December 14, 2014

A Lot Of Profit Which Resulted In Unsold Stock

An international desk clearing post for the weekend, starting in California. “On a reality TV show about Bay Area real estate, he was Mr. Flip It. But now Todd Hill, of Los Gatos, stands accused in a lawsuit of defrauding his top investor of $6 million. The concerns stem from a civil lawsuit by Woodside developer Max Keech, who claims Hill defrauded him by siphoning off money meant to rehab old houses. Keech said they bought between 160 and 170 homes, many of which were foreclosed properties sold at sheriff’s sales. Hill, who still identifies himself on his Facebook page as an ‘actor and director,’ was one of the show’s stars. In its trailer, he’s seen on courthouse steps reaching out with a wad of bills. In another scene, he saunters up to a competing team looking at a house up for auction and says, ‘What are you doing here? You can’t afford this.’”

“In one shot, he seems to summarize the risks of house flipping in just a few words: ‘I don’t want to go broke.’”

“When George Brown went to sell his ninth floor condo in May, he expected to have a deal within 30 to 60 days. He finally sold it earlier this month. ‘I guess I’ve been in the business long enough to know sometimes things go and sometimes they don’t,’ he said. There was also an unusually high number of condos on the market, he said.”

“His case is an extreme example of the glut of homes on the market slowing sales, according to the ReMax Housing Market Outlook report. Larry Stewart, who is Brown’s agent and owner of the Saskatoon branch of ReMax, said the city ‘has serviced an amazing amount of land — almost too much, I think. There’s been a lot of profit in construction in the past five years.’ So much profit, in fact, that the roughly 200 small builders in the city have been putting up houses on spec, which has resulted in unsold stock.”

“Slashed prices on a large-scale apartment building project in Shenzhen by East Pacific Group, a leading developer in the city, are part of a growing trend to spur demand in China’s flagging realty market, according to Guangzhou’s Time Weekly. Prices for the project, one of the largest housing projects in the city in recent years, have dropped to 40,000 yuan/square meter (US$6,500)from the original 70,000 yuan/square meter (US$11,300). The reduced price is comparable to houses built 10 years ago in the neighborhood.”

“That a leading property developer and its chairman Huang Chubiao, long dubbed by Hong Kong media as the ‘Li Ka-shing of Shenzhen,’ would take such a step is a reflection of the market trend, said the report. Huang is again being picked apart by the news, under such names as the ‘realty king of Shenzhen’ for the huge amount of idle land the group owns in the city.”

“The construction industry has expressed fears over the Central Bank’s new loan-to-value and loan-to-income requirements. Strict new mortgage lending measures will play havoc with building at both ends - first by eliminating a huge tranche of buyers and second, by causing banks and private financiers to withdraw promised capital and finance for big schemes. First time buyers in Dublin will now have to save an average of €70,000 to buy a €350,000 home and most builders and their financiers believe this is too big an ask for young couples.”

“One source added: ‘In most cases, those schemes which have gone ahead have only just got funding by the skin of their teeth.’ The source said that if the measures went ahead ‘almost all’ multi-unit schemes currently being planned would be postponed or curtailed altogether.”

“As oil prices suffered more sickening blows this week, and iron ore and coal languish, only one force stands between Australia and a serious recession — Chinese investment in our residential property market. I’ve already looked at some of the local and global side effects of the oil slump, so today it’s appropriate to note that the Chinese boost to investment in real estate is a global phenomenon. Whether it be London, New York, Melbourne or Sydney, housing markets have never seen anything like the current rash of Chinese and Asian buying.”

“An enormous portion of the Chinese investment comes via new developments and the Chinese developers behind the big Sydney and Melbourne apartment projects appear to be working on an expected return of about half that required by their Australian counterparts. Accordingly, many Australian developers sell the land and approvals to the Chinese and let them go to the next stage. That’s why Chinese are dominating new developments, particularly in Melbourne where there is a high likelihood of major oversupply of one or and two bedroom apartments.”

“At the moment, some of the Chinese investors are planning a slowdown for the early months of 2015 but this will be temporary and they will be back with force. To put it simply, during the middle of the mining investment boom we did not need Chinese investment, but now we do.”

“Presented in snappy 12-to 15-minute segments, Ultra Rich Asian Girls puts a lens on Chelsea Jiang and three female contemporaries, as they swan about their adopted city. A recent episode saw them leave Vancouver for a sumptuous island cottage owned by one of the women’s family. The four women feasted on B.C. crab and argued over what to look for in a potential husband. Forget handsome but poor, declared Ms. Jiang. ‘Ugly rich guys can use their wealth to get plastic surgery and become handsome,’ she said. ‘Hot and rich.’”

“Politicians understand there’s an affordability crisis in Vancouver but most are loath to discuss the role of foreign capital, particularly from China. Ian Young, a reporter who is ethnically Chinese, moved to Vancouver five years ago, and writes frequently about the local housing market and the impact that mainland Chinese money has on the city. ‘It’s accepted, widely understood that mainland Chinese money is a driving force behind the Vancouver property market,’ says Mr. Young. ‘There’s a reluctance to discuss it’ outside of Chinese communities, he says, because people are afraid that if they do, they’ll be branded as ‘racist.’”

“The first time Chun Yang saw Tacoma, it reminded him of his hometown of Shanghai. Yang already has built a twin-tower hotel in his hometown. He wants Tacoma to be next. Congress approved the EB-5 program in 1990 to create jobs in America by encouraging foreign capital investment. Immigrants whose investment of $1 million leads to the creation of 10 direct full-time jobs can receive a permanent visa. At 10 jobs per investor, about 90 investors at the $500,000 level would be allowed. That would raise almost $45 million – about $11 million more than they’re required to have for the equity component, so it gives them a cushion. The calculations are about the same for the second phase of the project – the apartment/condo building – if Yang decides to build it after the hotel is done and financially stable.”

