December 30, 2014

It Feels Like Some Sort Of Hard Landing

The Guardian reports from the UK. “The control of plans for tens of thousands of new homes in London is now in the hands of foreign investors who are increasing their grip on the capital’s prime property assets, figures obtained by the Guardian have revealed. Sites for close to 30,000 homes are owned by just 10 investors in Hong Kong, China, Malaysia, Australia, Singapore and Sweden, sparking warnings from politicians and housing industry experts that too many are being built to act as ’safe deposit boxes’ for international investors rather than for Londoners in housing need.”

“Tim Craine, director of Molior, a residential property research consultancy, confirmed the influx of Asian money was causing a surge in the number of homes being built but added: ‘They are being built at the wrong price. A one-bed flat for £1m is not going to solve anyone’s housing crisis.’”

The Irish Independent. “The spectre of long queues out the door returned in 2014. One house buyer, Ciara Cosgrove, spoke to Weekend Review earlier this year about heading out to view a house on a wild, stormy night expecting to be the only interested party to brave the elements. When she got to the address, there were 18 other couples ahead of her. ‘We’ve seen prices jump up all the time. A place that was €250,000 one week is valued at €260,000 the next. It’s like the Celtic Tiger all over again,’ she said.”

“Field reports from estate agents were redolent of the years immediately prior to the bubble bursting. ‘I showed a two-bedroom apartment at The Grange the other day,” said Brian Dempsey of Douglas Newman Goode estate agents. ‘And there were 52 people for that first viewing. I went back into the office and mentioned it to my colleagues as it was such a huge number, yet somebody else had shown a property that morning and 65 people had turned up for that.’”

“Dr Conor Skehan is one of the country’s foremost authorities on housing, so it came as something of a shock when he revealed he would rather stay renting than become a homeowner. With property prices spiralling upwards in Dublin, he had this to say: ‘I’m the chairman of the Housing Agency and I will never buy a piece of property again. I rent. We’ve completely lost connection between rental values and market values in Ireland and that still has to sink into people’s minds.’”

The Hamilton Spectator in Canada. ” The Bank of Canada said last week the country had showed signs of a ‘broadening recovery.’ However, the bank’s statement offset the positives by pointing to potential threats: weakening oil prices that drive down inflation and the significant risks of high household debt accumulated during years of low borrowing rates. The basic logic behind low rates is to encourage people to gather debt when the economy is weak, said McGill University economics professor Christopher Ragan, who has worked at the Bank of Canada.”

“He added, however, that monetary policy is a ‘pretty blunt instrument’ that can’t control those who borrow too much. ‘Some people have too much debt, but not everybody,’ Ragan said. ‘Some firms probably have too much debt, but not all firms. And monetary policy just can’t address that issue.’”

First Post on India. “In an unbelievable discount offer to beat slowdown blues, realty firm Supertech yesterday claimed to offer a free add-on studio apartment with the purchase of a luxury flat, but ‘conditions apply’ like all such schemes. o far, some realty developers have offered freebies like cars, ACs and other household items, but this one beats all such discount games that real estate companies come up with to lure buyers in a sluggish market. ‘In order to boost sales, Supertech announces buy one get one free offer on one of its residential project Capetown located in Noida. The offer is available only for the top floor apartment buyers in ‘Cape Crown’ of Capetown Project,’ the company said.”

“The project ‘Capetown’ is spread over 50 acres comprising 7,000 housing units. Supertech is currently developing over 90 million sq ft. The company has a presence in Noida, Greater Noida, Gurgaon, Meerut, Moradabad, Haridwar, Rudrapur, Ghaziabad and Bangalore.”

Nikkei Asian Review on China. “Two Chinese municipal governments have made it clear that they will not guarantee new debt issued by affiliated investment companies, removing an implicit backstop that has generally encouraged reckless infrastructure spending. The western Chinese city of Urumqi said Dec. 17 that a 1 billion yuan ($160 million) bond sale by a wholly owned financing vehicle would be canceled to protect investors. The proceeds were supposed to fund road construction, but the city saw little prospect of the project generating enough income to repay investors without government aid.”

“Subjecting municipal borrowers to some market discipline will likely help curb their enthusiasm for the kind of big-budget projects that show no regard for financial viability. This will have consequences for the national economy. Local infrastructure investment, an important driver of growth, is certain to lose steam in the coming years. As of Wednesday, no local governments had explicitly said how it would treat already-issued bonds. Saying they were not guaranteed would surely provoke opposition from the financial institutions that lend to these vehicles.”

