March 25, 2015

A Long Way To Go To Be Back To Normal

A report from The Telegraph. “Inflation hit zero for the first time on record in February, sparking concerns that long-term deflation could wreak havoc in a muted UK housing market already spooked by general election uncertainty. Bad deflation - as seen in Japan over the last two decades and now a lurking threat in the eurozone - is down to subdued inflationary pressures. According to Anthony Codling, an analyst at the broker, Jefferies, this is dire news for existing homeowners. ‘If property prices drop existing homeowners will struggle to trade up, as a lower selling price will force them to take on a higher loan-to-value mortgage,’ said Mr Codling. ‘Why would you buy if you think prices are going to go lower? Homeowners like buying into a rising market.’”

The McKenzie County Farmer in North Dakota. “Even though oil prices continue to be low, city officials aren’t seeing the housing market or rental prices dropping in the area. Instead, they have been in somewhat of a holding pattern. ‘Because of the timing of the first building opening in December, and being that it was around Christmas, we didn’t fill up very fast,’ said Katie Walters, managing partner for Homestead Management who manages one local apartment complex development. ‘We also manage some modular cabins, and when people left for Christmas, they didn’t come back.’”

“‘Rents don’t seem to be coming down for apartments or duplexes, but I have heard of lease rate and lease-term reductions for modular and camper type of rental units,’ says Watford City Mayor Brent Sanford. ‘If the newly constructed apartments don’t fill as soon as expected, and if hotel occupancy and rates begin to decline this summer, there may be some downward pressure on the rent levels. Time and the West Texas Intermediate oil price will tell.’”

The Katy Rancher in Texas. “Figures released by the Houston Association of Realtors (HAR) indicate the housing bubble that the Houston market has enjoyed in recent years may be showing signs of weakening, and Fort Bend County has not been immune to the decline. According to HAR, falling oil prices and related layoffs, combined with limited housing inventory and rising home prices contributed to the decline in sales. ‘We’ll probably continue to see a shift from a seller’s market to a buyer’s market in the months ahead,’ said Realtor Kim Patrick with Keller Williams Premier. ‘We’ve been in a seller’s market for a few years, so it was just a matter of time before we started seeing numbers switch the other way.’”

The Financial Post in Canada. “So you think Calgary’s housing market has seen a major downturn this year? Just take a look at what’s happening in the heart of Alberta’s oilsands industry as crude’s price collapse continues. MLS sales of single-family homes in Fort McMurray and its surrounding area have plunged this year. In February, sales were down by a whopping 66% from a year ago, at just 48 units. That followed an annual decline of 53.19% in January.”

“Don Campbell, senior analyst with the Real Estate Investment Network, said smaller centres located in resource-based regions, such as Fort McMurray and Grande Prairie always have higher highs and lower lows than the more diverse and larger cities. ‘When a city or region’s economy is based on one major industry, when that industry slows, the consumer confidence in the whole city begins to fade thus increasing the overall market fear,’ said Campbell.”

The Australian. “Port Hedland — the dust-coated Pilbara town at the heart of the ­nation’s economic miracle of the past decade — grew at breakneck speed during the boom as thousands of people poured in to seek their fortunes. As property prices in the town plummet in response to the end of the mining construction boom and the recent collapse in iron ore prices, its once-overheated economy is returning to normal.”

“A sudden availability of workers means small businesses — many of which were forced to close during the boom due to the dearth of labour — are opening at a rate not seen in years. And cheaper housing means families are again able to live in town, reducing the need for iron ore mines to rely on fly-in, fly-out workers. Mine worker Tom Hillcoat decided to switch from being a fly-in, fly-out worker to moving permanently to Port Hedland with his wife, Kylie, and two young children, who he says all enjoy the outdoor lifestyle.”

“Looking around for a rental property, he found a house that had once been rented out for $2600 a week but the price had fallen to $1700 a week — and has since plummeted to $900 a week. ‘To have my family up here is the best thing I can imagine,’ he says. ‘And as prices come down, it’s becoming more family oriented and more people are moving here.’”