“The attractiveness of college outside China cannot be underestimated, said Michael Fowler of the World Trade Center Tacoma, and that’s where Tacoma shines. The hotel developer Yang’s son, Yiwen, will start attending UWT Tacoma in January. ‘There’s a very strong tie between academic pursuits and their children’ for foreign investors, Fowler said. College entrance exams in China are, in a word, hellish. ‘Rich kids are not necessarily the best test takers,’ he said. ‘Usually it’s the countryside folks who score highest on the tests because it’s their out. So coming to the U.S. is a good alternative for wealthy children and has good career opportunities as well. EB-5 is a way to get there.’”




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53 Comments »

Comment by Ben Jones
2014-12-13 08:06:50

‘Rich kids are not necessarily the best test takers’

‘The four women feasted on B.C. crab and argued over what to look for in a potential husband. Forget handsome but poor, declared Ms. Jiang. ‘Ugly rich guys can use their wealth to get plastic surgery and become handsome,’ she said. ‘Hot and rich’

Classy.

Comment by Bring Back the WPA
2014-12-13 08:58:35

I just about spewed my coffee this morning — about 35 sec into Episode 1 of Ultra Rich Asian Girls, one of the girls orders ‘95 Chateau LaTour (retails for $600 per bottle). The sommelier pours the wine and the girl promptly asks for a straw. Not much substance there behind the thin veneer of flashy consumption…

Comment by Guillotine Renovator
2014-12-13 09:30:11

They did not earn that money, hence they have no respect for it, or anything or anyone for that matter. They are disgusting humans.

 
 
 
Comment by Ben Jones
2014-12-13 08:09:54

‘Australia’s financial regulators have launched a joint attack on risky home lending as investment and interest-only loans threaten the stability of the financial system. The Australian Prudential Regulation Authority called an emergency meeting with the nation’s banks to tell them of new speed limits that will prevent them from aggressively pursuing investment property borrowers.’

‘At the same time, the Australian Securities and Investment Commission said it would investigate interest-only loans, which make borrowers highly sensitive to movements in interest rates.’

‘The move could put the brakes on the rampant property markets in Sydney and Melbourne, which have seen house prices rise at a double-digit pace fuelled in part by demand for investment loans. The investigation will probe the banks, including the big four, as well as non-bank lenders and their behaviour as the property market heats up, the Australian Securities and Investments Commission said.’

“The review follows concerns by regulators about higher-risk lending, following strong house price growth in Sydney and Melbourne,” it said.’

There’s a barn door, closing thing in there somewhere.

Comment by iftheshoefits
2014-12-13 09:06:22

I liked the line from your Australian link above:

“only one force stands between Australia and a serious recession — Chinese investment in our residential property market. ”

No comment necessary. The scent of desperation is everywhere these days.

 
 
Comment by Housing Analyst
2014-12-13 08:14:21

“An international desk clearing post for the weekend, starting in California. “On a reality TV show about Bay Area real estate, he was Mr. Flip It. But now Todd Hill, of Los Gatos, stands accused in a lawsuit of defrauding his top investor of $6 million. The concerns stem from a civil lawsuit by Woodside developer Max Keech, who claims Hill defrauded him by siphoning off money meant to rehab old houses. Keech said they bought between 160 and 170 homes, many of which were foreclosed properties sold at sheriff’s sales. Hill, who still identifies himself on his Facebook page as an ‘actor and director,’ was one of the show’s stars. In its trailer, he’s seen on courthouse steps reaching out with a wad of bills. In another scene, he saunters up to a competing team looking at a house up for auction and says, ‘What are you doing here? You can’t afford this.’”

This sums up housing in CA doesn’t it? Realtor and mortgage fraud in all 4 directions, scamming, lying, showboating and deliberate misrepresentation.

It’s no wonder demand is collapsing and prices are falling in CA.

Comment by Ben Jones
2014-12-13 08:26:43

‘What are you doing here? You can’t afford this’

‘I don’t want to go broke’

As one poster used to say, you’d have to have a heart of stone not to laugh at this.

Comment by scdave
2014-12-13 08:54:35

you’d have to have a heart of stone not to laugh at this ??

He’s from Los Gatos…some of the most narcissistic people in our valley call it home…

 
 
 
Comment by Housing Analyst
2014-12-13 08:47:32

Spokane, WA Sale Prices Crater 14% YoY As Price Declines Accelerate Across State

http://www.zillow.com/wa-98516/home-values/

 
Comment by Housing Analyst
2014-12-13 08:54:11

Auburn, WA Sale Prices Plunge 5% YoY; Sellers Slash Prices As Demand Sinks

http://www.zillow.com/auburn-wa-98002/home-values/

 
Comment by Housing Analyst
2014-12-13 08:59:42

Los Angeles, CA Sale Prices Dive 10% YoY; Housing Demand Strikes Six Year Lows

http://www.zillow.com/los-angeles-ca-90026/home-values/

 
Comment by Housing Analyst
2014-12-13 09:06:42

Finding out that you got ripped off on a house and were lied to about it and then doubled down on those losses by financing it must be a real kick in the teeth.

Comment by rms
2014-12-13 23:27:10

“Finding out that you got ripped off on a house and were lied to about it and then doubled down on those losses by financing it must be a real kick in the teeth.”

A woman I know from work was financed by “a friend” who sold her a hybrid mortgage with prepayment penalties despite her good credit rating. The trap was sprung when she tried to apply her income tax refund to the principal.

 
 
Comment by Ben Jones
2014-12-13 09:16:01

‘As long as asset values are inflating, the inherent risk in these daisy chains is muffled and discounted. Yet that’s exactly why the present mother of all financial bubbles is so dangerous and palpably unstable. The marginal “bid” is dependent upon wildly inflated collateral which is tucked away in the warp and woof of the entire global financial system. When the Chinese stock market hit a 5.5% air pocket within a few minutes two nights ago, for example, it was because the financial authorities there said icksnay to the repo of bonds issued by essentially bankrupt local development agencies.’