The Sydney Morning Herald in Australia. “With the federal government fore­casting a $9 billion shortfall in ­revenue over the next two years as iron ore plunges to new five-year lows, the view of China from Australia is one of a ­country struggling to maintain the growth that turned it into a ­economic superpower. Shadow banking, ghost cities, ­slumping property prices, a ­manufacturing slowdown and debt defaults are just some of the ­headwinds that threaten the world’s second-largest economy.”

“Data from the National Bureau of Statistics showed that home prices fell for the seventh consecutive month in November. It has particularly hurt demand for Australian iron ore, as residential ­property accounts for 24 per cent of steel consumption in China. ‘From Australia it feels like China is actually having some sort of hard ­landing,’ Credit Suisse analyst Damien Boey said. The ruling Communist Party of China has to be very careful how it balances the huge capacity for fixed asset investment and consumption. ‘It’s like asking Australia to stop being a consumption and mining ­economy, we can’t do that overnight either,’ Mr Boey said.”

The New Zealand Herald. “The world economy enters 2015 at a fork in the road. One track leads to the self-sustaining vigorous recovery that policymakers have sought in vain since the financial crisis erupted in 2007. The other track leads back towards recession. Problems that have been stored up since 2008-09 can be contained no longer. Trevor Greetham, director of asset allocation at Fidelity Solutions, says the plunging oil price could prompt ‘credit stress.’ This would affect governments, such as Russia, Venezuela and Iran, that can only balance their books if the oil price is at US$100 a barrel or more. And it would affect the shale gas sector in the US, where much of the investment has been financed by high-yielding but risky junk bonds.”

“As the Bank of England points out in its recent Financial Stability Review: ‘As US oil and gas exploration firms account for 13 per cent of outstanding debt in US high-yield bond markets, an increase in the perceived or realised credit risk in this sector could lead to sales by investors and potentially illiquidity in the broader high-yield market.’ In other words, shale could be the next sub-prime.”




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48 Comments »

Comment by Housing Analyst
2014-12-30 03:54:52

This;

“The control of plans for tens of thousands of new homes in London is now in the hands of foreign investors who are increasing their grip on the capital’s prime property assets”

Then this;

House prices falling in a third of UK

http://www.ft.com/intl/cms/s/0/fee1b3ee-87a5-11e4-bc7c-00144feabdc0.html

See the pattern?

 
Comment by Ben Jones
2014-12-30 04:00:11

‘Emerging-market distressed debt losses are the worst this month since the global financial crisis. Bank of America Merrill Lynch’s Distressed Emerging Markets Corporate Plus Index fell 13.4 percent through Dec. 26, set for its worst performance since October 2008, as a tumble in the price of oil sparked a currency crisis in Russia. That brought this year’s decline to 19.7 percent, the most in six years. Emerging markets accounted for 14 of the 56 global defaults this year in Standard & Poor’s coverage.’

‘Crude reached the lowest in five years earlier this month and is heading for its largest annual decline since 2008 as members of the Organization of Petroleum Exporting Countries resist production cuts to defend market share. A supply glut has also pushed metal and coal prices deeper into a bear market.’

“With many moving parts to the equation, could there be a point where investors begin to interpret the circumstances as contagion?” said David Tawil, co-founder of New York-based Maglan Capital LP. “What happens if we need to add Venezuela and Russia to the mix? Contagion is good for no one.”

‘The coming 12 months may spell more bad times for emerging market debt, considering the U.S. Federal Reserve is expected to start increasing interest rates from near zero in the third quarter. That would increase the cost of raising new funds. “Markets are challenged enough,” Maglan Capital’s Tawil said. “Now they’re on edge because of concerns relating to the Fed raising rates in 2015 and the drop in the price of oil.”

 
Comment by Ben Jones
2014-12-30 04:00:44

‘Iron ore’s glory days are over. The price has fallen 50 per cent this year and is 65 per cent off its peak in February 2011. A little late to the trend, most analysts have swung to a decidedly bearish tone, which in a normal, freely traded market would have the contrarians clamouring for a technical bounce.’

‘Unfortunately for Australia and the miners, there has been no ability to sustain a rally since breaching $US100 a tonne in May. The 62 per cent benchmark for deliveries to Quingdao was last night worth $US66.94/t.’

‘This is because Chinese port and steel mill stockpiles are not far off record highs and China’s Government remains steadfast in rebalancing growth away from investments that consume steel.’

‘Almost two decades of rampant spending on infrastructure and urbanisation in China has run into the financial limit of debt saturation just as global miners reach peak production capacity.’

