERSUPPLY

Even Beijing has a problem with excess supply. Figures from data provider China Real Estate Information Corporation (CRIC) show more than 13 months supply of unsold housing in the capital, an increase of 80 percent from a year ago.

“Due to the impact of oversupply, it will be difficult for the market to come out from the correction in the first half of the year; the extent of price cuts may further expand under the pressure to sell inventories,” CRIC said.
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Correction in property market weighs on China’s growth
Xinhua
2014-05-10
09:48 (GMT+8)

Buildings under construction in Taiyuan, Shanxi province. (File photo/CNS)

The meteoric rise of the Chinese property sector has shown signs of abating since the beginning of this year, and economists say such a downturn could weigh on growth.

The property sector accounts for at least 16% of China’s economic output, according to Tokyo-based brokerage firm Nomura Securities. Slowing investment growth and tightening credit conditions in the property sector during the first quarter of this year have already taken a toll on growth, which dipped to 7.4% in the first quarter, the lowest rate since the second quarter of 2012.

“We are convinced that the property sector has passed a turning point and that there is a rising risk of a sharp correction,” said Zhang Zhiwei, an economist with Nomura Securities in a research note earlier this week.
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Pop
An illustrated guide to why China’s housing bubble may finally be bursting—and what that means for the economy
By Gwynn Guilford @sinoceros May 6, 2014
Is China’s building boom finally busted? Reuters/Kim Kyung-Hoon

The long-awaited popping of China’s housing bubble may finally be here. Although a slew of individual cities had seen their property markets collapse since 2012, in Q1 2014, the trend went national.

“Every property market leading indicator at the national level turned down,” writes Zhang Zhiwei, economist at Nomura, in a note. “The question is no longer ‘if’ or ‘when’ but rather ‘how much’ China’s property market will correct.”

This is scary stuff. Falling sales tend to discourage property investment, which generates at least 16% of China’s GDP, says Zhang. A six-percentage-point decline in property investment translates to a 1ppt drop in GDP growth, he calculates. In other words, if property investment were to fall from 2013′s 19.8% to, say, 7.8%, China’s GDP growth would fall to around 5.8%. Nomura expects a less dramatic drop—for investment to slide to 13.8%, dragging GDP growth down to 6.7%.
…

Got inventory out the wazoo?

blogs dot ft dot com
Gloom deepens for China property developers
May 9, 2014 11:44am
by James Kynge

The torrent of bad news for Chinese property developers shows no sign of letting up.

Unsold floor space continued to surge in April. Two small developers are reported to be slipping into financial distress. The total net profits of 117 domestically-listed developers posted a 27 per cent decline in the first quarter to Rmb9.65bn. The bearishness of investment bank analysts, meanwhile, is plumbing new depths.

This chart from China Confidential, a research service at the FT, shows what is amiss – a surge in unsold real estate inventory. The red line shows a moving average of unsold inventory in 14 cities nationwide, while the black line shows a less dramatic trend in first tier cities – Beijing, Shanghai, Shenzhen and Guangzhou.
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Citi sees “nuclear” Chinese property bust
Posted by Houses and Holes in China Economy at 6:05am on May 8, 2014

Citi’s Oscar Choi and Marco Sze have produced this startling assessment of the Chinese property market:

A Powerful Loosening “Combo” now a MUST to Prevent a “Demand Cliff”: We believe the physical market has reached a critical point, with potential for broader- based demand shrinkage across different product-ends. Beside the recurring factors like tight credit, HPR [home purchase restrictions] policy, altered ASP [average selling price] expectations due to media reporting, etc, different to FY08/11, the downward pressure on demand is also intensified by new factors, like a weaker economy, RMB depreciation, anti- corruption, outflows of purchasing power to overseas, etc, We believe merely fine- tuning policy by the local gov’ts is insufficient to mitigate this potential correction…

June/July – Last Chance to Shoot the Silver Bullet: We believe a “nuclear” impact on economy and employment from any excessive slowdown of this mega- size market (est. total housing value at RMB130-160trn, annual RMB8trn property sales and RMB3-4trn land sales) is not affordable for government and society. To prevent the “demand cliff” and a big correction, we see June/July as the LAST chance for government to introduce powerful measures. Our current judgment is that nationwide volume should peak in FY15 (not FY14, even if it is more challenging than expected), based on the argument that the gov’t could still adopt powerful policy easing to restore buyer interest and a ST volume recovery. Missing this “deadline” could bring about a downward adjustment to our national assumption (sales up 8%, ASP up 2%) and an earlier-than-expected significant correction.
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More worried that Obamacare will pinch the U.S., China seems fine:

(Reuters)
Updated: 2014-05-09 10:50
Counter:36

Chinese imports of copper rose 7.2 percent in April from the previous month, extending gains made in March as stronger domestic prices boosted their appeal. Seasonal consumption also supported demand in the world’s top copper consumer, along with global prices that have fallen more than 9 percent this year.