‘Stated differently, there are financial time bombs planted everywhere in the world economy because central bank financial repression has caused drastic mispricing of nearly every class of financial asset, which is to say, every layer of collateral which has ratcheted-up the entire edifice.’

‘As the redoubtable Ambrose Evans-Prichard so cogently noted, central bank ZIRP has radically compressed the debt markets of the world. This means that cap rates—-the basis for valuation of tens of trillions of fixed income securities and real estate around the world—are now so aberrantly low as to be downright stupid: What is clear is that the world has become addicted to central bank stimulus.Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.’

‘Needless to say, this drastic central bank driven financial repression has unleashed a mindless pursuit of “yield” or short-term trading gains that give the concept of “irrational exuberance” an entirely new definition. Consider for example, the hapless mutual fund investors or institutional managers who have been buying energy sector CLOs. What is the collateral for the 5% yields advertised by these fly-by-night funds—–often issued and managed by the same folks who sold housing sector CLOs and CDOs last time around?’

‘Why its the leveraged loans issued by E&P operators in the shale patches. The collateral for these leveraged loans, in turn, is shale rocks 4,000-9,000 feet down under that have been worthless until approximately 2005 and would be worthless today without dramatically over-priced crude oil and drastically underpriced debt capital.’

‘That is to say, the vaunted collateral in the shale patch craps out after about two-years unless new money is poured down the well bore and oil prices are above $75-$80 per barrel on the WTI marker price to cushion the sharp discounts back to the wellhead. But with marker price now plunging into the $50s, the drilling will soon stop, the production will crap-out, the shale rock collateral value will regress toward the zero bound, the E&P borrowers will default, the energy CLO’s will implode and the hapless yield chasers will be left high, dry and panicked.’

‘Cannot the same thing be said of Italian bonds at 2%? As reminded below, the Italian economy has not grown for six years, its debt-to-GDP ratio has gone critical and its political system is disintegrating.’

‘Are the international dollar bonds of Turkish banks—one example of the $9 trillion EM debt market—– issued against their loan books any different? Just consider the daisy chain of collateral there. Istanbul is comprised of miles of empty apartment and commercial buildings which are collateral for the Turkish bank loans. Yet what is the equity of the real estate developer borrowers of these generously leveraged loans—-other than their “investments” in the Erdogan regime? More often than not its the down-payments on newly built space made by speculators who borrowed the money from the very same banks.’

‘Indeed, in a ZIRP world the collateral chains extend so deep into the netherworld of speculation that no one can possibly trace them. That is, until after they erupt. Then we will learn all about the “risk” that was driven below the surface during the great bubble of the past 6 years just like we did in September 2008.’

‘In short, what is happening now is that risk is coming out of hiding; the collateral chains are buckling; the financial time bombs are beginning to explode.’

‘Moreover, the central banks are now out of dry powder—– impaled on the zero-bound. That means any resort to a massive new round of money printing can not be disguised as an effort to “stimulate” the macro-economy by temporarily driving interest rates to “extraordinarily” low levels. They are already there.’

‘Instead, a Bernanke style balance sheet explosion like that which stopped the financial meltdown in the fall and winter of 2008-2009 will be seen for exactly what it is—-an exercise in pure monetary desperation and quackery.’

Comment by Guillotine Renovator
2014-12-13 09:38:50

Something wicked this way comes.

Comment by Blue Skye
2014-12-14 17:50:17

It’s bigger than it was before and we are running out of rope.

 
 
Comment by Whac-A-Bubble™
2014-12-13 16:16:56

‘Stated differently, there are financial time bombs planted everywhere in the world economy because central bank financial repression has caused drastic mispricing of nearly every class of financial asset, which is to say, every layer of collateral which has ratcheted-up the entire edifice.’

Where will people try to hide when this all blows up?

 
 
Comment by Ben Jones
2014-12-13 09:34:40

‘Tiger Woods is getting a second crack at designing a golf course in Dubai. Woods’ design firm has been selected to create the design of an 18-hole championship course at the Akoya Oxygen resort in the United Arab Emirates. Announced in September, the course is to be named Trump World Golf Club, Dubai, marking Trump’s second managed property in the emirate’

‘Site prep has already started, with the course planned to open in late 2017. However, the space will feel familiar to Woods, as it is essentially the same spot where his first design, Tiger Woods’ original Dubai design, called Al-Ruwaya, was first announced in 2006. The project came to a screeching halt after the UAE was crushed by the worldwide financial crisis in 2008. It was suspended indefinitely in 2011.’

‘In the next month, it’s expected a Woods design will open for play for the first time. El Cardonal, Woods’ course in the Diamante resort-slash-housing development in Cabo San Lucas, Mexico, is poised to open before the end of the year. Woods’ firm is currently working on redesigning the Bluejack National, a Houston-area, high-end private club.’

I can just hear the conversation:

Mr Trump, can I call you Donald?

Sure Tiger.

Donald, I don’t have time to draw up new plans. Since this is the exact same course, in the exact same place, can’t you just move some sand traps around on the Powerpoint for these suckers, err, investors?

I don’t see why not Tiger.

Comment by Whac-A-Bubble™
2014-12-13 16:18:18

“Mr Trump, can I call you Donald?”

“That’s ‘The Donald’ to you, Tiger.”

Comment by rms
2014-12-13 23:35:04

“That’s ‘The Donald’ to you, Tiger.”

+1 Hole in one. Lolz!

 
 
Comment by Blue Skye
2014-12-14 17:52:07

Two icons of “it’s the top” in one scene.