“Yet not everyone is convinced that Port Hedland can return to normal so soon after the economic revolution of recent years, or that it can grow from 20,000 people to reach the Barnett government’s vision of sustaining a population of 50,000 in the next two decades. One of the town’s longest-­serving residents, former mayor Arnold Carter, says the average rental value of a house in today’s market is still about $800 a week — far higher than in Perth and other centres. ‘It’s a long way to go to be back to normalisation,’ he says.”

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Comment by Housing Analyst
2015-03-25 04:55:27

Falling housing prices, falling rental rates, falling oil and fuel prices. All positively bullish fundamentals.

Comment by 2banana
2015-03-25 05:15:31

That is quite a haircut.

But $2600 a WEEK IN RENT???? For a nothing special house in the middle of nowhere?

Even $900 a week is pretty inane.


“Looking around for a rental property, he found a house that had once been rented out for $2600 a week but the price had fallen to $1700 a week — and has since plummeted to $900 a week. ‘To have my family up here is the best thing I can imagine,’ he says. ‘And as prices come down, it’s becoming more family oriented and more people are moving here.’”

Comment by snake charmer
2015-03-25 07:51:31

That mine worker apparently thinks his job is secure, when so many other mining jobs have just evaporated.

Flying people in for the workweek is a classic boom-time maneuver. During the late 1990s, the tech company I worked for did that. I remember asking “why are we flying an entire work group down here every week from Maryland?” The human resources manager just shrugged her shoulders.

Then came the bust, when even the complimentary Wall Street Journals for senior management ceased. The company had rented some furnishings, and shed that expense also. One morning a guy with a trolley came to my office and took the plastic ficus tree away.

Comment by 2banana
2015-03-25 08:42:59

That is truly a sign of the Apocalypse!

One morning a guy with a trolley came to my office and took the plastic ficus tree away.

Comment by In Colorado
2015-03-25 11:33:17

When I worked at HP we were once provided with real live greenery for our cubicles and a nice lady would even come by to check on them and water them.

Then one day they were all gone!

Turns out the plants were the property of the company that employed the nice lady who watered them. In a cost saving move HP did not renew the contract and the plants were removed.

(Comments wont nest below this level)
Comment by Combotechie
2015-03-25 05:27:41

“‘Homeowners like buying into a rising market.’”

Which makes sense if housing is considered to be an investment item rather than an consumption item.

If one is renting a house then housing is considered to be an consumption item and hence the renter would welcome falling prices, in this case falling rents.

But if one is buying a house - investing in a house - then he would welcome rising prices because rising prices would increase the value of his investment. The investment in this case is still a consumption item but it is not considered to be one, instead it is considered to be an investment item.

But a different way to look at it is to maybe to consider buying a house to be a mixture - a hybrid - of investing and consuming, something the RE marketing folks can latch onto and push. And, in my view, this seems to be what goes on.

People are given the choice of either buying a car - investing in a car - or leasing a car and most people choose to buy a car but they do not think of themselves as investors - especially when they thoroughly expect the value of their investment to decline as soon as they drive it off the lot. No, people who buy cars understand that buying a car is more of consumption decision rather than an investment decision.

But this is not the way they think when they buy houses.

Comment by Albuquerquedan
2015-03-25 05:57:45

I agree with your main point but if you can call what they are doing as investing they are investing in the worse way. Most people seem to be involved in momentum investing and not value investing. That type of investing, and it has become more and more common in the stock market, will always lead to bubbles.

Comment by Combotechie
2015-03-25 06:38:12

“… if you can call what they are doing as investing they are investing in the worse way.”

It doesn’t matter what I think about the term” investing”, it only matters what they think of the term “investing”.

They and millions of other theys.

Comment by Professor Bear
2015-03-25 06:40:57

Bubbles in turn always lead to crashes and bailouts.

Comment by AmazingRuss
2015-03-25 12:29:01

When value has been left so far behind, momentum is the only thing to trade on.