Benchmark three-month copper on the London Metal Exchange inched up slightly after the Chinese data was released, trading at $6,669.25 per tonne at 0317 GMT.

Arrivals of copper anode, alloy, refined metal and semi-finished copper products were 450,000 tonnes in April, up from 420,000 tonnes in March, customs data showed on Thursday.

April imports surged 52 percent from the year before.

April arrivals were higher than expected by some traders, who had said some importers were delaying term shipments as they expected prices to fall.

The rise could be a result of the buying by China’s stockpiler, the State Reserves Bureau, said Zhou Jie, dealer and senior analyst at China International Futures (Shanghai) Co Ltd.

“SRB buying has already pushed up (yuan) premiums in the domestic market,” Zhou said.

He added that strong premiums for spot refined copper could encourage importers to buy metal in the international market this month to resell domestically.

Seasonal demand has also boosted domestic consumption, traders said.

A factory using refined copper had increased buying of spot metal in the domestic market after its orders had risen 11 percent in April and were up 5 percent in May, a purchasing manager at the firm said.

But supply of spot refined copper had fallen in April due to reduced sales by Chinese smelters with stronger seasonal consumption, traders said.

Large smelters plan to export more refined metal to support domestic prices, while traders said the third-largest producer Jinchuan Group had cut supply by a third last month after a technical problem in March.

Buyers of spot refined copper paid premiums of over 1,000 yuan per tonne on top of the price of front-month copper contract on the Shanghai Futures Exchange to secure physical metal in April, compared to discounts in March, traders said.

China’s role in copper’s collapse: Why investors should care
March 12, 2014, 9:38 AM ET

The investment world is buzzing about copper prices, and there’s good reason to pay attention, as those falling prices trace back to China — and a potential hard landing for its economy.

For the first time since July 2010, prices for a most active futures contract HGK4 are trading below $3 a pound, according to data from FactSet.

China is the major culprit for the price drop, as the country is one of the metal’s biggest customers and recent poor trade data have rattled the investing world. But the collapse in prices to their worst level in nearly four years isn’t solely about demand concerns.

Overnight, the Chinese solar-energy company Baoding Tianwei Baobian Electric saw its bonds suspended on the Shanghai exchange after a second year of net losses spurred default fears. Such action would follow last week’s first default by a Chinese company on its onshore corporate bonds.

The default worries have “shaken the foundations of the copper market which in China is used as much for financing transactions as for its commodity properties,” wrote Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, in a note Wednesday.

Wednesday’s session saw high-grade copper for May delivery falling as low as $2.91 a pound.

With estimates that as much as 60% of China’s copper stock is used as trade collateral, there’s panic among copper investors who are worried about massive liquidation in the market, said Schlossberg.

Over the years, copper’s value has expanded beyond its use as an industrial metal, and the commodity is now firmly a highly financialized product in China, said John Hardy, head of foreign-exchange strategy at Saxo Bank, in emailed comments Wednesday.

He said the drop in copper prices “can be directly traced to the recent and obvious move by the Chinese regime to weaken its currency in order to slow the popularity of the U.S dollar/China yuan carry trade that was driving their currency stronger against the USD even as major [emerging market] currencies were recently weak.”
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China Steel Mills Slide as Credit Squeeze, Iron Ore Panic Grips
By Bloomberg News Mar 12, 2014 1:29 AM PT

Chinese steel companies, the world’s largest, helped drive a regional industry benchmark index to a seven-month low as concern builds that some mills face financial difficulty amid a government credit squeeze.

“They are having trouble accessing finance,” Yunde Li, chairman of Ishine, a unit of China Zhongsheng Resources Holdings Ltd., which processes iron ore in Shandong, said today in an interview in Perth. Some of Ishine’s steel mill customers cannot make their payments to his company, Li said through a translator, declining to name the companies.