 
 
Comment by Ben Jones
2014-12-13 09:39:00

‘Fresh figures show the economic growth of China has indicated further signs of fatigue during the last month as factory output growth in the world’s second-largest economy continues to wane. The closure of many factories in northern China to reduce air pollution was partly to blame for the weaker-than-expected output.’

‘Experts say a slackening growth in export orders combined with a cooling housing market have also contributed to the slower growth. This comes as investment expansion across China is already hovering near a 13-year low.’

‘The latest statistics has reinforced the view that annual economic growth may weaken further from 7.3 percent in the third quarter. The economic experts say the data can hurt China’s gross domestic product (GPD) and the world fragile economy as well.’

“The data bodes ill for GDP growth in the fourth quarter, which is bound to slow further,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong.’

Comment by Guillotine Renovator
2014-12-13 09:42:05

Could the massive capital flight have anything to do with it as well?

 
Comment by Ben Jones
2014-12-13 09:45:42

‘Rapid economic growth, vast wealth with few investment channels, and insatiable greed have driven up illegal fundraising cases in China. One 47-year-old woman surnamed Wang will never see her money again. The former hospital worker committed suicide after failing to recover money she lent to a private school in Xi’an, capital city of northwest China’s Shaanxi province. Between 2009-2011, the school illegally raised money from over 4,000 people, ostensibly to fund college programs.’

‘Attracted by a 30% annual interest rate, Wang gave all of her savings, a total of 60,000 yuan (US$10,000), to the school and signed a one-year loan agreement.’

‘But one day upon reaching the school for a visit, she found it closed and its heads arrested over a funding scam involving 360 million yuan (US$58.23 million). Wang lost everything, and later killed herself after a family dispute in June.’

‘In coal-rich Yulin city, a similar situation took place. A local pawnbroker claimed he owned two coal mines and asked residents to help him finance it, promising big returns. One man, surnamed Liu, at 63 years old, lent more than six million yuan (US$969,000) to the pawnshop. The pawnbroker promised to pay Liu hundreds of thousands of yuan in interest each month. “He seemed very rich and said I could earn a lot, so I believed in him,” Liu recalled. “He comes from the same village as me and collected over 800 million yuan (US$129.40 million) from locals,” Liu said.’

‘In early October, residents mobbed the pawnshop to demand their money back, but what they found was an empty office. The owner had run off with the money.’

‘An official in charge of combating illegal fundraising in Yulin revealed that some of these fraudsters have invested money in real estate or coal mines, while others use the cash to pay high interest on loans or bonuses to employees. When coal prices or housing prices drop, the capital chain is broken, and lenders go bankrupt.’

“With low bank interest rates, a gloomy stock market, and skyrocketing housing prices, many people find their idle funds have nowhere to go, so they join in illegal fund-raising activities,” he said, quoting lenders during investigations.’

‘Chinese public security departments cracked 3,700 illegal fundraising cases in 2013. Over the past three months, more than 30 illegal fundraising cases involving over 500 million yuan (US$81 million) were exposed in Lanzhou, capital city of China’s Gansu province, alone.’

‘Some private companies involved in fraud have actual businesses in need of capital. They seek funding for development since it is difficult to obtain loans from state-controlled banks, said Wang Yongsheng, a police officer from the public security bureau of Lanzhou. But others exist just to defraud the public. “These cases are malicious crimes. It is difficult to retrieve victims’ money since it has already been transferred or squandered when the cases are exposed,” he added.’

‘Illegal fundraising can lead to financial market disorder and threaten social stability. The country should strengthen investor education campaigns to guide the public to effectively identify and resist illegal fund-raising, said Xia Xueluan, professor of sociology at Peking University.’

“Clamping down on illegal fundraising is not a sustainable solution. In the long run, more financing channels for small and medium-sized enterprises and reliable investment opportunities for individuals should be created,” he said.’

‘He seemed very rich and said I could earn a lot, so I believed in him,’ Liu recalled’

Remember Liu:

‘Ugly rich guys can use their wealth to get plastic surgery and become handsome’

Comment by azdude
2014-12-13 10:50:10

I’m looking for some venture capital to build a golf course in china. Any of you got any cash?

 
Comment by Whac-A-Bubble™
2014-12-13 16:21:03

‘Attracted by a 30% annual interest rate, Wang gave all of her savings, a total of 60,000 yuan (US$10,000), to the school and signed a one-year loan agreement.’

Hint: If a project offers to pay a 30% annual interest rate, it is a scam.

 
Comment by tresho
2014-12-14 12:20:01

Used to have a co-worker from China / Taiwan named Chu Qin. Some of the boys at work would call her “Chu Wang”, and she would testily reply, “Not Chu Wang, Chu Qin!” She never really got the joke, just as well.

 
 
 
Comment by Whac-A-Bubble™
2014-12-13 16:14:10

“Whether it be London, New York, Melbourne or Sydney, housing markets have never seen anything like the current rash of Chinese and Asian buying.”

If it seems spectacular now, just wait until it ends.

You ain’t seen nothin’ yet!

 
Comment by alphonso bedoya
2014-12-13 17:06:17

Quote: “Yang is undeterred.”

The iceberg, however, had the final say in the matter.

Comment by Whac-A-Bubble™
2014-12-13 19:05:31

How does Yin feel about the matter?

 
 
Comment by Ben Jones
2014-12-13 22:57:04

‘Enterprise Products Partners is shelving a proposed pipeline that would have transported crude from North Dakota to Oklahoma, the company announced’

‘The news came in the midst of a brutal slide in global oil prices that have raised concerns about whether U.S. companies will continue to build on the expansion of oil production. Middle East oil producers have yet to announce a cut in production to offset the drop in crude, in what some analysts say is a slow-bleed strategy designed to make pumping crude as uneconomic as possible for the world’s fastest growing non-OPEC oil producer.’

