They Are Wrong, Just Like They Were Wrong Last Time
It’s Friday desk clearing time for this blogger. “Alec Diacou bought two large houses in Riverdale in 2004 with the plan to restore and sell them. He’d already rehabbed a number of properties, which he ended up selling with relative ease. But when he finished rehabbing the second in 2009, the recession was in full swing, emboldening some buyers to skip the niceties of negotiation. The real estate market bounced back with a vengeance, and now in Manhattan and parts of Brooklyn and Queens, bidding wars and sky-high prices are the norm. But not so in the high-end niche in Riverdale. Mr. Diacou’s aim now is to break even and move on.”
“Perhaps just a victim of timing and the ruthlessness of the market, he never anticipated all the difficulty he’s been up against. Riverdale’s slump doesn’t make any sense to him. His wife, Suzi Arensberg, is also perplexed. ‘Brooklyn and Manhattan are sold out,’ she said. ‘Why don’t they come 15 minutes up the highway?’”
“‘”Foreclosure, foreclosure, foreclosure.’ Real estate broker John Susani drives down a Paterson, N.J., street where every third house seems to be abandoned or boarded up. During the boom years, money flooded into Paterson. In some cases, he says, home prices jumped as much as 50 percent. The homes on these streets aren’t worth nearly that much anymore. ‘The banking industry allowed everyone to be a homeowner; they gave mortgages to people [just because they were] breathing,’ Susani says.”
“According to RealtyTrac data, 33 percent of the nearly 400 homes in foreclosure in Worcester County were identified as abandoned. In the city of Worcester, though, the number of vacant homes in foreclosure is estimated to be much higher by city officials who keep tabs on them. ‘I say they’re cursed,’ said Lee R. Hall, principal sanitary inspector for the city. ‘Two years is not really very long for these properties’ to sit vacant waiting to be foreclosed.”
“Realtor Nilton Lisboa is one of the people charged checking on these zombie properties to ensure they are maintained properly. ‘I want to get these properties sold,’ he said. ‘We know there’s no one living there. We know it’s an eyesore, but there’s nothing we can do about it, because we have to wait for the banks.’”
“Foreclosures in metro Toledo surged in June, according to RealtyTrac, an increase of nearly 100 percent compared with the same month a year ago. Re/Max Masters broker Jon Modene, who specializes in foreclosed properties, said what could be fueling the surge is a huge drop-off in short sales. Prior to Jan. 1, short sales were not subject to sales tax, but now they are. ‘There’s now a disincentive to do a short sale. You do a short sale, you get a tax bill,’ Mr. Modene said. ‘So nobody is doing short sales anymore. People are staying in the house and … giving the banks back the house. The banks are sitting on inventory. So they have the ability to push the [foreclosure] numbers forwards or backwards.’”
“Former Federal Reserve Chairman Alan Greenspan spoke to MarketWatch about the current stance of Fed policy, the economy and what to do about asset bubbles. MarketWatch: ‘Some economists argue that the economy has just been bubble after bubble and that we’re doomed to repeat this cycle.’”
“Greenspan: ‘Well, I agree with that. I have come to the conclusion that bubbles, as I noted, are a function of human nature. We don’t have enough observations, but my tentative hypothesis to what we’re dealing with is that both a necessary and sufficient condition for the emergence of a bubble is a protracted period of stable economic activity at low inflation. So it is a very difficult policy problem. I do believe that central banks that believe they can quell bubbles are living in a state of unrealism.’”
“Singapore’s central bank said Thursday that recent property-sector cooling steps were working but it was too early to ease those measures as real-estate prices remained at elevated levels. Property prices have risen 60% over the last four years and fell just 3.3% over the previous three quarters, said Monetary Authority Of Singapore Managing Director Ravi Menon. Singapore, like China, is worried about potential property bubbles that could destabilize the financial industry and push up inflation. China has taken some steps including credit curbs and restrictions on multiple home purchases.”
“‘Risk factors have not changed,’ Menon said. ‘It is premature to ease property measures now.’ Global interest rates are still at historical lows and debt levels among highly leveraged households remain high, the MAS said.”
“London property stagnated in July, the first month with no growth since December 2012, as demand plunged and properties took longer to sell, Hometrack Ltd. said. The data add to evidence that measures to cool the market are working after groups including the Organization for Economic Cooperation and Development warned that a bubble could be forming. The Bank of England introduced measures in June to limit riskier mortgages and new rules came into force in April requiring tougher mortgage-affordability tests.”
“‘It is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market,’ said Richard Donnell, director of research at Hometrack. The slowdown is due ‘in part due to warnings from the Bank of England and others of a possible house-price bubble,’ he said.”
“Many mainstream economists argue that Dublin is not experiencing a house price bubble at present. They are wrong, just like they were wrong last time. Yesterday’s CSO data appears to show that the cost of buying a house has risen by a bubble-like 24pc in the capital over the past 12 months. The reality is there are already enough houses in the capital to put a roof over the heads of everybody currently looking for a home. It is only a matter of time before people begin selling in big numbers. The trend has already begun at the top end of the Dublin market. It will trickle down. It always does.”
“Rising prices are seductive for anybody who either owns a house outright or anybody in or close to negative equity. Most people probably want prices to keep rising for years against their better judgement. History and common sense tell us they won’t.”
“As the price of houses goes up and up, so the debate goes on: does Australia have a house price bubble? Only 20 years ago, household debt stood at about 60 per cent of income. Now, it’s 177 per cent, the highest it’s ever been. The damage is done. For proof, look at the Reserve Bank’s study, released last week, suggesting Australians would be financially better off renting rather than buying.”
“It could just be that this level of debt across the community has simply made a lot of Australians cranky and impatient, even if they do see the value of their homes galloping ahead week after week. Ten years ago, John Howard secured a stunning election win by asking voters ‘who do you trust to keep interest rates low?,’ Interest rates right now are even lower but many of us are so deep in debt we’re reluctant to trust anyone.”
“Given a second trial in Charlotte, former Beazer executive Michael Rand heard the same verdict: guilty. A federal court jury convicted Rand of securities fraud and other charges stemming from what prosecutors describe as a seven-year accounting conspiracy at the Atlanta-based construction giant. Rand was charged with manipulating earning reports to mislead investors and regulators, then lying about it to federal investigators and company auditors.”
“He also was accused of trying to block a federal probe into his company’s illegal home-mortgage practices that led to hundreds of Charlotte-area foreclosures. Rand and Beazer’s former chief accounting officer, faces a maximum penalty of 85 years in prison and a $1.25 million fine. Sentencing will occur at a later date.”