Comment by Bluto
2015-03-25 11:48:47

Agree, I bought my last place in 1997 and did so because it was affordable, net monthly outlay was about equal to rent, AND the market had been more or less flat for several years so I was reasonably confident that I would not be upside down on the mortgage in a few years. I bought it to live in, NOT as an investment…did make a profit when I sold 10 years later for 2.7 X what I paid but don’t want or expect to experience that again in my lifetime.
Would try buying again someday if it makes sense compared to rent and the market is stable. It was relatively simple in 1997 and did not have to deal with bidding wars and competition from 100% cash flippers and speculators…the flippers and speculators made it virtually impossible in 2011/2012 and the 60% runup since than now makes buying a poor choice for me.

Comment by Combotechie
2015-03-25 05:37:26

“‘When a city or region’s economy is based on one major industry, when that industry slows, the consumer confidence in the whole city begins to fade thus increasing the overall market fear,’ said Campbell.”

Go here for an extreme example of what this guy is talking about:

Comment by Ben Jones
2015-03-25 11:57:16

Or like tech stocks to the Bay Areans?

Comment by Bluto
2015-03-25 12:08:54

Along those lines Gigaom of S.F. shut down very suddenly earlier this month, this might well be a sign of things to come when vulture capitalists pull the plug on bad investments. Gigaom had been around for nearly 10 years and was thought by many to be a viable business…

Comment by Ben Jones
2015-03-25 06:19:06

‘The US coal sector is in a “terminal decline” which has sent 26 companies bust in the last three years, according to financial analysts. A report by the Carbon Tracker Initiative found that in the past five years the US coal industry lost 76% of its value. At least 264 mines were closed between 2011 and 2013. The world’s largest private coal company, Peabody Energy, lost 80% of its share price.’

‘Co-author Luke Sussams said the coal industry had been pummelled by cheap shale gas and a series of Environmental Protection Agency (EPA) regulations. “It was something of a one-two punch. Gas took the legs out from the sector and the EPA really held it down,” he said.’

‘The US shale gas price fell 80% since 2008. Meanwhile, renewable energy has become increasingly competitive. From 2005 to 2013 the amount of US electricity generated by burning coal dropped by 10.5%. This was picked up by gas (8.7%) and renewables (4.1%).’

‘In order to avoid the increasingly hostile domestic market, Sussams said the industry had banked heavily on a future where US coal exports to China and India grew significantly. But this has been undercut by cheap supply from Indonesia, Australia and South Africa. Additionally, Chinese coal consumption fell 3% last year and India has said it may stop imports of coal within three years.’

‘Andrew Grant, report co-author said the report issued a warning that even without an international agreement on carbon emission, the most carbon intensive sectors of the economy were risky investments.’

“The roof has fallen in on US coal, and alarm bells should be ringing for investors in related sectors around the world. These first tremors are amongst the clearest signs yet of a seismic shift in energy markets, as high carbon fuels are set to be increasingly outperformed by lower carbon alternatives,” he said.’

Comment by Albuquerquedan
2015-03-25 06:25:49

Both Germany and Japan are increasing coal imports, shale gas is not an option in either country and the alternative energy sources have proved to be too expensive and they need to add cheap coal to the mix:

Comment by 2banana
2015-03-25 06:30:20

America has lots of coal. Amazing quantities. It will be used at the right price point.

Comment by Albuquerquedan
2015-03-25 10:12:39

Yes and India has ambitious goals to increase production, I think a little too ambitious:

Comment by Steadykat
2015-03-25 10:23:09

We have quite a bit of the prime, low sulfur coal here in Utah. Bill Clinton designated an area with about a trillion tons of it to the National Park system at about the same time that he was getting campaign cash from an Indonesian investment group.

Look up the Lippo Group and you might see the connection that led to Clinton’s true reason for the transfer of that particular piece of land to the Park service.

Much of the low sulfur coal that the friends of Bill now send to the States is transferred at the Port of Long Beach. The black dust that is a by product of the transfers blankets most of the Long Beach area.

Even in Belmont Heights were I had a house. Any water that hit the sidewalk or my driveway would run black.

Comment by Ben Jones
2015-03-25 06:23:01

‘Half of Colorado’s drilling rigs have gone idle since the end of October, the sharpest percentage decline among the country’s major oil producing states, according to a report Monday from IHS, a data analysis firm based in Douglas County.’