‘Enterprise Products said in a terse statement that investors had “decided not to move forward with development of its proposed Bakken to Cushing crude oil pipeline.”

‘Commitments from potential partners “were not sufficient to support the project,” Enterprise Products added. “Enterprise Products Partners management has been consistent in communicating this was a low probability project,” said Adam Karpf, a portfolio manager for Atlantic Trust’s master limited partnership strategies.’

‘North Dakota’s Bakken region and Oklahoma’s Cushing are two of the most prolific oil hubs in the U.S. energy revolution. Pipeline construction projects have taken on increasing prominence as the crude boom picks up speed, sending domestic oil production skyrocketing to more than 9 million barrels per day.’

http://www.cnbc.com/id/102265279?__source=yahoo|finance|headline|headline|story&par=yahoo&doc=102265279

Comment by rms
2014-12-13 23:47:50

Enterprise Products said in a terse statement that investors had “decided not to move forward with development of its proposed Bakken to Cushing crude oil pipeline.”

Pipe laying investors better keep an eye peeled.

 
Comment by tresho
2014-12-14 12:48:42

Meanwhile check out this cool graph of the wastage of natural gas at the North Dakota wellheads.

 
 
Comment by clark
2014-12-14 00:12:14

“An international desk clearing post for the weekend” Crimeiny! This was maybe better than a Friday Desk Clearing time!
Whoa! Thanks a bunch, Mr. Ben.

And then Housing Analyst says: “Finding out that you got ripped off on a house and were lied to about it and then doubled down on those losses by financing it must be a real kick in the teeth.”

That whole, “finding out” part. … It happens to different People, at different times.
The question is, “when”?
As a student of the H.B.B. it seemed to me they were fooked the minute they signed on.
Time will Tell. ..I wonder: how could our overlords make it so that this appeared to be a wise choice? And,… for how long?

I keep reading this word on the interNet A Lot lately, “icksnay”.

It’s hard to imagine what this means:

Whac-A-Bubble™ wrote, “If it seems spectacular now, just wait until it ends.

You ain’t seen nothin’ yet!”

Is this a race?

Most (all) People around me in the Midwest, I get the feeling they think nothing will Ever(!) change.

Ceteris paribus,… forever!

Comment by Blue Skye
2014-12-14 18:08:14

Ucklebay upyay.

 
 
Comment by Ben Jones
2014-12-14 07:44:29

‘MANILA – Isidro Consunji, the chairman and president of DMCI Holdings Inc., does not see a real estate bubble in the country amid rising demand in residential and office space. Consunji said a property bubble indicates that prices are “artificially high,” which he said is not the case in the Philippines where current prices of land and buildings are cheaper than it was in 1997 during the Asian financial crisis.’

“I really doubt whether it’s a bubble. Secondly, the economy is much bigger now, the OFWs have very strong remittances, and interest rates are very low,” he told ANC’s “Inside Business”.

‘He also said the high demand in real estate will not result in a bubble because the assets are being used. “I define bubble as superfluous assets, meaning to say buildings that are empty. If you go to certain cities in China, you will see hundreds of buildings with no lights at night. I don’t see that in Metro Manila. More or less every finished building here is lighted, so it’s being used,” he said.

 
Comment by Ben Jones
2014-12-14 07:52:58

‘The northern Front Range boasts one of the country’s best performing economies. But that success carries a darker side — a shrinking supply of homes and apartments affordable to low and even middle-income families.’

‘Colorado ranks among the top five states when it comes to creating jobs and attracting new residents. But construction, for a variety of reasons, hasn’t kept pace. Home prices and rents are rising sharply, while the incomes needed to pay them are stagnant.’

‘A study on Thursday from Zillow showed that a renter now needs to make $35 an hour to afford the median-priced rental in metro Denver, or almost 4½ times Colorado’s minimum wage. Many of the apartments being built target the higher end of the market, and low vacancy rates have spurred investors to buy up older complexes, rehabilitate them and boost rents.’

‘Of the single-family home starts this year in the metro area, only 17 percent were priced below $300,000, compared with 40 percent in 2012, notes analyst John Covert with Metrostudy. Higher housing costs wouldn’t hurt so much if incomes kept pace, but they haven’t, partly because so many of the new jobs created in this recovery pay on the lower end of the wage scale.’

‘Moore recalled one City Council meeting in Brighton at which a new car wash providing 15 low-paying jobs generated excitement. He, by contrast, was worried about where those workers were going to live, given the city’s vacancy rate of 0.5 percent. “If we are creating $8 an hour jobs, we better be able to have housing for those people,” he said.’

Comment by tresho
2014-12-14 12:50:46

“If we are creating $8 an hour jobs, we better be able to have housing for those people,” he said.’
Change their zoning laws, and let those workers sleep inside the car wash. Easy-peasy.

 
Comment by Bluto
2014-12-14 14:02:12

I’m set on sticking with Kaiser Foundation for health care (they are the insurer AND provider) so I very recently checked out the few areas online outside California where they operate and Denver is one. It only took a few minutes to determine that I would be no better off housing wise there than in the bubblelicious Calif. wine country where I live, that surprised me.

 
 
Comment by Ben Jones
2014-12-14 08:03:35

‘Consumers in the UAE don’t need to be told that the price of food is rising. It is quite evident every time you check out of the supermarket these days. It’s a sign that the money printing of the past six years has at last started to appear on the supermarket shelves. Don’t expect it to go away anytime soon.’

‘Once the inflation genie gets going, it is hard to get it back in the bottle. Of course where inflation has really caught up with people living in the UAE is housing rentals. That is a function of the house price inflation of the past few years, especially the 30 per cent rise last year that was the highest in the world.’

‘A million workers in Dubai live in neighboring Sharjah and those numbers seem to be growing month after month. So too are the endless adverts for real estate projects and the launching of giant new schemes.’