‘Massive oversupply has been the primary cause for the plunge this year, but the big question for all commodity markets now, not just iron ore, is whether the demand side of the equation will meet the bullish growth forecasts of economists and mining executives who have invested billions in production capacity to meet it.’

‘Worryingly, Peking University Professor Michael Pettis, one of the best China forecasters, has warned the study of 26 financial crises revealed that even the pessimists were wrong in forecasting the end of booms because they weren’t bearish enough.’

‘And in China’s case, its growth transition has barely begun.’

Comment by Combotechie
2014-12-30 06:55:42

“Massive oversupply has been the primary cause for the plunge this year, but the big question for all commodity markets now, not just iron ore, is whether the demand side of the equation will meet the bullish growth forecasts of economists and mining executives who have invested billions in production capacity to meet it.”

“… bullish growth forecasts of economists and mining executives who have invested billions in production capacity to meet it.”

IMO these people are just plain stupid.

 
Comment by Blue Skye
2014-12-30 19:43:33

‘And in China’s case, its growth transition has barely begun.’

From one kind of debt expansion to another?

 
 
Comment by Housing Analyst
2014-12-30 04:01:36

“Dr Conor Skehan is one of the country’s foremost authorities on housing, so it came as something of a shock when he revealed he would rather stay renting than become a homeowner. With property prices spiralling upwards in Dublin, he had this to say: ‘I’m the chairman of the Housing Agency and I will never buy a piece of property again. I rent. We’ve completely lost connection between rental values and market values in Ireland and that still has to sink into people’s minds.’”

With rental rates a fraction of the cost of buying in the US, this same fraud driven trend should sound familiar to anyone in the US.

“Six arrested in €1m mortgage fraud probe

http://www.irishexaminer.com/ireland/six-arrested-in-1m-mortgage-fraud-probe-232777.html

Mortgage fraud miles deep and wide across Ireland. Just like the US.

 
Comment by Ben Jones
2014-12-30 04:01:50

‘Bond brokerages have a New Year’s resolution proposal for China’s policy makers: allow more defaults among so-called zombie companies.’

‘The extra yield on three-year AA rated debt over top-ranked notes surged 47 basis points this month to Dec. 25, the most for any month since October 2011, even after China’s first onshore bond payment in March failed to trigger a shakeup in the market. Borrowers graded at or below that rating need to repay a record 632.3 billion yuan ($101.6 billion) of notes in 2015, up 71 percent from 2014, China International Capital Corp. data show.’

‘President Xi Jinping, who delivers a year-ahead address on Jan. 1, must balance the need to support an economy set for its slowest growth in more than two decades with reining in the world’s biggest corporate liabilities that Standard & Poor’s estimates stood at $14.2 trillion in 2013. Haitong Securities Co. and Fitch Ratings Ltd. say that will require greater use of bankruptcy laws.’

‘Zombie companies are using up too many lending resources, Liu Shiyu, who was deputy governor at the People’s Bank of China and is now chairman of Agricultural Bank of China Ltd., said earlier this year.’

‘Wang said if there are more defaults like Chaori in which investors at the end of the day get their money back, that will encourage reckless market activity known as moral hazard. “More investors will buy those troubled companies’ bonds because they think the premium is high and it’s risk free,” she said.’

‘Premier Li Keqiang said on March 13 the government will ensure there is no systematic risk, six days after Chaori Solar missed part of an interest payment. “Regulators are very unwilling to see defaults in the public bond market because they equal defaults to sources of systematic risk,” Shi said.’

Comment by Prime_Is_Contained
2014-12-30 09:33:35

“Regulators are very unwilling to see defaults in the public bond market because they equal defaults to sources of systematic risk,” Shi said.’

That is so incredibly ironic: by misunderstanding systemic risk, they are CAUSING systemic risk!

 
 
Comment by Ben Jones
2014-12-30 04:05:06

‘The cost of borrowing from sources abroad increased in the third quarter on geopolitical risks and heightened uncertainty on the timing of the US central bank’s rate hike, the Bangko Sentral ng Pilipinas said.’

“Bond spreads generally widened in Q3 2014, indicating higher risk aversion towards Philippine sovereign debt papers against a similarly tenured US T-bond (Treasury bond),” the BSP said.’

‘Spreads on Philippine debt papers have been rising since the fourth quarter of 2012 until the third quarter of last year. It narrowed in the last quarter of 2013, and continued to do so in the second quarter of 2014.’

‘Meanwhile, credit default spread (CDS) slid to an average of 87 bps in the third quarter from 94 bps in the second quarter. “Against those of neighboring economies, the Philippine CDS traded lower than Indonesia’s CDS average of 146 bps, Thailand’s 95 bps and close to Malaysia’s 82 bps,” the BSP noted.’