Closely-held steel mills in China are struggling to get funding at the moment and that’s led to panic selling of iron ore, according to Morgan Stanley. The nation’s top banking regulator said yesterday strict credit guidelines will be imposed on mills that were big polluters and users of energy.

“The capital squeeze on steel traders has started to affect mills,” said Henry Liu, Hong Kong-based executive director of China Merchants Capital and head of its commodities research department. “It looks like the credit crunch is worsening.”

Iron ore this week had its biggest drop in more than four years, spooked by the credit squeeze and a surge in stockpiles. The Bloomberg Asia Pacific Iron/Steel Index, which includes China’s Baoshan Iron & Steel Co. and Angang Steel Co. and Japan’s Nippon Steel & Sumitomo Metal Corp., dropped for a third day today, to the lowest since July 31.

“There’re talks some mills are facing tightening credits, as they may be charged with higher interest rates on loans,” said Hu Shunliang, investor affair representative with Maanshan Iron & Steel Co. It hasn’t affected Maanshan, Hong Kong’s second-largest listed steelmaker, he said.
…

Housing Not as Important as Fed Thinks: Shepherdson

May 8 (Bloomberg) — Ian Shepherdson, chief economist at Pantheon Macroeconomics, discusses Janet Yellen’s worries about the U.S. housing market and what he thinks the Fed should focus on in the economic recovery on Bloomberg Television’s “Bloomberg Surveillance.”

May 9, 2014, 6:31 a.m. EDT
2 reasons the Fed may keep interest rates at zero
Opinion: Yellen highlights risks from weak housing and emerging markets
By Rex Nutting, MarketWatch
Reuters
Federal Reserve Board Chair Janet Yellen

WASHINGTON (MarketWatch) — Everyone assumes the Federal Reserve will finally raise interest rates sometime next year. That’s what the Fed’s “dot plot” is forecasting, that’s what the markets are pricing in, and that’s what almost every Fed watcher believes.

But what if they are wrong? What if the Fed delays that first rate hike? What if the U.S. economy isn’t ready for higher rates in 2015?

In her testimony to Congress this week, Fed Chair Janet Yellen didn’t steer anyone away from the assumption that the Fed will probably raise rates next year. But she did flag two risks to the economy that could delay higher rates: the U.S. housing market and the fragile condition of foreign economies.

The link between a weak housing market and low rates is pretty straightforward: Housing is very sensitive to interest rates. Usually, the Fed’s easy-money policies work primarily through the housing market. By lowering borrowing costs for home buyers and home builders, the Fed can accelerate home buying and home building, and give the economy a jump-start that spreads to other sectors of the economy.

This channel for monetary policy has failed in this expansion, mostly because a warped housing market was the main cause of the recession, and it’s taking time to fix it. Many households can’t buy a house, either because their credit was ruined by a foreclosure, or because they are underwater on their current mortgage, or because they want to further reduce their debts, or because their income growth won’t allow it, or because lenders are reluctant to lend to any but the most overqualified buyers.

During last year’s “taper tantrum” in the bond market, just the hint of tighter monetary policy put the brakes on the housing recovery, as mortgage rates drifted higher. By almost every metric, housing has slowed in the past six months, and the Fed is as much to blame for that as anyone.

It’s possible that the housing market will be strong enough by next year that it could accommodate higher rates. But it’s also possible that housing will remain so weak that even a whisper of higher rates could crash the market. The Fed doesn’t want to do that.
…

May 8, 2014, 7:00 a.m. EDT
6 dubious Yellenisms from the Fed chair’s testimony
Opinion: Above all, her ‘don’t worry, be happy’ talk hit a sour note
By Diana Furchtgott-Roth
Bloomberg

Federal Reserve Chair Janet Yellen did a masterful job navigating the political shoals of the Joint Economic Committee yesterday. She told liberal Vermont Sen. Bernie Sanders (I-VT) that she shared his concern about the Koch brothers and inequality, and conservative Indiana Sen. Dan Coats (R-IN) that Congress needed to act soon to reduce long-term budget deficits.

But her testimony, and the discussion that followed it, raised a host of serious questions about the role of the Federal Reserve in this sluggish economy. As Chair Kevin Brady (R-TX) told Yellen, her “don’t worry, be happy” monetary message might not work. From what I heard, there were at least six issues on which she spoke that made no sense. I’ll call them Yellenisms. Each of the six issues, below, is bold-faced.