‘Still these new real estate projects are gaining less and less traction and each new project dilutes the shrinking pool of available investors. It is the same story in the hotels. Where are the guests?’

‘Also, unless you were living under a rock, you would have noticed how oil prices have slumped 30 per cent in the past few months. The question to ask now is – how much longer is this prosperity going to last?’

Comment by Ben Jones
2014-12-14 08:15:54

‘Oil producers group OPEC can ride out a slump in oil prices and keep output unchanged, its head said on Sunday, arguing market weakness did not reflect supply and demand fundamentals and could have been driven by speculators.’

‘Speaking at a conference in Dubai, Abdullah al-Badri defended November’s decision by the Organization of the Petroleum Exporting Countries to not cut its output target of 30 million barrels per day (bdp) in the face of a drop in crude prices to multi-year lows.’

“We agreed that it is important to continue with production (at current levels) for the … coming period. This decision was made by consensus by all ministers,” he said. “The decision has been made. Things will be left as is.”

‘Badri said OPEC sought a price level that was suitable and satisfactory both for consumers and producers, but did not specify a figure. The OPEC chief also said November’s decision was not aimed at any other oil producer, rebutting suggestions it was intended to either undermine the economics of U.S. shale oil production or weaken rival powers closer to home.’

“Some people say this decision was directed at the United States and shale oil. All of this is incorrect. Some also say it was directed at Iran and Russia. This also is incorrect,” he said.’

‘However Saudi Arabia’s oil minister Ali al-Naimi had told last month’s OPEC meeting the organization must combat the U.S. shale oil boom, arguing for maintaining output to depress prices and undermine the profitability of North American producers, said a source who was briefed by a non-Gulf OPEC minister.’

Comment by Ben Jones
2014-12-14 10:11:17

‘Budget and Final Accounts Committee Chairman MP Adnan AbdulSamad warned the country has reached the stage of real deficit, indicating the oil price decline is a serious issue. He admitted he was surprised when the oil minister refused to limit production, as if he is happy over the oil price decline. Responding to the lawmaker, Oil Minister Ali Al-Omair said he does not bring good or bad news; indicating, “We deal with reality in a professional way and the rise or fall of oil prices is not in our hands”. He pointed out Kuwait is producing 2,700,000 barrels of oil while the excess in the global market reached more than 1.8 million so there is no point in reducing production.’

‘He added, “We cannot sacrifice our interests just to adjust prices in a particular market. We are part of an organization of many nations.”

‘Oil prices have lost around 30 percent of their value since June, amid a surplus in supplies and a weak global economy, hitting the state coffers of energy-dependent countries like Kuwait.’

‘The head of Parliament’s budget committee, lawmaker Adnan Abdulsamad, has said if oil prices continue at the current level, the budget surplus would shrink to just $3.1 billion from $45 billion last year. Kuwait has decided to end subsidies on diesel, kerosene and aviation fuel as a first step in revising heavily-subsidised electricity, water and petrol. Local media said Kuwait’s fiscal reserves grew to $548 billion as of June 30.’

 
 
 
Comment by Ben Jones
2014-12-14 08:06:16

Check out the photo:

‘Luxury properties, green buildings and eco-friendly homes are gaining momentum among non-resident Indians, or NRIs, that will shape up the future of India’s real estate industry. The exhibitors, developers and participants of the Indian Property Show, or IPS, said NRIs, who also opt for the affordable housing concept, will be playing a major role in boosting the property sector as the current demand in the domestic market is weak.’

“Undoubtedly, there has been a slowdown in Indian market for last 12 months or so,” Nishant Singhal, director for strategy and International business at Investors Clinic, an Indian real estate consultancy with offices in Dubai, told Khaleej Times at the IPS, which concluded in Dubai on Saturday.’

‘He said developers are offering attractive discounts in the form of freebies like modular kitchens, air-conditioners and woodwork to prospective home buyers in the country or abroad. “They are also offering special payment plans like subvention schemes and possession linked plans which results in discounts ranging from five per cent to 15 per cent,” he said.’

 
Comment by Albuquerquedan
2014-12-14 08:37:38

Usually it’s the countryside folks who score highest on the tests because it’s their out. So coming to the U.S. is a good alternative for wealthy children and has good career opportunities as well. EB-5 is a way to get there.’”

A society at least partially built on merit, imagine that.

Comment by Blue Skye
2014-12-14 18:16:50

It’s a story of desperation for the many and bribery for the few.

 
 
Comment by Ben Jones
2014-12-14 09:46:41

‘In a newly released report, Virginia Gov. Terry McAuliffe (D) sets priorities for improving the commonwealth’s economy, and there is reason to think Virginia — and the Northern Virginia suburbs in particular — are in need of a turnaround.’

‘As a whole, Virginia’s economic growth has fallen behind the rest of the country’s. Though it fared better than the rest of the country during the depths of the recession, the commonwealth’s growth has trailed the national rate the past three years. McAuliffe’s report attributes this to an over-reliance on the federal government for jobs and growth.’

“The commonwealth currently has a material imbalance in its job generating machinery,” it says. “We are overly dependent on the public sector for economic prosperity.”

‘About 30 percent of Virginia’s economy is tied to the federal government, and the Defense Department is by far its biggest employer (Wal-Mart is second and Fairfax County Public Schools is third). Since 2010, according to the report, the federal payroll dropped $1.16 billion, or 7.5 percent, causing consecutive monthly federal job losses in Virginia for more than a year.’

‘Even though it looks like the loss of Virginia’s federal job might be slowing, the pace of federal contracting cuts is expected to double in the 2015 fiscal year. That would mean the loss of an additional 22,000 public and private jobs in Virginia, per the report.’

‘No wonder owners of Northern Virginia office buildings are having such a hard time filling them.’