 
Comment by Housing Analyst
2014-12-30 04:08:09

However, the bank’s statement offset the positives by pointing to potential threats: weakening oil prices that drive down inflation and the significant risks of high household debt accumulated during years of low borrowing rates. The basic logic behind low rates is to encourage people to gather debt when the economy is weak, said McGill University economics professor Christopher Ragan, who has worked at the Bank of Canada.”

“He added, however, that monetary policy is a ‘pretty blunt instrument’ that can’t control those who borrow too much. ‘Some people have too much debt, but not everybody,’ Ragan said. ‘Some firms probably have too much debt, but not all firms. And monetary policy just can’t address that issue.’”

Your debt is your problem. Don’t make it mine. A painful lesson for indebtured credit slaves.

Comment by Puggs
2014-12-30 14:45:13

“Always, always, always pay off debt during good times!” Yer running out of time.

“Some people have too much debt, but not everybody”

Any debt is too much debt.

 
 
Comment by Housing Analyst
2014-12-30 04:12:08

“This would affect governments, such as Russia, Venezuela and Iran, that can only balance their books if the oil price is at US$100 a barrel or more. And it would affect the shale gas sector in the US, where much of the investment has been financed by high-yielding but risky junk bonds.”

I recall some dude forecasting this on a blog somewhere 6 months ago. Welcome to 2014. Happy New Year!

Are you enjoying falling fuel and gasoline prices to dramatically lower and more affordable levels?

 
Comment by Housing Analyst
2014-12-30 04:22:30

Newport Beach, CA Sale Prices Turn Negative YoY; Plummet 8% QoQ As Sketchy Mortgages Implode

http://www.zillow.com/newport-beach-ca/home-values/

 
Comment by Housing Analyst
2014-12-30 04:26:54

Monterey County, CA Asking Prices Nosedive 19% YoY; Sellers Slash Prices On Cratering Housing Demand

http://www.zillow.com/monterey-county-ca/home-values/

 
Comment by Housing Analyst
2014-12-30 04:50:11

New York, NY Sale Prices Turn Negative YoY; Down 5% QoQ As Metro Areas Lead Prices Lower

http://www.zillow.com/new-york-ny/home-values/

 
Comment by Mugsy
2014-12-30 05:37:42

“The control of plans for tens of thousands of new homes in London is now in the hands of foreign investors who are increasing their grip on the capital’s prime property assets”

So which statement fits this situation?

No one could have seen it coming.

or I am shocked, shocked that foreigners have bought up all the prime London real estate!

The folks at the Guardian should watch Max Keiser so they wouldn’t be so surprised that their country has been sold off piece by piece.

 
Comment by Ben Jones
2014-12-30 06:53:50

‘When Allan Pulga, a communications manager, found out he was going to be a father, he had to make a tough choice — stay in a tiny downtown condo or leave Vancouver.’

‘The 34-year-old packed his bags and moved to Regina, Sask., where the typical family home costs roughly one third of the price in the Greater Vancouver area.’

‘Pulga typifies a worrying trend in Vancouver, where sky-high housing prices are forcing many young professionals out of the city and into long commutes from far-flung suburbs, with some choosing just to leave the region altogether. That has business groups raising the alarm about Vancouver’s ability to attract and retain the talent needed to foster local successes.’

‘Government data shows the migration of 25 to 44-year-olds out of Vancouver to other provinces has outpaced those migrating in from elsewhere in Canada over the past three years, eroding a key working-age demographic.’

“Housing prices are a concern for that exact reason,” said Ken Peacock, chief economist at the Business Council of British Columbia. “It makes it more challenging for younger people starting a family.”

‘Vancouver’s expensive housing also makes it tough for companies to bring in new talent from other regions, in particular senior executives, he noted. “There is a sticker shock phenomenon,” said Peacock. “A lot of these people are coming from 5,000-square-foot estates and here they get a three bedroom bungalow.”

‘Vancouver is not alone. New York, London and Singapore have long been popular with foreign investors, driving up the cost of living for locals. But while those cities are global financial hubs and have many bankers with big compensation, Vancouver’s economy relies more on tourism and a cyclical resources industry.’

‘The median family income in Vancouver in 2012, the last data available, was just $71,140 a year, the lowest of any major city in Canada, putting home ownership far out of reach for most. The median income in Regina, by comparison, was $91,200, while Toronto families make just a bit more than Vancouver families.’

 
Comment by Ben Jones
2014-12-30 07:12:01

‘The latest signs suggest the Australian economy, which weathered the 2008 global financial crisis due to a China-fuelled mining boom, could be entering a rocky period that has been called its “dog days”.