Most important, will the Fed be able to keep inflation in check at “only” 2%, its target goal, after its massive monetary accommodation?

Yellen testified that the Fed has the tools to move in time to avoid inflation. Carnegie Mellon University professor Allan Meltzer, whose op-ed in the Wall Street Journal forecasting higher inflation appeared on the same day, does not think so. Meltzer wrote: “Never in history has a country that financed big budget deficits with large amounts of central-bank money avoided inflation. Yet the U.S. has been printing money — and in a reckless fashion — for years.” Every Fed chair wants to avoid inflation, but America saw substantial periods of inflation in the 1970s that were difficult to eradicate.

Linked to inflation is the question of asset bubbles. Rep. Richard Hanna (R-NY) asked Yellen about Meltzer’s concern that seniors on fixed incomes are taking too much risk in the stock market because they can’t get a historic rate of return on their savings accounts.

Yellen, in full “don’t worry, be happy” mode, sees no evidence of an asset bubble in equities. Plus, she highlighted the advantages for Americans of low mortgage rates that have served to increase the value of houses, Americans’ main asset. True, house prices have gone from underwater to back in the black, as she said. Is this another bubble, especially given the current softness in the housing market? It will take us another few quarters to be sure. Former Fed Chairman Alan Greenspan did not see asset bubbles, but they surfaced and popped anyway.
…

If banking is the question then housing is the answer. Btw has anybody read Nomi Prins new book. I love her efforts in exposing the Bankers as well as the Politicians.

May 9, 2014, 3:45 p.m. EDT
If you own bonds, beware of rising interest rates
By Jonathan Clements

If you own bonds, how badly could rising interest rates hurt you?

With the economic recovery apparently on a firm footing and the Federal Reserve curtailing its efforts to hold down interest rates, there’s a decent chance we’ll see higher bond yields—and when yields climb, existing bonds decline in price.

How much could interest rates rise? How much would your individual portfolio suffer? To answer the first question, we can look to nominal economic growth, which reflects both inflation and real (after-inflation) GDP growth. Bond yields and nominal economic growth tend to track each other fairly closely.

I’ve heard various theories for why the two may be connected. One possibility: If government bond yields are above the nominal economic growth rate, the government would have to commandeer an ever-growing share of the economy’s resources to cover its interest payments—and that isn’t sustainable in the long run.

Lately, of course, this hasn’t been a worry, thanks in part to the Federal Reserve’s loose monetary policy. Yields on 10-year Treasury notes have been well below the nominal U.S. economic growth rate, which clocked in at 3.8% in 2011, 4.6% in 2012 and 3.4% in 2013.

As the effects of the financial crisis wane, many expect economic growth to pick up, with real GDP growth at 2.5% and possibly 3% a year, while inflation runs at 2% or more. Combined, that might put nominal economic growth at 4.5% to 5% a year.

Suppose that, as the Federal Reserve cuts back its monetary easing, the 10-year Treasury note rose to those levels. That would mean a two-percentage-point rise from today’s 2.6% yield. How would your bond portfolio react?
…

May 9, 2014, 11:59 a.m. EDT
How to gauge bond-fund losses before rates rise
By Dan Moisand

Financial markets are full of uncertainty, but how rising rates affect bond prices isn’t all that mysterious. In this week’s featured question, we explore how to estimate the damage rising rates may inflict on bondholdings.

Q. Hi Dan. I really enjoy your articles. My wife and I are both retired. We have two IRA’s. One is $162,000 and the other is $125,000. Our RMDs start next year. All in a bond fund. I am getting nervous about the outlook for bonds and I am not sure what I should do. I know interest rates are going to rise which will hurt bonds but I don’t know how badly. We are comfortable right now but we cannot afford to lose much money. I would appreciate your thoughts. Thank you — Allan

A. Thanks Allan. I enjoy writing these.

You don’t need to wonder how rising rates affect bonds. The shorter the term of a bond, the less damage will be done by rising rates. In January, my firm posted a commentary on rising rates . In it there is a chart of the behavior, from May 1- Dec. 31, 2013, of an exchange-traded fund that holds short-term Treasurys and one that holds long-term Treasurys. Interest rates rose a little last year and you can see the effect clearly in the chart. The long-term bonds lost about 18% but the short-term bonds were hardly affected. The trade-off for the stability of shorter-term bonds is that the shorter-term bonds tend to pay less interest.