“The federal investigation that led to Rand’s indictment began in 2007. It followed a series of Observer stories focusing on Beazer practices that broke federal lending laws and put hundreds of Charlotte-area residents into homes they couldn’t afford. While the homebuilder amassed $389 million in profits in 2006, more than 13 percent of its Mecklenburg houses resulted in foreclosures, leaving behind wrecked families and ravished neighborhoods.”
“Despite the damage, Rand is one of only two Beazer figures who have faced charges. Janette Parker, the manager of Beazer’s mortgage office in Charlotte, pleaded guilty to three counts of mortgage fraud in 2011.”
“‘The banks are sitting on inventory. So they have the ability to push the [foreclosure] numbers forwards or backwards.’”
It’s good to be the king.
Amy, are you out there? Hustle up another mark and bring him to me so we can unload some of this housing inventory everyone seems to be complaining about and we’ll end up looking like the good guys plus make some big bucks while we are at it.
You do all the leg work and when you are finished give me a call on my cell (I’ll mostly likely be at the beach) then you and I and the mark can sit down and share a few grins among ourselves as he signs some dotted lines that I will be happy to present to him.
(You work, the mark works, and I reap: It does not get much better than this.)
HA is looking for work as a bird dog.
Encinitas, CA Housing Prices Crater 7% YoY At Peak Of Selling Season; Sellers Panic
http://www.movoto.com/encinitas-ca/market-trends/
BREAKING NEWS: NEED A JOB? THE GOV’T IS HIRING TROLLS
Read more at http://investmentwatchblog.com/breaking-news-need-a-job-the-govt-is-hiring-trolls/#m67eQJ1iHappSFdx.99
Excellent link.
“‘Some economists argue that the economy has just been bubble after bubble and that we’re doomed to repeat this cycle.’”
“Greenspan: ‘Well, I agree with that. I have come to the conclusion that bubbles, as I noted, are a function of human nature.’”
And money, don’t forget money. Bubbles are a function of human nature AND MONEY.
You cannot control human nature but you can control the money.
Buffett: “When you combine ignorance and borrowed money, the consequences can get interesting.”
Combine ZIRP money with a market that believes that Price equals Value and the consequences can get interesting.
And so here we are.
I was at a brewery yesterday and I heard an older gentleman bragging about his stock purchases to his young lady friend. Shoe shining moments are back.
That doesn’t scream “shoeshine boy,” it screams “wealthy older dude with arm candy.”
And Greenspan still arguing that the Fed has no role in this. It is almost impossible for him to be that stupid.
‘The Bank of England would be risking a dangerous housing bubble and a return to recession if it left interest rates at an all-time low for too long, its governor said on Wednesday.’
‘Mark Carney said rising housing prices could result in households taking on more mortgage debt to afford a new home, limiting their ability to spend money on other things and dragging the economy back into contraction.’
“The Bank is well aware that a prolonged period of historically low interest rates could encourage other risks to develop. In the UK, the biggest risks are associated with the housing market,” he said.’
“History shows that the British people do everything they can to pay their mortgages. That means cutting back deeply on expenditures when the unexpected happens. If a lot of people are highly indebted, that could tip the economy into recession.”
So we have the UK, Singapore, Indonesia, Malaysia, Hong Kong, Canada, New Zealand, Norway, China, even Dubai; all have central banks and governments at least trying to do something to reign in house prices. But in the US, nope. It’s out of our control - nothing can be done. What a joke.
‘Greenspan: ‘I do believe that central banks that believe they can quell bubbles are living in a state of unrealism.’
‘The spectre of a housing bubble has again been raised, this time by a commentator who previously dismissed such concerns.’
‘Economic commentator Christopher Joye, who famously debated economist Steve Keen in 2011, has argued in an article in The Australian Financial Review that Australia is in the midst of a housing bubble.’
‘Joye took on Keen in February of 2011 in a televised debate on Business Today, arguing against the existence of a housing bubble. But Joye has now claimed that Australian housing is overvalued.’
“When the Reserve Bank of Australia deploys its alternative assumption – which is the more modest annual house price growth rate since 2004 of about 4 per cent in nominal terms – its model finds that Australian homes are 19% overvalued.
“This just happens to be the same result you get if you compare the house price-to-income ratio to its average since 1993. Other credible benchmarks on which to base future house price appreciation – including household income growth, the returns consumers think they will get and the rate at which rents rise – similarly imply that housing is overvalued by between 20% and 30%,” Joye said.’
‘Joye said the Reserve Bank of Australia has dismissed the idea of a housing bubble because credit growth is low. He argued that this was a misconception on the part of the Reserve Bank.’
“This is muddle-headed for two reasons: first, housing credit growth is outpacing incomes, which is the key criterion; second, credit growth is only meaningful in respect of the light it sheds on changes in the level of household leverage and the probability of borrowers defaulting,” Joye said.’
central bankers are the new god’s heads
And Greenspan still arguing that the Fed has no role in this. It is almost impossible for him to be that stupid.
Wouldn’t it be far more stupid for him to admit it??
Perhaps equally as stupid. How about just shutting his slobbery trap? The old man needs to be put down.
The old man needs to be put down.
Death panels??!? (gasp!!)
“Greenspan: ‘Well, I agree with that. I have come to the conclusion that bubbles, as I noted, are a function of human nature. We don’t have enough observations, but my tentative hypothesis to what we’re dealing with is that both a necessary and sufficient condition for the emergence of a bubble is a protracted period of stable economic activity at low inflation. So it is a very difficult policy problem. I do believe that central banks that believe they can quell bubbles are living in a state of unrealism.’”
_____________________________/
Interesting theory Mr. Greenspan. My tentative hypothesis is that bubbles are caused by artificially low interest rates imposed by central bankers.
pols will always offer to change the value of things and fools will always believe them
bootycare, great sociaty etc…………………..
‘It doesn’t sound right at all — this concerted policy thrust on housing. Starting with the Budget, the Government and the Reserve Bank have unveiled five sops for the real estate sector: ₹7,060 crore for smart cities (whatever that means); tax relief for Real Estate Investment Trusts; tax rebate on the principal and interest payable on housing loans; lower investment threshold for FDI in real estate ‘townships’; and exempting loans for ‘affordable housing’ from CRR (cash reserve ratio) and SLR (statutory liquidity ratio) requirements.’