‘Colorado’s rig count fell from 75 on Oct. 31 to 39 on March 6, a 48 percent decline. IHS predicts capital expenditures on oil and gas wells in the state will fall from $7.4 billion last year to $5.5 billion this year.’

Comment by Ben Jones
2015-03-25 06:28:26

‘Let’s start with The Wall Street Journal article, “Banks Struggle to Unload Oil Loans,” which reveals the Fed’s role in encouraging excess oil production that led to the inevitable price drop’

‘The two forces that united’

‘First, the banks’ search for profits. As many articles have explained, abnormally low interest rates, combined with stiffer reserve regulations, have made banks’ search for profits and growth more difficult. Even traditional lending to small businesses and consumers is less desirable, pushing banks to look elsewhere.’

‘Second, the low interest rate effect on investors. With traditionally safe investments paying next to nothing, investors need to search for alternative investments to find income. Hence, the growth of specialty funds offering higher income with the appearance of acceptable risk.’

‘Nowhere is this price setting process more important than in the capital markets because it determines the allocation of capital throughout the financial system and the economy. And the process is anchored in the short-term money market rates that the Fed can control.’

‘So, when is the Fed allowed to take action and set non-market rates? The two accepted action-periods are: Fed raises interest rates (tightens money supply) to cool off a boom (evidenced by abnormally fast growth, high leverage and risky speculation)’

‘Fed lowers interest rates (loosens money supply) to counter a bust (recessionary downtrend and risk aversion)’

‘However, the 2008-2009 “bust” is long gone, yet the Fed continues its low interest rate policy, using a variety of reasons to support the desirability of doing so. This abnormal pricing and its abnormal effects, like bank/investor-driven lending to shale oil producers, are complex and not fully visible. Only when the Fed finally allows the capital markets to fully set interest rates will we see what the misallocations were.’

Comment by Professor Bear
2015-03-25 06:38:36

Only when the tide goes out will we see who was swimming naked.

Comment by "Auntie Fed, why won't you love ME?"
2015-03-25 12:42:55

I thought A-dan already edumacated us on this topic. Oil companies don’t borrow money to produce oil. They just rent the land. If the land stops producing profitable oil, then the companies file bankruptcy (because they have loans for their equipment or payroll or skittles or whatever), thereby losing no money, and the land retains its value just like before, since it was only being rented and not mortgaged in any way. The lack of profitable oil does not hurt the value of oil-bearing land, nor the pocketbooks of oil companies and oil workers.

Comment by Ben Jones
2015-03-25 06:34:37

‘Rents are falling faster than house prices in one-time boom residential property markets, creating a “draconian dilemma” for investors of over-priced properties as well as massive over-supply.’

‘Darwin and Perth, superstar property markets during the 10-year mining boom, are reeling as the slowdown is worsened by a sharp increase in housing that started about three years ago.’

‘Darwin and Perth contrast with Melbourne and Sydney, where jobs, prosperity and confidence - some claim irrational exuberance - contribute to high, single-digit price rises and reasonable rents. Australian and overseas investors are bidding up prices in the hunt for assets that provide better returns than record low interest rates.’

‘Louis Christopher, managing director of SQM, a property research company, says the overall national scene is “fairly stable” but rents falling faster than prices in Perth and Darwin is a “draconian dilemma” for investors.’

‘David Simon, a partner with BT Advice, an advisory group owned by Westpac Bank, says building approvals during January were five times higher than predicted by market analysts, suggesting a steep step-up in supply.’

“Apartments are getting more expensive to buy [in Melbourne and Sydney] and returning less cash flow through rent,” Simon says. “Investors may be paying too much and [residential] property investing looks increasingly high-risk,” he says.’

Comment by Professor Bear
2015-03-25 06:36:08

‘Why would you buy if you think prices are going to go lower? Homeowners like buying into a rising market.’

Better question: Why would you buy if you thought homes were ludicrously overpriced? Why not wait out the mania for prices to return to normalcy?

Comment by Ben Jones
2015-03-25 07:00:34

‘China Shenhua Energy, the world’s biggest coal company, is predicting a 10 per cent cut in domestic coal sales this year ­because Chinese power com­panies are moving away from coal, says Tim Buckley of the US-based Institute for Energy Economics and Financial Analysis.’