‘Australia has had a remarkable 23 years of growth and is now the 12th-largest economy in the world and the fourth biggest in Asia, with average pre-tax annual salaries of more than A$75,000 (S$80,000).’

‘But the current headline figures facing the nation are grim. Australia’s unemployment this month increased to a 12-year high of 6.3 per cent, the budget deficit is ballooning, the dollar has plunged to four-year lows against the US dollar and the government is not expecting a budget surplus for at least five years.’

‘Adding to the worries, property prices are booming, with increases of 8 per cent nationally and 13 per cent in Sydney last year, prompting concerns that the market is overheated and that households have taken on too much debt.’

‘The official government forecaster, the Bureau of Resources and Energy Economics, said on Tuesday that the price is falling due to a global oversupply, caused by a slowdown in demand from China and increased Chinese domestic production. Three months ago, the bureau was predicting iron ore prices next year of US$94 but it has now revised its expected price to just US$63 a tonne.’

‘The price of coal, Australia’s second-biggest export, has also dropped by about 30 per cent in the past year to five-year lows.’

‘Not surprisingly, consumers were hardly feeling cheerful in the lead-up to the busy Christmas shopping period. On Dec 10, the Westpac- Melbourne Institute index recorded a sudden drop in consumer sentiment of 6 per cent, marking the deepest gloom among shoppers in more than three years.’

“We haven’t seen people as worried about jobs, as unfavourably disposed to the employment story as this, ever, in this survey. That’s back to 1975,” Westpac’s chief economist Bill Evans told Fairfax Media.’

‘An expert on economic forecasting at Victoria University, Dr Janine Dixon, said an examination of the figures suggested that “it is difficult to see how ‘2015 will be better’”. “If (the mid-year review) has got the terms of trade right, living standards are heading lower,” she wrote.’

‘Many analysts are predicting that if the currency does not drop further, the Reserve Bank may try to force it down by dropping interest rates. But such a scenario could further fuel Australia’s overheated property market - a trend the Reserve Bank is determined to dampen or reverse.’

Comment by Dudgeon Bludgeon
2014-12-30 20:35:50

The Business Cycle is dead, long live the Business Cycle.

Comment by Housing Analyst
2014-12-30 20:40:05

I believe that. What’s left of the traditional cycle is a distorted, contorted unrecognizable remnant of itself.

 
 
 
Comment by Ben Jones
2014-12-30 07:14:36

‘House price growth is lagging in London, putting it behind five other cities in the UK, according to the most recent Hometrack survey. Hometrack’s research director Richard Donnell said: “The high growth cities over the last year are now recording the fastest slowdown and this is most pronounced in smaller cities such as Cambridge and Aberdeen. The Aberdeen economy is closely related to the health of the oil industry and a weakening oil price is impacting the housing market.”

“The slowdown in London will act as a drag on the UK rate of house price growth over the next 12 months. The rate of growth in house prices is starting to lose momentum across other cities in southern England.”

 
Comment by Ben Jones
2014-12-30 07:19:15

‘Canadian consumers are ending 2014 on a grumpy note. The Bloomberg Nanos Canadian Confidence Index fell to 55.1 in the final reading of the year. That’s the lowest since May 2013, as expectations for the economy tumble amid a plunge in the price of crude oil, the nation’s largest export, and with the currency at the weakest in more than five years. Views on housing have also dropped in the weekly sentiment gauge.’

“As we close out 2014, the forward view on the economy from a consumer standpoint is trending negatively,” said Nik Nanos, Ottawa-based chairman of Nanos Research Group. “Roll up a drop in the price of oil, a lower Canadian dollar and softening view on the value of real estate, and an environment is emerging which could lead to a tumultuous 2015.”

‘The 49 percent drop since June in crude prices has prompted companies to scale back investment in a country sitting on the world’s third-largest pool of reserves, and governments to trim their outlook for revenue, providing another drag on an economy the Bank of Canada says is still two years away from a full recovery. The Canadian dollar is down 8.7 percent this year versus the U.S. dollar amid the oil rout.’

‘The percentage of respondents who think the economy will strengthen over the next six months fell to 15.2 percent, the lowest since 2008, in the week ended Dec. 26. The share of Canadians predicting a worsening economy surged to a 2014-high of 33.3 percent, more than double readings in the summer.’

‘There’s also evidence the global plunge in crude oil prices is beginning to have an impact on the housing market at a time when Canadian households are sitting on record debt levels and with overvalued real estate.’