‘It is argued that this supply side push will create more housing stock and lower prices. That’s rich. Economic slowdown and rising unemployment over three years should have brought down housing prices by releasing unsold stock. But prices remain absurdly high, and policymakers do not seem to mind. How else can an ‘affordable’ house be priced at ₹40-50 lakh (RBI’s definition) in a country with a per capita monthly income of barely ₹6,500?’
‘There is a rhinoceros in the room that the RBI and Government do not want to see: a cabal, from the neighbourhood broker to the local politician and large corporates, has managed to contain inventory costs and hold up prices. In the absence of genuine demand, this is only possible with access to unaccounted money. A secondary factor is that banks have been chary of releasing houses of defaulters, fearing a crash that may affect its recoveries.’
‘Now, with cheaper credit, and the usual access to foreign and domestic black money, the cabal’s game of managing stocks and rigging the market becomes easier. Those seeking a house as a roof over their heads are pushed into the grey market of unauthorised colonies. For others, housing is an inflation-beating investment.’
‘There are two ways to prick this bubble: Squeeze access to funds by cracking down on round-tripping (for that, impose GAAR); and empower the income tax department to buy a property at its registered value where it is lower than the market price. Prices will fall to affordable levels. But which government is interested?’
‘Massachusetts foreclosure starts in June rose 99.1 percent when compared with foreclosure starts in June 2013, but last month’s number was 14.8 percent lower than the number for May 2014, the Warren Group reported.’
“The clean-up continues as lenders push through the backlog of delinquent mortgages,” Warren Group chief executive Timothy M. Warren Jr. said in a statement. “The number of petitions filed last year at this time was artificially low due to regulatory uncertainty regarding the proper procedures for taking foreclosure action.”
There was a poster here saying what’s happening today isn’t a bubble. Here’s some food for thought:
‘Miami real estate prices are soaring alongside new skyscrapers and high-rises, making downtown a pricey place to live. A recent study found that condominiums built during the 2003-2008 economic boom sold then for $230 per square foot. After a 75 percent increase, the same condos now sell for $400 per square foot.’
‘Units currently under construction can be sold for anywhere between $450 and $550 per square foot, and proposed units to be built in the future are worth $550 to $675 per square foot in pre-sales. Super-luxury units can even fetch $1,000 to $1,200 per square foot.’
‘An Argentine grocery magnate bought the last waterfront parcel last week for $125 million, five times the land’s worth of $25 million in 2006.’
OK, so here’s a test for those out there that insist it is subprime loans that cause a bubble. There’s no subprime loans on these Miami condos. It’s not fraud; heck, many aren’t even built yet.
So are these prices going to hold, even though way above 2006? From the article:
‘“It is getting to the point where I think a lot of people are priced out,” said Ryan Homan of Integra Realty Resources.’
“OK, so here’s a test for those out there that insist it is subprime loans that cause a bubble.”
IMO it’s the availability of money that causes a bubble. If the availability of money is from subprime loans then you could argue that the cause of the bubble is subprime loans but really subprime loans was just the vehicle that was used at the time to deliver to the market the supply of available money.
And then there’s people like this guy:
‘”An Argentine grocery magnate bought the last waterfront parcel last week for $125 million, five times the land’s worth of $25 million in 2006.’”
This “Argentine grocery magnate” had the money, had the available money, and his available money and his decisions (rational or not) is what drove the prices.
It may be nuts but nevertheless there it is.
really subprime loans was just the vehicle that was used at the time to deliver to the market the supply of available money ??
Supply of available money too whom ?? Answer is to people who had no ability to pay for the debt they were borrowing and with no skin in the game…
It may be nuts but nevertheless there it is ??
Yep…Just as “Nutty” as Balmer paying 1-Bil extra for a franchise in the NBA…No way of knowing who the buyers are for those Condo’s in Miami but I would suspect most are cash buyers from throughout the world…
The majority of foreclosures were prime loans.
Any numbers on percentage of total loans given that were “sub-prime?”
My guess is it was quite high. Technically the loan we defaulted on was sub-prime but we had the income and credit scores to qualify. Went no documentation for ease and being penalized a whopping 1/4 of a point.
Think modern day Joe Kennedys. All that money Americans spend on illegal drugs coming home to roost. The sons of these foreign shit birds will be our masters.
“subprime loans was just the vehicle that was used at the time to deliver to the market the supply of available money…”
In 2001 I was shopping for a house priced about 1 x my yearly earnings. The bank qualified me for a mortgage of 10 x my yearly earnings plus a HELOC to make the downpayment. It was to be a bridge loan to boot. I was shocked. I couldn’t have made the monthly payments, not and feed four teenagers and a couple of cars.
There are two sides to bubble prices, one to lend money that cannot be repaid and another to borrow it.
“There are two sides to bubble prices, one to lend money that cannot be repaid and another to borrow it.”
Do you think this is happening today?
My “holy sh*t” moment of the bubble years was probably in 2005 when I heard that the most popular loan in Silicon Valley (where there was supposedly money, income AND credit) was an Option ARM. Until that time, I thought the reason for the bubble prices farther inland was crazy lending combined with over-exuberance, but that Silicon Valley was just over-exuberance.
Turned out crazy lending had a place in both markets.
So, today, I’m looking for evidence of crazy lending anywhere and candidly, I’m not seeing it (Option ARM, Piggie Back Loans to provide down payments, NINJA loans, etc.).
I am seeing crazy cheap money for those who DO borrow, so there IS a different kind of crazy lending, but it’s crazy lending that generally won’t result in payment spikes (plenty of fixed rate borrowing out there).
‘I’m looking for evidence of crazy lending’
What mattered most for foreclosures was when the loan was made, not the type of loan.
‘One thing that has not changed is the footprint of toxic loans…Most of the loans going into default in the second quarter are still from the 2005-2007 period when the market was overheating.’
This is why we’ll see another huge wave of foreclosures. The loans that are still dominating were made near the peak. Borrowers find themselves underwater and stop making payments. ARM’s are a prevalent foreclosure feature, and they are spiking in California right now. And the economy is weaker now than in 2007.
What mattered most for foreclosures was when the loan was made, not the type of loan.
Totally correct, Ben—the fundamental reason that loans fail is because the market was over-PRICED when they written.
However, the fact that the whole market was overpriced had a lot to do with the aggregate lending that was occurring at the time. Money was too easily available to every idiot with a pulse, whether prime or sub-prime. I think of it like a boat going up-stream through locks; all of the boats rise as the locks fill, and the water filling the locks is analogous to the money flowing into the market.