‘Mr Buckley, who spent decades as an investment banking ­resource analyst in Australia, said many people in the Australian coal industry were in denial about how serious China was about ­reducing coal-sourced pollution.’

“There is a transition coming in China that looks likely to be a total surprise to the Australian steaming coal industry,’’ he said. “Chinese power companies have been doing everything the Chinese government has asked them to do, and more,’’ he said, ­citing grid improvement, nuclear innovation, high-voltage cables and other measures designed to cut air pollution.’

“While proponents of the view that coal is only in a cyclical downturn argue that the 2.9 per cent ­reduction in coal consumption in 2014 was an anomaly, Shenhua’s own forecast provided more ­evidence that China has past peak coal,’’ he said. “And any suggestion that Shenhua is being conservative should note that total Shenhua coal sales for January and Feb­ruary were 47.4 million tonnes, a reduction of 31.2 per cent.’’

‘Mr Buckley said the Shenhua cutback prediction has negative implications for Shenhua’s controversial planned Watermark coalmine on NSW’s Liverpool Plains. Given the cutback in domestic production in China, “the strategic rationale for this $1 billion greenfield expansion is likely to be reviewed in detail” by Shenhua management, he said.’

‘Rio chief executive Sam Walsh made a speech in China at the weekend noting a positive future for resource deliveries to China. However, he was talking about iron ore given China is cutting back on, but still active in ­urbanisation, housing, infrastructure development and resource-intensive manufacturing.’

‘He predicted for China “a ­future with lower prices and slower growth that is less resource-­intensive”. “Now the tide is going out, and we’ll see who’s been swimming naked,’’ he said.’

“I’d draw their attention to the recent announcement by India’s energy minister, Piyush Goyal, that ‘possibly in the next two or three years we should be able to stop imports of thermal coal’.” He added Mr Goyal had more recently asked coal promoters to point to a single coal-fired import power plant in India that was profitable. “There aren’t any,’’ the minister reportedly said.’

‘Mr Buckley noted China’s top energy official, Nur Bekri, recently said the country would aim to raise wind power capacity to 200 gigawatts and solar to about 100GW by 2020, a near doubling of wind and quadrupling of solar since the end of 2014.’

Comment by Ben Jones
2015-03-25 07:06:53

‘Canada is in the midst of a unprecedented housing boom that seems likely to bust. I was recently in Canada and noticed a schizophrenic oscillation between housing exuberance and oil-price despair. What did it mean for the Canadian economy’s outlook? Upon returning to the US, I did some research. What I found leads me to the conclusion that Canada is now among the most vulnerable large economies in the world.’

‘The seemingly conservative Canadian population has been voraciously consuming debt at a breakneck pace. Total household debt (C$1.82 trillion) now exceeds GDP (C$1.6 trillion), approximately C$1.3 trillion of which was for residential mortgages (Click HERE). Further, household debt is now >160% of disposable income – meaning it would take ~20 months for a family to pay off its debt if interest rates were 0% and they spent 100% of their disposable income to do so.’

‘Home prices continue their basically uninterrupted rise that began in the mid-late 1990s. Detached single-family homes in Toronto now average more than C$1 million and Vancouver is now deemed the second least affordable city in the world – thanks to Chinese buyers (who are themselves facing a slower economy).’

‘The impact of lower oil prices is rippling through the economy at breakneck speed. Since 2011, Alberta, the oil-rich home of the oil sands, was responsible for more than 50% of all jobs created in Canada. It has literally been the locomotive of job creation pulling Canada forward. It’s now in reverse.’

‘Finally, craziness. Yup, not sure how to better categorize what I’m about to say. Here’s the situation, as told to me by Seth Daniels of JKD Capital, one of the most astute Canada-watchers I know. Seth told me that there is now a booming private mortgage market in which ordinary citizens are borrowing from their home equity lines to lend money to desperate borrowers. Specifically, he noted “a homeowner acts as a subprime lender by drawing a HELOC at ~3% interest-only, and lends it to a subprime borrower at 8-12% for one year (interest only).” I honestly didn’t believe him when he first mentioned this to me, but I then confirmed it myself (click HERE). In fact, if you’re a Canadian and interested, here’s a sales pitch from one vendor (click HERE). It’s only a matter of time before this shadow mortgage banking market slows, and the ramifications are likely to be enormous.’