The extent your holdings are exposed to interest rate risk can be assessed by a mathematical calculation called duration. If the fund you hold has a duration of say 7, a 1% rise in rates will cause a drop in value of about 7%. A shorter duration would result in a smaller drop in prices.

Of course, you would still collect interest which will offset some of the drop. If your fund yields 3% and rates rise 1%, after a year, the fund should be down around 4% (-7% in price reduction + 3% in interest payments).

Don’t interpret this to mean higher yields mean greater safety. That may not be true if the higher yields are coming from bonds issued by parties with weak finances. Wall Street likes to label these “high yield” but they were once commonly known as “junk bonds.” (“High yield” sure sounds better than “junk,” doesn’t it.) Find out what percentage of a fund’s holdings are below “investment grade.” The fund company should have the duration and credit quality information handy.
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I’m tired of not knowing the answers.

Jose,

“Whac” has been an institution around here for a very long time and even though we have our differences, many of his posts are important news items regarding financial tidbits. So I read the posts that interest me and skim over the ones that don’t.

I first read his stuff when he was Get Stucco and it might be interesting to list his names over the years.

And another thing, one of the purposes of this blog is to generate visits/clicks because that’s how Ben makes some of his money. I would imagine that he only inhibits disruptive posts. Is that about right?

I have three words for you: Joshua Tree Extension

Amen. And if you live in Florida, like we do, in some ways the aftermath of the bubble and now bubble 2.0 has been worse. Florida has become some sort of promised land for northern refugees from the sh&thole states like NY, NJ, Mass, Ct. and Illinois. We’re getting vultured beyond belief here. All of a sudden, all the whining about “ooh, it’s too cold up here”. No, that’s not the reason they’ve moving here en masse. Because it’s interesting to note that you don’t see too many people moving here from New Hampshire, for example, where taxes and social ills are far less than in those other states.

Really, it sucks on the ground here in Florida. You’d have to see it to believe it. “I’m moving to Florida!!!!!!” Ugh, I can’t stand it. They’re driving up prices, keeping the bubble going, clogging the roadways, straining the resources, flushing the goddamn toilets and draining the aquifer. These are people who, in the past, wouldn’t have looked at Florida twice to bet on in a dog show. All of a sudden, this is such a great state. WHAT????? I moved here in the first place back in 1980 to get away from these dicks. They looked down on Florida and were all mealy-mouthed about “I like the four seasons”. Oh, yeah? Well, the four seasons don’t look so good when you’re broke-ass, right?

Good. Another lackey joins the ranks.

stoner wastoid “brah, deadheads are everywhere” sack leach mentally ill lazy ass dirty rap sheet

Leech may cover it, but is he sucking on the govt teat in some way? Why isn’t he on disability? That unAmerican.

become…

Realtor.

Are his teeth still presentable?

“Mother’s Day might be a time to shower your mom with cards and gifts, but the woman responsible for the holiday would tell you not to bother. That’s because the late Anna Jarvis, who founded Mother’s Day (unofficially on May 10, 1906) to honor her own mother, grew to despise the day for its sappy commercialization.

“A printed card means nothing except that you are too lazy to write to the woman who has done more for you than anyone in the world,” Jarvis famously told greeting card and candy executives. “And candy! You take a box to Mother — and then eat most of it yourself. A petty sentiment.”

She’s sleeping.

(Are there any moms on here?)

I have one kid, and strangely enough, I have also become my mother’s mother (stroke - sometimes she will introduce me to doctors/nurses as her mother.) She is driving me up a wall watching the Kardashians.

Are you kidding? The antifemale statements that sometimes dominate this blog have driven away probably 85% of the people who might be mothers. It’s a shame too, since those people probably could have contributed some good comments.

Did you mean to post a different link? The link you posted does not provide evidence of girls being held up as important members of society. In contrast, it proves that lots of people want to lend support to men who kidnap and sell girls, and make public statements about God wanting men to sell women.

A-Dan: Do you even read the links that you receive in your “post this” list every morning?

What does the NY Times care about some heroin addict in small town PA? They got no junkies of their own in NYC?

Plutocracy.

A crony capitalist / progressive society. Little real capitalism. Corporations are run mostly by “progressives” and they run the thugernment. “Progressives” in government owe a lot to large and mispd sizes corporations, but cannot admit it.

Are “volatile” and therefore excluded from core inflation.

“Let them eat i-pads” — Federal Reserve bankster William Dudley

FEMA sector VIII checking in.