That said, whether or not sub-prime has returned per se, there is certainly still plenty of money that is too easily available, flooding into the market. And that is by design.
The net result is that the market is again over-priced, and we will eventually reap the consequences.
I wouldn’t have believed back in 2006 that we could be back in the same spot in less than 8yrs. Unbelievable.
‘Money was too easily available to every idiot with a pulse, whether prime or sub-prime’
I think a lot about the comparisons of then and now these days. I’m not sure why the firs thing some think of is, “it’s not exactly like 2004, or as much like 2005″. Yes, summer 2014 is not like 2004. For instance, house prices are near or over the earlier peaks in some markets, but no very many really. Place like Vegas was way off. But we’ve seen a big jump in the last 18-24 months. Phoenix (depending on the market segment) may be up 71% in a little over two years. Somehow, not many people realize how nuts that is. Look at Florida; still drowning in foreclosures and we read there’s a shortage of houses, and bidding wars?
There’s a lot going on, currents and undercurrents and these cities and regions are not different in many ways. What’s at the heart of the bubble in 2014? What’s really driving it? Money supply. There has been an unprecedented amount of cash created in the past 6 years. Like the Argentinian guy buying up the lot in Miami for way more than the last transaction; money is pouring around the world, driving up prices of everything from New Zealand dairy farms to Picasso’s. I happen to believe wealth cannot be printed. That fiat money will go away somehow. And what happens when $30 trillion goes away? That’s a question I wasn’t contemplating in 2004.
“And the economy is weaker now than in 2007.”
+1 Exactly.
“However, the fact that the whole market was overpriced had a lot to do with the aggregate lending that was occurring at the time.”
You got it backwards.
It was the cessation of traditional underwriting standards in favor of pervasively insane lending standards (e.g. handing over $700,000+ loans to Central Valley strawberry picker households earning $30,000 a year) that led to the whole market getting overpriced.
“For instance, house prices are near or over the earlier peaks in some markets, but not very many really.”
I’ve been looking at the recent sale prices around my parent’s area in the Midwest. We are talking in many cases of pricing below $25/sq ft for livable housing. (Albeit my mom mentioned a couple of recent shooting incidents in our area which would never have occurred forty years ago.)
Maybe it is time for a demographic tsumami of Californians facing $300/sq ft housing prices to flood inland?
Rental Watch: I am seeing crazy cheap money for those who DO borrow, so there IS a different kind of crazy lending, but it’s crazy lending that generally won’t result in payment spikes (plenty of fixed rate borrowing out there).
There’s little to no private financing in the mortgage market; there’s no opportunity for private profit given the current prices and interest rates. It’s purely driven by government (USDA, VA, FHA, GSEs) and the central bank serving as a front for the FIRE sector. The government is assuming the vast amount of risk in US mortgage financing.
I think this is an unusual thing. Can it go on forever? Or will the financial side effects and/or political effects make it untenable?
There is dodgy financing out there, most definitely - it underpins the market.
I think people are purchasing here because they believe they will lose less of their capital in the good old United States.
Besides it’s always nice to talk about your condo in the Miami area with friends and GFs.
Prices hold??? It’s difficult to believe that they won’t collapse because of the extreme prices and at some point you have to run out of greater fools. But who would’ve thought you could find this amount of greater fools??? i’m shocked that this is happening again so soon.
I think a great part of it has to do with the energy security that people throughout the world believe that the U.S. has due to shale oil and shale gas. Without the high paying jobs created in the oil patch and the reduction in oil import we would not have slow growth, we would have a recession. The other “legs” of this “recovery” are very wobbly. Home building when people cannot afford new homes and sub-prime auto loans creating demand for autos when everyone knows that when the first auto repair needs to be made, the payments will stop.
However, I think even the oil sector is starting to slow down. I am not seeing the same growth in oil rigs drilling and the year on year production figures are up ‘only” one million barrels not the 1.2 million they were just a few months ago. Of course, this has been predicted, with the decline rate in oil shale wells it takes more and more drilling just to stay flat. Since Obama will not open the federal lands that actually have oil on them only the marginal lands where no one wants to drill. I see by next year we will only be up 800,000 barrels or less.
Since Obama will not open the federal lands that actually have oil on them ??
Obama, Obama, Blah Blah Blah….
Why didn’t Bush open up the federal lands ?? Why didn’t Bush Drill-Baby-Drill ?? Your Hypocrisy rearing its ugly head again A-Dan…
Bush opened up all the federal lands that Congress would allow. However, I suspect he did not try harder exactly because he is a corporate globalist. The big oil companies do not want an oil surplus. Reagan was not doing the will of big oil companies when he pushed energy production so high he collapsed the prices. He was helping the consumer. I always have and always will put Bush I, Bush II, Clinton and Obama in the same globalist camp. All of them wanted the U.S. to create the demand but not provide the supply of manufacturing goods. This is all part of their plan to create one world government.
Lots of hydrocarbons off CA coast. They are drilling all over the hills of Moorpark CA I see the rigs going up and the tankers driving around
SANTA BARBARA CHANNEL, Calif. -
A large oil and gas seep from a natural source in the Santa Barbara Channel, is no longer producing the widespread release it was known for.
In the 1980’s the area was popping with gas bubbles from the underwater source. There was also clear evidence of oil in the water with brown streaks and globs at the surface unless they were broken up by wave action.
On a tour of the area Thursday, the same site only had a small surface release of natural gas and oil was stretched out in barely noticeable streaks. There was no obvious odor from the release. In past years, passengers on a boat sitting in the location too long would report impacts, and headaches.
The trip was sponsored by the Western States Petroleum Association and the SOS (Stop Oil Seeps) California organization from Santa Barbara.
Steve Greig from Venoco Oil, which operates Platform Holly near the seep site and other facilities in the area said the natural releases have been noticeably reduced in the last year. He believes production from the nearby platform has taken pressure off the seep zone.
It’s also a position SOS has been researching for several years.
“This was the second largest natural seepage area in the world,” said Greig. “Because of the production from Platform Holly a lot of that seepage has been reduced.”
I’ve spent a lot of time in Latin America and I’ve never heard anyone talking about a Miami real estate investment, although admittedly I don’t move in the same circles as the referenced Argentine grocery magnate. Usually the plan is to move to Miami on a permanent basis.