‘The share of survey respondents who see real estate prices rising over the next six months fell to 32.3 percent, a 2014 low for that question. The share expecting a decrease in prices rose to 14.4 percent last week, the highest this year.’

‘The prairie provinces including Alberta, site of Canada’s main oil-sands deposits, posted the largest declines in confidence in recent months and, along with Quebec, are the biggest losers of 2014. Quebec, a province that has lost jobs in a year of employment gains in the rest of Canada, also posted declines in consumer confidence of similar magnitude this year.’

 
Comment by azdude
2014-12-30 07:34:37

will stock and home prices extend their gains in 2015?

 
Comment by Ben Jones
2014-12-30 07:39:19

‘Interest rates have been declining for 20 years, and falling yields make dividends more attractive. But that backdrop is going to change. Dividend growth prospects are much better outside of Canada. Ramona Persaud, a Boston-based portfolio manager at Fidelity Investments, noted that the payout ratio for Canada as a whole is almost 60%. Globally, that number is about 45%. “The potential for dividend growth to be higher outside of Canada is better because you’re starting with a better payout ratio,” she said.’

‘Those types of numbers should get the attention of income-hungry Canadians. So, too, should the fact that the global equity universe has more than 2,500 highly liquid stocks, whereas Canada only has about 100. Ms. Persaud also points out that the return on equity for global stocks is between 15% and 20%, versus approximately 10% in Canada.’

“The quality of what you get in Canada is just a lot lower,” she said. “And if your portfolio is highly concentrated in a market that is so dependent on things outside your control, the volatility that comes with that will impact investors, especially those that need income as they grow older.”

‘In Canada, income is often found in dividend-paying financials. Since the sector is deeply cyclical, the best strategy is to buy at troughs and sell at peaks. Again, there are some pretty compelling reasons that this isn’t going to keep working.’

“This market segment certainly doesn’t look like it’s at a trough, and there are plenty of arguments why it’s at a peak, so financials are a tough place to put your money,” Ms. Persaud said.’

‘Investors need to consider their risk exposure in a much broader context, both because of the sensitivity of many Canadian stocks to commodity price movements, and because the domestic equity market is far too small and illiquid to be immune to outside factors.’

‘Don’t just sell Canada blindly. Be selective when paring back your exposure. Then take the remaining capital elsewhere. And don’t come back.’

 
Comment by Ben Jones
2014-12-30 07:41:46

‘Ting Hsin International Group is required to repay within three days an outstanding balance of NT$6.5 billion (US$205 million) on a NT$7 billion (US$220.5 million) syndicated loan that became due Saturday, Taiwan’s deputy finance minister Wu Tang-chieh has said, citing a decision made by the lenders.’

‘The decision not to renew the loan agreement was reached in a meeting among the main lender Mega International Commercial Bank, and three others — First Commercial Bank, Chang Hwa Bank and Taihsin International Bank.’

‘Except for Taihsin, the lenders are all government-invested institutions.’

‘The loan was made to a Ting Hsin-invested company in 2010 for a land development project in New Taipei’s Sanchong district. If Ting Hsin fails to meet its obligations, the lenders will apply for provisional seizure of the property and then auction it, according to Wu.’

 
Comment by Ben Jones
2014-12-30 08:21:29

‘Civeo shares plunged in premarket trading Tuesday after the firm handed in weak guidance, citing continued weakness in the global commodities markets as major oil companies in reduce 2015 capital spending budgets.’

‘Its shares were down around 40 percent prior to the opening bell. Civeo, which provides accommodation for oil and gas workers, also moved to suspend quarterly dividend payments in an effort to maintain financial flexibility.’

‘The grim outlook of oil prices has caused major oil companies to reduce their 2015 capital budgets, Civeo said in a statement. “This has had the effect of reducing the near-term allocation of capital to development or expansion projects in the oil sands, which is a major driver of demand for the company’s services in Canada.”

‘The company said it trimmed its Canadian and U.S. headcounts by 30 percent and 45 percent, receptively, from early 2014 levels.’

Gee, I wonder if any of those headcounts had mortgages?

 
Comment by Ben Jones
2014-12-30 10:16:04

‘Just when you thought the U.S. economy was roaring back to health, Former Federal Reserve Chairman Alan Greenspan is here to tell you otherwise. “The United States is doing better than anybody else, but we’re still not doing all that well,” Greenspan, 88, said today. “We still have a very sluggish economy.”