And a helpful map in case you’re not sure what region you’re in:

http://www.fema.gov/regional-operations

“The sign never indicates where to check in – it only assumes that those who know where to check in will check in and for what is anyone’s guess. There are many people who believe that the sign would indicate that some sort of drill or action was already planned and that those “in the know” were required to check in.”

“EVERYONE MUST CHECK IN”

Thanks for the reminder.

Here’s something to keep you busy for a while:
http://pmpix.wordpress.com/2013/08/09/usps-logo-a-guillotine/

“you can check out anytime you like, but you can never leave”.

This sounds like a great recipe for another foreclosure tsunami the next time the economy heads south.

But if the experts recommend it, then it must be a good idea.

Wells Fargo Joins Lenders Lowering Credit Standards
By Jody Shenn, Dakin Campbell and Kathleen M. Howley
May 1, 2014 9:44 AM PT
Photographer: Patrick T. Fallon/Bloomberg
A Wells Fargo & Co. branch in Hermosa Beach, California.

U.S. banks are easing credit standards in search of a safe and profitable middle ground after an era of reckless home lending gave way to the stiffest rules in decades, putting a damper on the housing recovery.

Wells Fargo (WFC) & Co., the biggest U.S. home lender, two weeks ago cut its minimum credit score for borrowers of Fannie Mae-and Freddie Mac-backed loans to 620 from 660. The step followed moves by smaller lenders, such as the U.S. unit of Canada’s Toronto-Dominion Bank (TD), which lowered down payments to 3 percent without requiring mortgage insurance for some loans.

Banks ratcheted up borrowing requirements after the most severe housing crash since the Great Depression, preventing as many as 1.2 million loans from being made in 2012, according to an Urban Institute paper. Lenders rode a wave of refinancing until a spike in borrowing costs last year gutted demand, forcing the biggest banks to cut more than 25,000 mortgage jobs. Now they’re removing barriers to mortgages for some borrowers in hopes of reviving a shrinking market.

“We threw the baby out with the bathwater because we had to,” said Rick Soukoulis, chief executive officer of San Jose, California-based lender Western Bancorp. “From there, you start to inch back. If you keep selling only what isn’t selling, you’re just dead.”
…

Can’t find the online version to post, but an article in THE WALL STREET JOURNAL SUNDAY (dead tree edition) claims that divorced couples’ wealth levels are 75% lower a decade after divorce compared to couples that stayed married. Ouch!

I can say that from among my wife’s seven siblings, this principle definitely has played out. The one out of eight couples (including ourselves in the small sample) who got divorced seven years ago is now living the Oil City plan of which we some times post here. Before divorce, they were a six-figure two-income, upwardly mobile household.

The other seven couples are all making do financially.

“A bachelor is a man who never made the same mistake once” — Unknown

Divorce is a troubling trend in America and it’s very expensive.

In AZ the law divides the assets in half, you have to pay lawyer fees and you have to buy new stuff. Then when there’s a disparity in income, the richer half has to pay alimony to the other for 1/3 the time you married. Add it all up and it really sucks.

In the end a single person has a net worth about 40% of what they had before, depending upon how much the lawyers cost you. (I knew a lady that had been married 4 times. She knew the system so well she didn’t even bother with lawyers, but that’s another story.)

I asked a divorced friend why he didn’t have any “replacement squeeze?” He said he could afford to live on half, but not a quarter.

I guess this is just a snow slide.

Tom Steyer isn’t Senate majority leader, or chairman of the Senate Committee on Environment and Public Works, or even Senate president pro tem. He’s merely the man who wants to spend $100 million on Democrats this year and who hates the Keystone pipeline.

“Texas to Pay $10,000 for Each Toyota Job.”

“… part of a Texas Enterprise Fund incentive program run out of the governor’s office.”

California is run by idiots. The Golden State is letting lose of its gold.

Besides, land is cheaper and wages are lower in Texas. It surprises me that any business is still located in California, especially manufacturing.

Oh lord, everyone is telling me to buy stocks and buy a house. No one understands dividends or rents anymore. They only understand “equity”. And no one understands interest anymore either.

I’m sad.

Opinion Journal Live
Why Hillary Should Not Run in 2016

Why Hillary is better off not running in 2016, Obama and the White House Correspondents Dinner, and why running with Obama may put some Democrats in danger of losing.
5/6/2014 1:00:00 PM11:25

May 6, 2014, 10:00 AM
Exclusive: Monica Lewinsky Writes About Her Affair with President Clinton
By Vanity Fair
PHOTOS Monica Lewinsky Is Back
Photograph by Mark Seliger.