‘While some aspects of the United States housing market are returning to “normal”, at least according to the mainstream media, as you will see, certain key aspects are nowhere near what would be expected this far into the post-recessional “recovery”, particularly when one puts the current data into a long-term historical perspective.’
‘Here is a graph showing the number of new single family homes sold in the United States by month, seasonally adjusted to an annual rate, since 1963 when baby boomers were still wearing short pants’
‘As you can see on this graph, the number of new single family homes for sale in the United States is at almost the lowest level since before Neil Armstrong took his first steps on the surface of the moon’
‘Lastly, here is a graph showing the number of new houses that have been completed and are for sale (also known as spec built homes) In May 2014, there were only 46,000 completed new homes that were for sale. This is less than one-quarter of the 199,000 completed homes that were for sale in January 2008 and is well below levels seen going all the way back to 1973 when there were between 80,000 and 104,000 completed units for sale and the population of the United States was only 212 million, one-third smaller than it is today.’
‘In May 2014, 0.47 percent of all American workers were employed in residential construction. This is the lowest level since 1995 and is barely above the post-Great Recession low point of 0.425 percent.’
‘When we read or hear about the improvements U.S. housing market from the mainstream media, particularly when current data is being compared to the data from the depths of the Great Recession, we need to look at the data over the long-term. When we see that the housing market is now at levels last seen in the 1970s, 1980s and 1990s when the population of the United States was far lower than it is now, we get an accurate perspective of the ongoing housing market crisis, particularly when we keep in mind the historically unprecedented monetary policy actions of the Federal Reserve.’
From above, the guy in Australia says:
“Interest rates right now are even lower but many of us are so deep in debt we’re reluctant to trust anyone.”
Yep.
Many people in debt = Lack of sound decision makers
I don’t know which comes first, the misguided idea that going into debt is a good idea, or the lack of sound decision making ability base done on the very idea of being in so much debt.
I’m seeing LOTS of people - in and out of business = who simply react rather than think. People living on the edge of a knife because of the 24/7 pressure of making good on personal debt they can barely handle, if at all.
That’s good analysis. And it does precisely zero good except to make the educated person very frustrated. It’s all got to go wrong, since that’s what people do: Follow the trend and make everything worse over time.
In short, there’s only one way to keep the money machine working: By doing worse and worse things. Our culture is borrowing more and more from the future in order to avoid corrective actions (i.e. taking your bitter medicine) today.
I just can’t wait for China and India to try to consume energy, products and services at even 1/3 the levels we in the West do. It will be like adding another USA, Europe and Japan to the world’s consumption budget. Pollution can only skyrocket. CO2 levels will be insane. Temperature spikes and severe weather will become a standard issue, which will wreck more and more Human infrastructure on all the world’s coasts. And there’s not stopping it, since it’s our animal nature to just let it happen.
Glad to see Sir Alan found religion in his retirement years.
‘Here’s a new wrinkle in this post-bubble housing market. It’s no surprise that a nicely finished four-bedroom, two-bathroom single family home in Chicago’s North Center neighborhood can be listed on the market for $669,000. A similar home in Austin on the city’s West Side could be listed at $179,000.’
‘Geoff Smith with DePaul Housing Institute says in this recovery, hot neighborhoods like Lincoln Park are reaching sale prices beyond their original peak. “Really, the price increase you’re seeing in these stronger markets are more a function of supply and demand dynamics and access to credit. To the extent that [credit] is available is going to be more abundant in those areas because borrowers have stronger financial conditions,” he said.’
‘So a nearly half a million dollar price difference from one neighborhood to the next is likely based a lot on location.’
‘It could actually be more difficult for a middle class family to get a bank loan to buy the cheaper house in the distressed neighborhood. This happened to my friend Leila Noelliste. Her middle class family wanted to put down roots in North Lawndale on the West Side of the city.’
‘Noelliste wasn’t making a cash purchase. She offered $182,000 for a two- flat in the neighborhood. “When we got it inspected, it was really sturdy. Good foundation, good roof, didn’t need a lot of repairs,” she said. “There were two sets of tenants living in it. It was just a good building on a good block.”
‘She had plans for her family to live in one unit while renting out the other. But those plans came to a halt because of the home’s value –its appraisal. “It was appraised for like in the 140s. And we were shocked. I mean, I know this isn’t a great area, but that just seemed really, really low,” she said.’
‘The bank would only finance a loan for the appraised amount. Noelliste and her husband Norman Baldwin didn’t have the out of pocket money to pay the extra $40,000 on top of a down payment, so they had to move on.’
‘A less than 10-minute drive brings you to the Near West Side, where Leila ended up buying a home. “Upstairs we have a master bedroom with a walk-in closet, with a master bathroom. And then we have two smaller bedrooms. One of the bedrooms we use as my office-guest room. And the other room, my son is in. So it’s a beautiful home,” Noelliste said.’
‘They offered $285,000 for the place, and it was accepted. “My credit was good, Norm’s credit was good. We had a lot in our savings. All it was [the lower appraisal on the two-flat] was the value of the house. That’s all it boiled down to. Which is baffling, very, very frustrating,” she said.’
‘Here’s a family now living in a $285,000 house, but couldn’t get the financing for a place $100,000 cheaper in a less desirable neighborhood.’
They had “a lot” in their savings, but not the extra $40k to buy the cheaper place. Fact check.
Indeed. Realtors are liars.
“She had plans for her family to live in one unit while renting out the other” “‘They offered $285,000 for the place, and it was accepted.”
_
These Ding Dongs are going to be invoiced for double the mortgage payment on the larger loan compared to what would have been the smaller loan, plus not having any rental income coming in like they would have received from renting 1/2 of the lower priced shack.
_
I see future foreclosure at bat, and FHA bailout on deck from funding this madness.
_
Neil, please pass the popcorn…
austin has growth and low taxes -chitown has neither
Ben - Austin is one of those areas that folks with means are moving out of here in Chicago - reason - look at the latest daily charts on the number or random gun shootings and gang incidents in these neighborhoods. Nobody with means desires to live in a war zone.
or tax zone
see howmoneywalks.com
‘The real estate market has been plummeting in Wenzhou in eastern China’s Zhejiang province, leading to a growing number of non-performing loans and the rising abandonment of properties by homeowners.’
‘As of July 2013, the number of bad loans recorded at 412.77 million yuan (US$66.95 million) and the number of abandoned properties reached 595 as homeowners found themselves unable to pay off their debt.’