 
Comment by Ben Jones
2014-12-14 10:15:42

‘New York, London, Moscow, Paris, Tokyo are no more the most expensive cities in the world than Luanda, the capital of Angola. According to the US research firm Mercer’s classification in 2014, Luanda the capital of Angola is the most expensive city in the world for expatriates. According to Radio France International (RFI), who got the classification, 10 African Cities are among the 50 most expensive cities in the world. Curiously, Luanda the capital of Angola, the second largest oil producer in Africa after Nigeria is the most expensive city in the world.’

‘In Luanda, Everything is measured in dollars. For a cup of ice cream, RFI reports that the price is € 20, and twice for dinner at a restaurant. In fast food joints, the cost is € 11 for the basic formula, which cost is twice the price in Brussels. As for rents, they are expensive. According to RFI, the cost of single room is around € 2,500 per month and € 7,500 for a house. Since the financial crisis of 2008, the city attracts a new wave of immigrants from Portugal. People attracted by jobs and high salaries that correspond to the Angolan standard. Nine (09) others Africa countries are in the top 50 of the world ranking.’

‘Ndjamena, the capital of Chad is not less than the second most expensive city in the world in the Mercer ranking. It is at the same level as Hong Kong, Singapore, Zurich, Geneva and even Tokyo.’

‘Victoria, the Seychelles’ capital is the 13th most expensive city. Located on the largest island of the archipelago in the Indian Ocean, these islands have become a playground for expatriates who are bored in Dubai, a few hours by plane. Luxury yachts and dream villas result in very expensive bill in any hotel or restaurant, noted RFI.’

‘Libreville Gabon’s capital comes 19th, according to RFI, after New York and just before Kinshasa despite its 20% unemployment and 33% of poverty.’

‘Kinshasa, the capital or DRC is one of the most expensive cities in the world. RFI estimates at one hundred dollars, the price of a dinner in a fancy restaurant or a taxi hired for the day.’

‘Lagos, the capital of Nigeria and its 12 million peoples is the 25th most expensive city in the world. No two rooms is less than € 1,300 a month, payable in advance for 24 months, not including the generator, which pumps diesel at least at € 5 Euros.’

‘Brazzaville, the capital of Congo is in the top 50. There, the houses downtown are rented at € 1,500. In some popular areas, the rent ranges from € 60 to € 150 Euros.’

‘Bamako, Mali’s capital became the 29th most expensive city in the world, just after Brazzaville, since the deployment in June 2013 of United Nations Mission for the stabilization of Mali (Minusma). Around 12,600 workers and Blue Berets of UN mission has driven up prices.’

‘Conakry: classified as 34th most expensive city in the world, the capital of Guinea won 12 seats in 2014 in the Mercer ranking, reported RFI. Luxury apartments for expatriates, with water, electricity and security are rented at € 2000 per month, while a teacher with a salary of € 35, can barely buy two bags of rice a month.’

‘Dakar, the Senegalese capital is the 40th most expensive city in the world. Money is spent at full speed. New housing in downtown is sold at € 1,500 Euros per square meter. A teacher in Senegal earns not more than € 300 per month, while a minister earns 6 times the salary of a teacher.’

Comment by Ben Jones
2014-12-14 10:17:10

Here’s a question; how many global housing bubbles sit on top of oil prices?

Comment by Ben Jones
2014-12-14 10:21:47

Or stock bubbles?

‘The head of the Organization of Petroleum Exporting Countries, Abdalla Salem el-Badri, said Sunday that OPEC has no set price target for oil, according to the Wall Street Journal.’

“We are not going to change our minds because the prices went to $60 or to $40,” Suhail Al-Mazrouei, the United Arab Emirates’ oil minister said at the conference, according to Bloomberg. “We’re not targeting a price; the market will stabilize itself.”

‘Stock markets in the Persian Gulf got drilled Sunday as worries about further price declines grew. The Dubai stock index fell 7.6% Sunday, the equivalent of a 1,313-point plunge in the Dow Jones industrial average. The Saudi Arabian market fell 3.3%.’

‘Stock markets around the world have been unnerved by the plunge in oil prices, currently at their lowest levels in five years.’

“Unlike in the past, when they have defended oil prices, they are defending market share,” said Stewart Glickman, group head for energy and materials equity research at S&P Capital IQ. “They are going to face more bloodletting with oil prices until other swing producers feel enough pain to stop drilling.”

Comment by Ben Jones
2014-12-14 10:30:01

‘Share prices in energy-rich Gulf Arab states fell sharply at the start of the week Sunday, dragged down after oil prices plunged to new lows. The decline was across the board on almost all of the region’s seven bourses, as investors went into a panic sell-off soon after trading kicked off.’

‘Dubai’s benchmark DFM Index lost 6.2 percent to 3,373.51 points, pulled down by market leader Emaar Properties, which shed 8.0 percent, and construction giant Arabtec, which lost 7.2 percent. The index shed 7.2 percent on Thursday.’

‘Abu Dhabi Securities Exchange recovered slighty at mid-session, trading down 3.6 percent at 4,212.07 points with energy stocks declining 5.3 percent and the real estate and banking sectors also falling.’

‘The Saudi Tadawul All-Shares Index, the largest in the Arab world, dipped 3.3 percent to 8,113.22 points, a 12-month low. Leading the decline was the petrochemicals sector, with Saudi Basic Industries Co. SABIC losing 5.6 percent.’

‘The main index on the Qatar Exchange, the second biggest bourse in the Gulf, dived 7.2 percent to 10,959.0 points, a level last seen in early January. Market leaders in banking and industry contributed to the slide.’

‘Kuwait Stock Exchange deepened losses, losing 3.2 percent to 6,254.62 points, a 22-month low, despite the listing of VIVA, a third mobile phone operator 26 percent-owned by Saudi Telecom. The Muscat Securities Market lost 2.72 percent to 5,649.49 points.’