Monica Lewinsky writes in Vanity Fair for the first time about her affair with President Clinton: “It’s time to burn the beret and bury the blue dress.” She also says: “I, myself, deeply regret what happened between me and President Clinton. Let me say it again: I. Myself. Deeply. Regret. What. Happened.”

After 10 years of virtual silence (“So silent, in fact,” she writes, “that the buzz in some circles has been that the Clintons must have paid me off; why else would I have refrained from speaking out? I can assure you that nothing could be further from the truth”), Lewinsky, 40, says it is time to stop “tiptoeing around my past—and other people’s futures. I am determined to have a different ending to my story. I’ve decided, finally, to stick my head above the parapet so that I can take back my narrative and give a purpose to my past. (What this will cost me, I will soon find out.)”

Clearing the Air

Maintaining that her affair with Clinton was one between two consenting adults, Lewinsky writes that it was the public humiliation she suffered in the wake of the scandal that permanently altered the direction of her life: “Sure, my boss took advantage of me, but I will always remain firm on this point: it was a consensual relationship. Any ‘abuse’ came in the aftermath, when I was made a scapegoat in order to protect his powerful position. . . . The Clinton administration, the special prosecutor’s minions, the political operatives on both sides of the aisle, and the media were able to brand me. And that brand stuck, in part because it was imbued with power.”
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Scariest thing about Hillary Clinton: The deep pockets who run the show from behind the curtain may be able to figure out a way to get her elected, even though it appears that at least half the U.S. population would cringe at the thought.

We posted this article yesterday.

Where’s IE LANDLORD KING? According to him the Inland Empire is the land of milk and honey.

How do a diamond inspector and a jewelry designer manage to double their wages in tips? I have never given a tip to a person who does either of those jobs. Methinks they lied on their mortgage application, so they don’t want the real numbers publicized.

So much more to this story

Immigration status?

Liars loans?

Home equity loans?

No other jeweler jobs in LA?

Maybe they can get a good factory job at Toyota? Oh wait - the super majority of democrats who control the state pushed them out - along with thousands of other businesses…

Making $16 an hour, plus commissions, they earned as much as $2,000 a week

That was a lot of commissions, if they really did earn them. So how did they go from from being highly paid jewelers to selling home made popscicles?

And I’m sure that the HMRC would never make a mistake in collecting that money. They don’t have that “innocent until proven guilty” thing over there, do they?

Another incentive to store excess cash beyond the $5,000 bank limit - under your mattress if you are a Brit.

More reason to load up on movable and hidable wealth. Platinum and gold bullion and liquor. Should also move some wealth to Galt’s gulch in Chile.

And we wonder why foreigners see the US as a safe haven.

“…and for a little less than $25/sq. ft.”

So HA was telling us the truth after all…

When the Obama trillion dollar deficits end and the fed (100% appointed by Obama) stops QE and bankers start to go to jail.

Or to sum up - not until at least 2016…

C’mon…sit back, relax and enjoy the vindication and panic.

May 11, 2014, 11:21 a.m. EDT
Fed’s reverse repos to become permanent: Lockhart
By Asa Fitch
Bloomberg/file 2013 Enlarge Image
Atlanta Fed President Dennis Lockhart

DUBAI—An experimental monetary policy tool that lets banks and financial firms place cash with the Federal Reserve in exchange for an overnight loan of U.S. Treasurys will likely be adopted as a more permanent means for the central bank to help control short-term interest rates, Atlanta Fed President Dennis Lockhart said on Sunday.

The so-called reverse repos have proven popular since testing began in September. By manipulating the interest rates attached to these transactions, the hope is that the Fed can put a floor under overarching short-term interest rates.

While the Fed has put limits on allotments of the repos, Lockhart said the experiment has been a success.

“Overall I am confident that reverse repos will be among our tool bag and therefore may very well have a role in how we try to influence short-term interest rates,” he said at an American Business Council of Dubai event at the Dubai International Financial Centre.

Fed Chairwoman Janet Yellen said during congressional testimony last week that the reverse repo tool was likely to be in play when it came time to raise rates. The Fed has kept short-term interest rates near zero to stimulate the economy as it gradually recovers from the worst recession in a generation.
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