‘As of March this year, non-performing loans at banks in Wenzhou stood at 33.13 billion yuan (US$5.33 billion), with the bad loan ratio pegged at 4.52%, which posted an increase from 1.14 billion yuan (US$183.7 million) and 0.12 percentage points at the beginning of this year.’
‘Zhang stated that most of the bad loans were concentrated in the real estate market. When housing prices slip, it is very difficult to stimulate the circulation of capital in the sector.’
‘As Wenzhou’s real estate slides further into oblivion, the sinkhole is starting to swallow the city’s enterprises, reports the Guangzhou-based 21st Century Business Herald.’
‘Most enterprises in Wenzhou had investments in real estate before the city’s housing prices took the lead as the most devastated market in the whole country. Now investments in the city’s private enterprises have been all but rendered valueless by the city’s floundering real estate. Several well-known enterprises are reportedly fleeing the city because their financial support was cut off and prominent companies have already been steadily draining away since 2011.’
‘As real estate toppled, the number of cases of companies citing financial difficulty began to increase drastically, particularly after Sept. 2011. Total bank loans in the amounted to 1 billion yuan (US$161 million) at that time, but increased to 4 billion (US$645.06 million) in just 3 months. By the end of 2013, it had reached 52 billion yuan (US$8.385 billion).’
‘Real estate investment was once the main source of revenue for Xuteng, one of many garment companies in Wenzhou. It ended up being the final kick that catapulted the company out when the market collapsed. The owner has reportedly disappeared since May, according to the report.’
‘The real estate market has been plummeting in Wenzhou in eastern China’s Zhejiang province, leading to a growing number of non-performing loans and the rising abandonment of properties by homeowners.’
Cue up ABQDan to lecture us on why this has no relevance for the Chinese economic miracle.
Dan tells us that all the people have huge equity in their houses, and in their second houses. Dan tells us that the government has practically no debt. So, it is the local businesses that owe almost all the $25 Trillion. They invested it in Real Estate!
‘Many local governments in China have begun to collect related taxes from real estate agencies, hounding them to pay after the government crackdown on the manipulation of property prices that left many in debt, reports the Beijing-based China Times.’
‘The latest figures published by the Ministry of Finance revealed that in 2013, 39.1% of the government’s tax income came from property deals but only amounted to 6.6% currently this year.’
“It is our concern that once these property agencies go bankrupt, the tax money they owe will become bad debt for good,” said Li Quan, a spokesman for Guangdong government’s Tax Department. “We have more than 100 subject companies and individuals to go after this month. They are all property agencies or agents.”
‘China has launched an operation to hunt down corrupt officials and suspects in economic crimes who have fled the county. The operation, dubbed Fox Hunt 2014, is intended to block the last route of retreat for corrupt officials at a time when China’s major crackdown on graft has already narrowed the space for abuse of power.’
‘Corrupt Chinese officials have been fleeing overseas since the late 1980s. Although the number of fugitives and the sums they took with them has never been publicized, experts believe the trend has already caused a large amount of money to flow out of China, especially as most of it is acquired by illegal means such as taking bribes or embezzling public funds.’
“They have caused a great economic loss to our country, and wasted our taxpayers’ money,” said Liu Dong, deputy director of the Ministry of Public Security’s (MPS) Economic Crime Investigation Department. Wherever they try to escape and hide, “we will hunt them down and bring them to justice,” Liu vowed.’
‘Since 2008, more than 730 suspects in major economic criminal cases have been seized and brought back to China from 54 nations and regions.’
‘In 2013, 762 people suspected of criminality in taking advantage of their positions of power were brought back to China from abroad, with 10.14 billion yuan confiscated, according to the Supreme People’s Procuratorate.’
Australian, Canadian, and American realtors and developers will lobby their respective legislatures to keep those people from being extradited. Housing prices depend on it!
They don’t have an extradition treaty with the US.
If these Chinese people are illegal immigrants, and the Chinese government were to request that they be deported, then an extradition treaty may not be necessary. Then again, since these corrupt criminals have so much money, the United States might decide to keep them around.
Seems that China is even more draconian than America’s terrorist group, the IRS. IRS catches you, you go to prison in the high class way. China catches you, they execute you.
‘For years now the terms “Chinese housing” and “bubble” were invariably uttered together; sometimes with exclamation marks and sometimes with questions marks. In 2014 another word has been added: burst.’
“As for the housing market, the average estimate of a price correction appears to be 20–30 percent over a two-year timeframe,” Junheng Li of JL Warren Capital writes in a note.’
‘A correction roughly similar in size of the price decline the United States national housing index suffered after its bubble popped in 2006. Just by looking at the numbers, however, it appears that China’s bubble is even bigger than all previous real estate bubbles.’
‘HSBC compared the total value of residential housing to total GDP and found that China has surpassed the level Japan saw before its stock and real estate markets collapsed in 1990.’
‘The Chinese authorities have reacted by relaxing housing buying restrictions in a few locales. Junheng Li thinks this is too little too late. “In areas when purchasing restrictions are relaxed, demand has not caught up materially such as Tianjin,” she writes.’
“During a downturn, homebuyers lose faith in the continued rise of house prices. When confidence collapses, there is nothing the government can do to boost fundamental demand for expensive properties.”
I accept that the 20 to 30% number is probably correct. However, that does not exceed the 30% down payment made by Chinese for their first home and certainly is less than the 60% made for subsequent homes. Additionally, since the average loan length is just ten years, they pay almost ten percent of their mortgages off every year, thus the first time home buyer will have almost another 14% equity in the mortgage after two years.
Once again, I do not think the deflating of housing bubbles necessarily leads to recessions. That is what we have been sold in this country to justify bailing out the GSs of finances. I am actually surprised that this board in general is implicitly justifying programs like the first time home buyer credits, financial repression etc. since the only way they can be justified is if allowing house prices to reach their real market price is bad for the economy. I think it is an economic positive for people to spend less on housing, a consumptive item, and have more to invest in productive goods.
“However,…”
Yet another rebuttal?
“I do not think the deflating of housing bubbles necessarily leads to recessions.”
Correct.
Here is some great recommended background reading and video viewing for you, available free online. Please get back to us with your comments after you finish self-educating.
WORLD ECONOMIC AND FINANCIAL SURVEYS
World Economic Outlook
Growth and Institutions
April 2003
A Survey by the Staff of the International Monetary Fund
…
Chapter II.
352k pdf file When Bubbles Burst
Real and Financial Effects of Bursting Asset Price Bubbles
Corporate Fragility and Investment: What’s Different About the Recent Bubble?