‘The ending of the Canadian credit binge, combined with an oil-driven economic slowdown, is likely to crush consumer sentiment. In this Loonie tune, it seems our Crazy Canadian Coyote has run off the cliff, his feet are still moving, but he has yet to look down. He’s suspended in air, and it’s only a matter of time until gravity exerts its force.’

Comment by snake charmer
2015-03-25 11:41:41

“Seth told me that there is now a booming private mortgage market in which ordinary citizens are borrowing from their home equity lines to lend money to desperate borrowers.”

I think I’ve heard of this practice before. It’s called loan sharking. It’s popular with organized crime.

This is from one of the links in that article:

“[M]any people who found they couldn’t qualify for mortgages under the CMHC’s stringent new mortgage rules, instead of deciding to not buy a home, merely sought different types of mortgages.”

Did they ever.

Comment by "Auntie Fed, why won't you love ME?"
2015-03-25 12:38:34

Loan sharks often have trouble securing repayment.

Comment by Ben Jones
2015-03-25 07:09:52

‘Mortgage insurer Genworth is making changes to its underwriting practices in Alberta as it braces for an increase in delinquencies in the region. President and chief executive Stuart Levings said Genworth is exercising “heightened vigilance” in underwriting home purchases in Western Canada in light of the sharp decline in oil prices.’

‘Home prices in the region are expected to decline by three to six per cent, Levings said. Genworth says it has programs in place to support borrowers in financial trouble and prevent full-blown foreclosures. “It’s only a foreclosure that really matters because that’s when there’s an actual claim payment on our books,” Levings said.’

‘The Bank of Canada warned recently that the country’s housing market could be overvalued by as much as 30 per cent. However, Levings said he believes prices are only eight to 10 per cent overvalued on average, with figures higher in Toronto and Vancouver.’

Comment by rosie from the north
2015-03-25 07:40:07

This where we are at today. This guys a fee based financial planner. See why we are so screwed up here.

Comment by "Auntie Fed, why won't you love ME?"
2015-03-25 12:37:17

Yeah, the US housing market was overvalued by 5-10% at its peak, right before Phoenix prices dropped by 75%. Funny how everyone always has the same predictions all the time, huh?

Comment by Ben Jones
2015-03-25 07:51:35

‘Kern County business leaders gathered together Wednesday, March 25th, 2015, to get a glimpse of the county’s economic forecast during this year’s 15th Annual Kern County Economic Summit.’

‘County officials say oil and gas make up over half of Kern County’s revenue. A year ago, the price of crude oil sat around $100 per barrel. Right now, that dollar amount has decreased by about 50-percent. That downturn is leaving its mark on other sectors of the economy, from housing, to restaurants, and retail.’

“We can’t get complacent, we just have to keep on communicating the value of what we have in Kern County to the rest of the state,” said Kern Economic Development Corporation’s Richard Chapman. “If we’re at the $60, $70, $80 rate, things are sustainable, but we need to get back up to that rate,” said Chapman.’

Comment by RioAmericanInBrasil
2015-03-25 19:59:43

Kern County business leaders gathered together Wednesday, March 25th, 2015, to get a glimpse of the county’s economic forecast

“I grew up in an oil town but my gusher never came in..”

Kern River, Merle Haggard:

Comment by Ben Jones
2015-03-25 07:56:05

‘Dr. Bawumia has largely blamed the country’s current economic woes on excessive borrowing, corruption and fiscal indiscipline.’

‘Delivering a speech on the topic: “The IMF Bailout, Will the Anchor Hold” at the Central University College on Tuesday, Dr. Bawumia said “Probably the most significant contributor to Ghana’s current economic malaise is the ballooning and unsustainable public debt less than a decade after being granted HIPC debt relief to the tune of $4.2 billion.’