‘The sustained decline in Gulf equity markets due to falling oil prices has wiped out nearly $150 billion (Dh550.5 billion) since the end of October.

‘The trigger was the collapsing price of oil, which provides Gulf governments with the bulk of their revenues. But it’s not just the falling oil price that has put pressure on Gulf markets. Some investors used heavy leverage, including bank loans, to buy stocks on the way up; they are now selling the stocks to cover the debt.’

‘Another issue is the dominance of retail investors. They account for over 90 per cent of daily volume in Saudi Arabia, far more than the ratio in major markets elsewhere. Many focus on the short term rather than basing their decisions on long-term value, as institutional investors do. That can magnify moves.’

‘Saudi Arabia’s market, the biggest in the region, has sunk 25 per cent from its peak in September. Dubai is down 31 per cent. Although the declines have left many stocks competitively priced by global standards, few people are willing to call a bottom for the markets just yet.’

“Values are not the problem. The problem is that negative momentum has started,” said Mohammed Ali Yasin, managing director of NBAD Securities, a top Abu Dhabi brokerage.’

(Comments wont nest below this level)
Comment by azdude
2014-12-14 15:02:09

The experts on the tv say stocks are undervalued and will only rise when they print some more notes.

Do you think these shrills can ever be held accountable for swindling people?

 
 
 
 
 
Comment by Ben Jones
2014-12-14 15:19:33

‘Contrary to popular belief, the drop in crude oil prices can adversely impact global stock markets, including India. Soft crude prices are threatening growth in several oil-producing economies and this can have serious repercussions for India’s foreign fund inflows as well as exports. “Crude has created a lot of uncertainties in global markets which are adversely impacting the Indian market sentiment. The recent foreign fund sell-off in equities and decline in rupee’s value can be attributed to this constant fall in crude prices,” said Tirthankar Patnaik, India strategist and head of research of Mizuho Bank. “Hence, free-falling crude poses serious challenges for markets.”

‘Market sentiment was further shaken after the International Energy Agency warned about potential financial defaults by Venezuela and Russia.’

‘Falling crude price means lower incomes for oil-exporting countries. This will slow down global demand, which will have an impact on Indian exports.

“The sources of funds that invest in India are primarily sovereign wealth funds, pension funds and insurance funds. If Norway, Saudi Arabia, Abu Dhabi, Qatar, or Kuwait are not going to see surpluses, then they will have less capital to send out, which means capital flows into India will not be as strong as they were,” said Neelkanth Mishra, managing director and India equity strategist at Credit Suisse.’

‘Foreign institutional investors have sold equities worth about Rs 1,850 crore in the past four trading sessions in India. The rupee hit a 10-month low of 62.50 against the dollar on Friday, on concerns over slower foreign fund flows.’

‘The benchmark stock index, the Bombay Stock Exchange’s Sensex, nosedived to 27,350 points on Friday to post its worst weekly loss of 3.9% in more than three years. The index has dropped more than 1,200 points in just six trading sessions. The National Stock Exchange’s Nifty declined in five of the past six trading sessions, to end on 8,224 Friday.’

 
Comment by Ben Jones
2014-12-14 15:23:37

‘When fuel supplier OW Bunker went public in March, raising $530mn on the Copenhagen stock exchange, investors cheered: The shares rose as much as 19% during the first day of trading. At the beginning of November, the company’s prospects still looked good. Its share of the $150bn market for bunker fuel — the heavy oil that powers tankers, container ships, and other vessels — was 10% and growing.’

‘Less than a week later, the company filed for bankruptcy in Copenhagen; it will be liquidated, undone by a client that it says didn’t pay a $125mn bill and by an ill-timed bet that oil prices would rise, Bloomberg Businessweek reports in its December 15 issue.’

‘Selling fuel on credit “is common practice,” says Jens Maul Jorgensen, chairman of the UK-based International Bunker Industry Association. “If this could happen to OW Bunker, it can happen to anyone.”

‘Known for campaigning against corruption in the industry, OW Bunker was apparently unable to prevent bad judgment by its own employees. Members of its board have claimed that two managers at its Singapore subsidiary, Dynamic Oil Trading, exceeded their credit limits by continuing to sell fuel to a struggling trader, Tankoil Marine Services.’

‘Compounding Bunker’s woes, in recent months a risk manager, whose job was to protect the company against swings in the price of oil, bet that prices of diesel fuel would rise 20%. When prices fell, she increased the bet, leading to bigger losses.’

‘The company’s demise opens a window onto the world of bunkering, in which ships and barges act as floating gas stations for the enormous vessels that ferry goods around the globe.’

‘Bunker fuel is what’s left when petroleum, diesel, gasoline, and other distilled products have been separated from crude oil. It’s thick and difficult to measure when pumped into ship hulls, and unscrupulous players have found ways to exploit those characteristics and cheat their customers. One popular technique is raising the temperature of the fuel, which expands its volume.’

‘Perhaps the most common deception involves mixing air into a shipment, called cappuccino bunkering because it causes froth on top of the oil, says Abdul Farhan, operations manager at the Singapore unit of Bunker Detective, a Vancouver-based surveyor that helps ship charterers navigate disputes over quantity and quality of fuel.’

“Cappuccino bunkering is everywhere,” he says. Also, some suppliers use cheaper Iranian fuel, even though the European Union has banned oil from Iran since 2012.’

‘Singapore, home to a tenth of the world’s bunker market, according to the IBIA, has been the centre of the industry’s scandals.’

‘Until its collapse, OW Bunker, founded in 1980, was known for insisting on the use of flow meters on its fleet of 30 floating tanker ships to ensure the right amount of fuel was being delivered, and for keeping careful records of where its fuel originated.’

‘The company’s trustees are searching the globe for vessels, cargo, houses, cars — anything to pay creditors — as it’s liquidated.’

 
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