Appendix 2.1. Identifying Asset Price Booms and Busts
References
Boxes
2.1 A Historical Perspective on Booms, Busts, and Recessions
2.2 Corporate Financial Conditions and the Severity of U.S. Recessions
2.3 How Do Balance Sheet Vulnerabilities Affect Investment?
Tables
2.1 Equity and Housing Price Bear Markets in Industrial Countries
2.2 Relative Contributions to Output Growth Before and After Asset Price Busts
Figures
2.1 Equity and Housing Price Declines
2.2 Comparing Cross-Border Synchronization
2.3 Equity and Housing Price Busts: Macroeconomic Associations
2.4 Equity and Housing Price Busts: Financial Associations
2.5 Equity and Housing Price Busts: Implications for Banks
2.6 The Recent Equity Price Bust in Perspective
2.7 Corporate Financial Indicators Over the Bubble
2.8 Cross-Sectoral Dispersion of Market-to-Book-Value Ratio
2.9 Corporate Investment Over a Bubble
2.10 United States: Corporate Financial Indicators
2.11 Euro Area: Corporate Financial Indicators
2.12 Corporate Leverage in Advanced Countries
2.13 Selected Corporate Financial Indicators in Advanced Countries
See Also:
Video Webcast: The Real and Financial Effects of Bursting Asset Price Bubbles By Thomas Helbling and Marco Terrones Senior Economists, World Economic Studies Division (first essay in Chapter II)
Video Webcast: Corporate Fragility and Investment: What’s Different About the Recent Bubble? By Luis Catão (Senior Economist, World Economic Studies Division (second essay in Chapter II)
Are you talking about the down payment that Chinese people make on the mortgages for their leases?
Like the Fed, I don’t expect you to recognize the Chinese bubble collapse until everyone else plainly sees it through the rear view mirror, at which point you will claim you saw it all along.
‘Although suicide is the fifth-leading cause of death in China, it has become the leading cause of death among young people. It is estimated that 287,000 people –- or one every two minutes — commit suicide every year in China.’
‘Ten times that number attempt it — but are unsuccessful, according to the Chinese Center for Disease Control and Prevention. China now has one of the highest suicide rates in the world.’
Check out the (banned in China) film “A Touch of Sin”.
http://www.economist.com/news/china/21605942-first-two-articles-chinas-suicide-rate-looks-effect-urbanisation-back
How does the high suicide rate among China’s youth fit in with the economic growth miracle?
The “ant tribes” - well-educated young people forced to live in squalid conditions and work soul-killing low-wage jobs due to a lack of opportunity in China’s crony-capitalist system - have no future under the current system. Right now, they’re depressed. Someday soon, they might become very, very pissed off instead. And when they do, the corrupt Politburo would do well to read Mao’s little red book and Chinese history and realize what happens when rulers lose their mandate under heaven.
Excerpt from link that will soon post from a recent Economist magazine article:
The most dramatic shift has been in the figures for rural women under 35. Their suicide rate appears to have dropped by as much as 90%. The Lancet study in 2002 estimated 37.8 per 100,000 of this age group committed suicide annually in 1995-99. The new study says this declined to just over three per 100,000 in 2011. Another study of suicides, covering 20 years in one province, Shandong, found a decline of 95% among rural women under 35, to 2.6 suicides per 100,000 in 2010—and a 68% drop in suicides among all rural women.
Scholars suspect that the number of suicides is underreported in official figures (the official suicide rate nationally was 6.9 per 100,000 in 2012) and they make adjustments for that in their calculations. But in several studies, as well as in official data, the long-term decline in suicides has been marked across the spectrum, in rural and urban areas and among men and women from almost all age groups. The only notable exception is the suicide rate among the elderly, which declined overall but has crept back up in recent years, a worrying trend in a rapidly ageing society.
Another excerpt and proof that the best social program is a good paying job in the private sector:
Paul Yip, director of the Centre for Suicide Research and Prevention at the University of Hong Kong and a co-author of the recent study, says no country has ever achieved such a rapid decline in suicides. And yet, experts say, China has done it without a significant improvement in mental-health services—and without any national publicity effort to lower suicides.
Interesting title for a magazine so are they pro-globalist or anti-globalist in their editorial policy in general?
I watched the film and highly recommend it, disturbing and violent as it is. It consists of four short stories; after first one, you’ll see why the film is banned in China.
With such bright futures and all, why would Chinese people be offing themselves?
‘Following a sharp drop in recent years, the assessed value of homes in Elmore County continued to show signs of recovery over the past year with the value of commercial businesses showing similar signs of stabilizing.’
‘Figures released recently by the Elmore County Assessors Office showed home property values fell by 1.5 percent in 2013, which represents a slower rate of decline since the housing market crash in 2008.’
‘During the county’s assessment in 2013, property values had fallen by less than a half percent compared to a 5 percent drop the year prior. “The values haven’t started increasing yet,” Fisher warned regarding overall property values across the county.’
‘However, the county is seeing things continuing to stabilize, in part, because the number of “long-arm” sales are starting to fall, Fisher added. This refers to homes that either fell into foreclosure or sold well below their estimated market value.’
‘In 2013, nearly 40 percent of home sales in the county fell into this “distressed” category. The year prior, that number stood at 52 percent.’
‘While older homes were still selling well below their appraised value, the outlook on newer homes looked more promising, Fisher said. The appraisals are starting to match the asking price” of some homes sold in the past year, according to Fisher.’
‘A handsome, beautifully executed mistake.’
‘That’s what developer Scott Kimball sees in the gleaming glass of the 17-story Aspen Lofts he built in 2008. The 75 condominiums with a combined sale price of $38 million achieved the modern, high-end urban look Kimball was after. Units ranged from $160,000 studios to sprawling, 4,100-square foot, $3.5 million penthouses on the top floors. Located on Front Street between 8th and 9th streets and overlooking the city and Foothills, Kimball thought he’d found the perfect Downtown Boise site.’
‘But the recession struck in 2008 when The Aspen Lofts and a handful of other condo projects were under construction. Sales, which had brought in $13 million, went cold. Kimball auctioned eight units in 2010 at a 25 percent discount to reach half-capacity. The final condo - a penthouse - sold last December, but Kimball said he still took a seven-figure loss on the building.’
“I was proud of the project, and I stuck with it until the end and made sure it sold out,” he said. “I kept my credit rating intact.”