‘Greenspan said the economy won’t fully recover until American companies invest more in productive assets and the housing market bounces back. “Almost all of the weakness in the last four, five, six years has been in long-lived investments” in capital goods and real estate, Greenspan said. “Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

http://www.bloomberg.com/news/2014-12-30/greenspan-throws-a-wet-blanket-on-hopes-for-u-s-growth-breakout.html

Comment by drumminj
2014-12-30 10:51:23

“Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

So our economy is only healthy if it’s growing vibrantly?

Comment by Blue Skye
2014-12-30 19:57:26

For a banker, it’s doing well only if it’s borrowing (at interest) vibrantly.

 
 
Comment by Housing Analyst
2014-12-30 11:07:20

“Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

Well Al… You deliberately left out the operative fundamental; Housing prices need to fall to dramatically lower levels for that to happen. But of course you knew that already.

No vibrations until then.

 
 
Comment by alphonso bedoya
2014-12-30 10:16:57

London and Comepany

What percentage of the TOTAL number of high rise apartments are owned by foreigners?
What percentage were sold to them in the past three years?

I asked a local in 1980 where to have dinner with my wife.
She looked at me and answered: “Americans eat out. We do not.” Then silence followed.

 
Comment by Colorado Renter
2014-12-30 10:32:46

“Metro Denver home values set all time record”

Here’s the article:

http://www.denverpost.com/business/ci_27228094/metro-denver-home-values-set-all-time-record

After reading it, I’m left confused… Obviously a mixed set of data, are they just trying to spin the heck out of this?

 
Comment by Housing Analyst
2014-12-30 10:46:17

hmmm…. Looks like Denver is starting to roll over now..

Denver, CO Yearly Price Gain Evaporates; Down 4% QoQ As Housing Demand Wilts 6%

http://www.zillow.com/denver-co/home-values/

http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv

 
Comment by Ben Jones
2014-12-30 11:04:06

‘China negotiating with United States, Australia, Canada to share intelligence’

‘China will strengthen financial intelligence exchanges with the United States and Australia to track corrupt Chinese officials’ illegal assets and fight money laundering, a senior official from the Ministry of Justice said.’

‘The People’s Bank of China is in discussions with the US Financial Crimes Enforcement Network, a bureau under the US Treasury Department that monitors financial transactions to fight crime, said Zhang Xiaoming, deputy director-general of the ministry’s legal assistance and foreign affairs department. Preparations are being made for a bilateral agreement to target assets that Chinese suspects hold overseas, Zhang said in an exclusive interview.’

‘The central bank will also sign a similar agreement with the Australian Financial Intelligence Unit to monitor the suspicious flow of such assets, he said.’

“After the agreements are made, China will share intelligence with the US and Australia, which will also offer information to their enforcement agencies to conduct further investigations,” Zhang said. “Once law enforcement officers in the US and Australia identify illegal funds, they will immediately initiate judicial procedures to freeze and confiscate those criminal proceeds in their countries.”

‘More than half the known corrupt Chinese officials have transferred their illegal assets offshore and escaped to the US, Canada and Australia to avoid punishment, the Ministry of Public Security said. Between 1990 and 2011, more than 18,000 corrupt officials fled overseas, transferring ill-gotten funds of up to 800 billion yuan ($128.5 billion), figures from the Chinese Academy of Social Sciences show.’

http://usa.chinadaily.com.cn/us/2014-12/29/content_19196310.htm

Comment by Housing Analyst
2014-12-30 11:21:24

The message is turn yourself in to the authorities sooner than later. The irony is most of the people involved in absconding with borrowed or government money are also involved in the housing fraud business.

Coincidence?

 
Comment by Blue Skye
2014-12-30 20:08:14

Not to say there isn’t a lot of corruption, how can it be otherwise in a dictatorship? But “corrupt” branding by a corrupt regime envelops a lot of things the rest of us don’t consider “corrupt”. Trying to get your wife and children out of the way is being labeled as “corrupt”. I do wonder, if a man will lay in chains in China to get his wife and children to the US, is he corrupt? Maybe, maybe not.

 
 
Comment by Whac-A-Bubble™
2014-12-30 13:11:29

It seems as though rampant distrust of the motives of the international central banking cartel has resulted in a massive building boom in high end homes whose only real purpose is to hedge against incipient inflation. Did the central bankers realize their policies would generate that kind of response?

 
Comment by Bring Back the WPA
2014-12-30 14:17:07

I hereby propose a new term — “Frackclosure.” These are foreclosures triggered by rapidly falling energy prices in the fracking states.

“A private club in North Dakota’s Bakken shale that once charged membership fees as high as $25,000 and served jumbo shrimp cocktail was evicted this month in a sign that oil’s plunge is undercutting the region’s go-go years.