“The IMF is not a charity organization. Ghana is no stranger to IMF bailout. Ghana’s recent request for an IMF bailout has taken the world by surprise. It came at a time when Ghana was seen as a rising economic star after it struck oil, benefited from HIPC funds etc. By 2011 Ghana was the fastest growing economy in the world. Notwithstanding these achievements four years after oil production we are back at the IMF begging for a bailout”.

“Notwithstanding efforts to avoid the oil curse, public financing became a huge problem especially ahead of the 2012 elections. The government spending in 2012 increased astronomically to 30 percent of the GDP when the revenue collected was a little 12 per cent. Government abandoned all fiscal disciplines to win the elections. It did and even went further with unsustainable policies that became a further drain on the country’s finances. Over the last six years this government has had more finances than any other government”.

“Between 2001-2008 the total tax revenues was 15.2 bn cedis . In contrast a total of 62 billion has been collected in taxes within the last six years. There has been oil export proceeds, gold and cocoa proceeds. The question is despite all these major increases in revenue why would the government cry it has no money. The answer is simple. Government expenditure between 2011-2014 has been astronomical. Much of the country’s resources have gone into corruption.Corruption has played a role in the return to IMF. What we have in Ghana is no longer corruption but corruption with impunity.”

‘The former Deputy Governor of the Bank of Ghana also said the loose monetary policy of the Bank of Ghana is one of the factors that had led the economy into the abyss.’

“There has been a dramatic increase in central bank financing of government recently (i.e. equivalent to the printing of money), in addition to borrowing to finance the fiscal deficit. Central bank financing (net claims on government) has increased from GH¢1.45 billion in 2008 to GH¢13.95 billion by 2014, an 863% increase. The excess printing of money to finance the fiscal deficit causes inflation. In accommodating Government in this manner, the Bank of Ghana is by itself undermining the value of the currency that it is required by law to protect,” he said.’

Comment by "Auntie Fed, why won't you love ME?"
2015-03-25 12:32:19

I wonder if it’s well-known that the IMF is not a charity?

Comment by rj chicago
2015-03-25 08:13:24

Just in Denver last weekend - looking about in different nabes - did not spend time downtown and given the reporting that it is a big urinal - me thinks that living in a sky box next to Coors Field is most likely out of the question. Been smelling the urinal of Chicago for 30 years - my olfactory senses are gone after so much aroma round here.

Comment by 2banana
2015-03-25 08:51:43

Of course - this is only for the little people…


Housing report by Legislative Analyst raises affordability questions
CalWatchDog | March 24, 2015 | Wayne Lusvardi

First, the LAO called for much higher building densities in coastal metropolitan areas, including:

More than doubling of single family home densities in Los Angeles, Alameda, San Mateo and Santa Clara counties from 4 units per acre to up to 9 units (Figure 10, LAO Report); More than doubling townhome and condominium densities in San Francisco from 18 units per acre to 35 to 40 units (Figure 10, LAO Report); Building 100,000 additional housing units along the coast each year. This would be the equivalent to building a new city along the coastline with a population of 300,000, or about the size of Riverside or Stockton — each year.

Comment by "Auntie Fed, why won't you love ME?"
2015-03-25 12:28:22

Once the units per acre doubles, what happens to the traffic, trash, water, air quality, social environment, and supply chain?

Comment by AmazingRuss
2015-03-25 12:35:07

Despite all their rage, they’re still just rats in a cage.

Comment by snake charmer
2015-03-25 11:54:56

“Port Hedland — the dust-coated Pilbara town at the heart of the ­nation’s economic miracle of the past decade — grew at breakneck speed during the boom as thousands of people poured in to seek their fortunes.”

Exporting raw materials to China is an “economic miracle”? It’s a simple commercial transaction.

And boy have we ever perverted the word “miracle.” I’m reminded of Sifl & Olly on MTV, with Olly selling Miracle Dirt.

Comment by "Auntie Fed, why won't you love ME?"
2015-03-25 12:00:21

Did I ever mention that I hate it when housing bubbles take forever to fully correct themselves? Because I really really do.

Comment by Professor Bear
2015-03-25 23:35:05

What’s worse, the active effort underway by the PTB to forestall a correction pretty much assures this bubble will end with a much harder landing and worse hangover than the average bubble.

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