‘Some condos never sold… So Boise developers have been hesitant to build new condos, and bankers have been gun-shy about financing them. That’s finally changing, said Bryant Forrester, a consultant and salesman of Downtown condos and townhouses for Century 21 Magellan Realty. Projects to build 30 condos at 10th and Grove streets and up to 60 units at 9th and River streets are in planning stages.’
‘Only about 20 of the Downtown area’s 271 condos are for sale, and the market is hungry for more, said Forrester, who received four written offers on condo listings over the Independence Day weekend. “Our city is way underserved on housing when compared to the ratio of jobs,” he said. “The demand is there.”
‘Bankers remain skittish about financing condo projects in part because they are expensive to build and to buy, said Rob Perez, president and CEO of Northwest Bank.’
‘Downtown condos sell for between $250 and $400 per square foot, compared with the $110 or $125 available in many single-family homes, Perez said. In surveys, Boiseans say they like the location and transportation benefits condos offer, he said. But they don’t want to give up the Explorers they drive to McCall for camping trips, and they aren’t willing to pay condo prices, he said. That makes him skeptical as a lender.’
“Given the historic challenge of delivering this sort of unit, I’d want to make sure that the demand can be firmed up,” Perez said. “That usually means prequalification letters from buyers.”
“Price is a serious concern,” Forrester said. “We need to find ways to build a marketable product we can sell to the average workforce housing - to the schoolteacher, the firefighter. If I could sell a condo for $200,000, that would work.”
‘That price isn’t realistic, Felker said. “I don’t think so, not with the current land and construction costs,” he said. “If we could have priced it there, we would have.”
downtown boise? sounds like “government workers”
army intel etc…………
‘Monthly rents for condo-apartments in Canada’s most populous city have softened, according to data from the Toronto Real Estate Board. Some analysts and economists predicted last fall that Toronto rents would start falling amid a growing number of completed condo buildings. A report by Veritas Investment Research said in November that the rental market appeared to be at an inflection point.’
“We believe recent claims of robust rental market increases should be taken with a grain of salt,” the Veritas report said.’
‘The market is being watched not only by renters and landlords. Veritas outlined a potential scenario in which lower rents could cause a large number of condo-owners who are holding the properties as investments to sell, causing a decline in condo prices that could trickle into the broader housing market.’
Reagan wasn’t helping the consumer as a goal. He was destroying the Soviet Union.
I made money under Regan- Bama,not so much
Yes, that’s because offshoring didn’t start until Reagan started it. It’s been downhill since then.
I made more money under Bama than under any president and started my career under Reagan. I don’t credit or blame any president.
‘Why don’t they come 15 minutes up the highway’
It is called steering in RE lingo ( almost like red lining) and it is highly against the law. To prove this I went out with a RE agent and she drove me in circles to see the property they wanted me to view. I ask what is up the road she said nothing that would suit you?
When I insisted she showed me three homes of much better quality and market value.
She never raised a question such as these are betters buys, I told her to take me back to her office and didn’t appreciate the steer to her agency listings she was very nervous when I drove off.
Back in 2006, when my wife and I first started looking for a house to rent, we contacted a realtor who doubled as a leasing agent for a house we wanted to see. He steered us to a another house … that he owned. Yeah, right!
‘Why don’t they come 15 minutes up the highway’
That is a beautiful area (Fieldston, in Riverdale, in the Bronx.) When we were kids we drove up there from our neighborhood in northern Manhattan just to look at the houses. They have a private security patrol who were on us right away to ask us what we were doing there. It’s not private, just regular streets in the Bronx, but they did their best to hurry us out of there. I heard George Harrison lived there for a while.
Redlining is when lenders won’t give loans in certain areas.
1) None of the recent bubbles have been preceded by protracted periods of stable economic activity.
2) I just downloaded the JTF extension. I feel weird now; everything looks different.
Are you not counting the dotcom bubble (a different kind of asset bubble)?
The chutzpah of this reptile boggles the mind.
http://www.zerohedge.com/news/2014-07-25/please-dont-blame-fed-alan-greenspan-says-bubbles-are-function-human-nature
“Despite the damage, Rand is one of only two Beazer figures who have faced charges. Janette Parker, the manager of Beazer’s mortgage office in Charlotte, pleaded guilty to three counts of mortgage fraud in 2011.”
Take note fraudsters.
Oh dear.
‘House prices are falling in parts of London for the first time in two years as the capital’s “sealed bid frenzy” comes to an abrupt halt, a report says today.’
‘Across London as a whole, prices did not rise at all in July and fell “in localised markets where demand has cooled the most”, according to property data firm Hometrack. The biggest falls have been for larger properties in W and SW postcodes in central London, according to Hometrack’s director of research, Richard Donnell.’
‘He said buyers were being far more cautious after a long run of post-recession price rises that reached a peak earlier this year. He said: “The housing market runs in cycles and it has been such a strong upward trend everyone is now thinking, ‘it can’t keep heading for the stratosphere. Do I want to get into a sealed bid situation and pay 15 per cent more than I was planning to?’”
‘The slowdown in central London has been exacerbated by a “glut” of properties on the market priced at more than £2 million.’
‘Property buying agency Black Brick said there are currently 1,968 properties with “For Sale” boards priced at £2million and above, more with the 1,657 properties sold in that bracket in the whole of 2013.’
‘Managing partner Camilla Dell said: “It has started to become more of a buyers’ market for the first time in a long time, particularly in the super prime upper end of the market - £10 million and above.’
“Indeed, we’re currently in the midst of a search for a client looking for a house in Mayfair or Belgravia from £20 million up to £100 million and there are well over 20 houses for sale in this price range. If there are sanctions against Russia which mean that certain Russians might be exiled from the UK, this could create even more supply on the super prime end.’
“Many high end developers are now struggling to find buyers for their trophy mansions, and are having to become more realistic with their asking prices. As such, I believe we could see significant price drops at the super prime end of the market. Indeed, one house in Mayfair has already had a significant price reduction from £120 million down to £95 million.”
Similarly, six to nine months ago, China was going up, up, up. (It was actually already cracking, but anyway). Now people are trashing sales offices over their loses.
“Now people are trashing sales offices over their loses.”
Loosers!
Adult temper tantrums upset bubbles don’t go up forever. That includes the government bubble. We’re going to get small government again at the federal level. California eventually will have to get smaller as well.
It’s all borrowed money incentivized using trickery to get the target to walk through the door. It won’t be repaid because it can’t be repaid.
Would you lend money to any of these fools? Even a penny?