The Bakken Club was ordered on Dec. 17 to vacate its premises on Williston’s Main Street after failing to pay rent, state court records show. The club owed $21,598 for rent plus $1,329.90 in late fees, the landlord, On The Spot Development LLC, said in a Nov. 25 complaint. One check bounced. ” (source: Bloomberg)

[yeah, technically it's an eviction not a foreclosure. Still, a sign of pain to come.]

Comment by Puggs
2014-12-30 14:51:41

ANYTIME you put all your nuts into OIL. You WILL loose long term.

Comment by Ben Jones
2014-12-30 15:06:34

‘Excelerate Energy’s Texan liquefied natural gas terminal plan has become the first victim of an oil price slump threatening the economics of U.S. LNG export projects. The floating 8 million tonne per annum (mtpa) export plant moored at Lavaca Bay, Texas advanced by Houston-based Excelerate has been put on hold, according to regulatory filings obtained by Reuters. The project was initially due to begin exports in 2018.’

‘Excelerate’s move bodes ill for thirteen other U.S. LNG projects, which have also not signed up enough international buyers, to reach a final investment decision (FID). Only Cheniere’s Sabine Pass and Sempra’s Cameron LNG projects have hit that milestone.’

‘Prices that LNG projects can charge for long-term supply are falling from historic highs as new producers crowd the market, which is already oversupplied due to slowing demand and rising output that has seen spot Asian LNG prices halve this year.’

‘At the same time, major consumers from Japan to South Korea and China are seeking to offload some of their long-term LNG supply commitments, contributing to the glut.’

‘Prior to the oil price crash, the U.S. discount to rival Brent-linked LNG supply from Qatar and Australia was around $8-$9 per mmBtu. Now those supplies represent a cost saving over U.S. projects. “With U.S. LNG no longer looking to be the cheap LNG that off-takers have been seeking, finding companies prepared to commit to tolling fees for 20 years has become more challenging,” Flower said.’

http://finance.yahoo.com/news/exclusive-oil-price-crash-claims-first-u-lng-182142207–finance.html

Gosh, I hope no one bought a house expecting to work on this thing.

 
Comment by Gabor
2014-12-30 15:28:05

Loose?

Comment by Whac-A-Bubble™
2014-12-30 15:34:38

It’s a blogologism.

(Comments wont nest below this level)
 
Comment by Puggs
2014-12-30 22:15:01

Keep ‘er loose goose.

(Comments wont nest below this level)
 
 
 
Comment by cactus
2014-12-30 19:42:17

Does the Wealth effect engineered by the federal reserve only work for the rich?

 
 
Comment by cactus
2014-12-30 19:32:17

What happens when data used by central bankers to set policy is the result of prior policy manipulation?
Charles goodhart

Comment by Whac-A-Bubble™
2014-12-30 21:35:53

Sounds a bit like a tail-chasing exercise, or perhaps even like a snake swallowing its own tail.

 
 
Comment by Tarara Boomdea
2014-12-30 19:48:34

Spoke to an acquaintance who is a mortgage broker; asked him about this:

Appraisal Time Bomb Coming in January 2015

Article referred to in video clip:
Fannie Mae to pick ‘Lowest Risk’ comparables for appraisers

He said it was not going to be good for him and that it “will kill deals that should not have any issues”.

It will be good for those buying in better neighborhoods that are arbitrarily lumped in with not as nice, but adjacent, areas (very common here in Las Vegas.)

 
Comment by Ben Jones
2014-12-30 23:06:57

‘Fed should heed market view of deflation risk: Minneapolis Fed chief’

http://finance.yahoo.com/news/fed-heed-market-view-deflation-033037784.html

A comment:

‘John Adams
“There are two ways to conquer and enslave a nation.
One is by sword. The other is by debt.”

Dwight Eisenhower
“As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.”

Patrick Henry
“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to RESTRAIN THE GOVERNMENT -
lest it come to dominate our lives and interests.”

Henry Ford
“It is well enough that the people do not understand banking or the monetary system, for if they did there would be revolution before tomorrow morning.”

Andrew Jackson
“It is one of the serious evils of our present system of banking that it enables one class of society, and that by no means a numerous one, by its control over the currency to act injuriously upon the interests of all the others and to exercise more than its just proportion of influence in political affairs.”

James Madison
“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance.”

Thomas Jefferson
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their
Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

Thomas Jefferson
“The system of banking we have both equally and ever reprobated.
I contemplate it as a blot left in all our constitutions, which, if not covered,
will end in their destruction, which is already hit by the gamblers in corruption
and is sweeping away in its progress the fortunes and morals
of our citizens”.

 
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