Bits Bucket for June 1, 2015
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Is a real estate crash of similar magnitude to the recent commodities crash unpossible?
Why?
Here is a very important piece of evidence.
Don’t miss the writer’s none-too-subtle effort to discredit anyone who questions the wisdom of turning residential real estate into a globally-marketed commodity. Never mind the financial disaster which resulted!
How Real Estate Became a Global Commodity
By Livia Gershon
February 25, 2015
A New York Times investigation is looking at the purchase of New York real estate by wealthy buyers from other countries. There’s something about citizens of other countries buying land and homes in the U.S. that can be unsettling to some Americans. That goes for both the purchase of $15 million condos and the conversion of mortgages to hugely complicated paper assets sold on international markets.
It’s also something that can seem inevitable. People with more money tend to buy valuable things, regardless of where in the world they are. But a 2006 paper by Tulane University sociologist Kevin Fox Gotham argues that the globalization of U.S. real estate is driven more by deliberate government policies than most people realize. Gotham was writing at the height of the real estate bubble. Now that we know about the implosion of mortgage-backed securities that followed, and the disastrous consequences for the global economy, there are even more reasons to be interested in his argument.
Gotham notes that all kinds of cross-border exchange depend on “an elaborate and complex set of rules, regulations, and institutions that are established by the state.” Governments, in other words, make it possible for a home to become an impersonal asset ripe for investment by anyone with money, anywhere in the world.
Even in an economy where just about anything can be bought and sold, real estate stands out as something different. Houses and apartment buildings can’t be shipped overseas, of course, and they’re rarely standardized like widgets in a factory. If you’re buying a house for yourself, you’ll probably spend time looking around the rooms, checking the pipes for rust, and finding out about the local schools.
Gotham writes that the U.S. Agency for International Development has helped develop international real estate standards that make the quirks for individual homes less worrisome for investors. With international trade groups and real estate industry organizations, USAID has helped establish appraisal standards, licensing laws, lending practices, mortgage finance systems, and regulatory institutions—making real estate a more standardized, transparent commodity.
Quasi-public agencies Fannie Mae and Freddie Mac also played a role in turning real estate into a more marketable commodity. Their basic function involves funneling capital into mortgages, making it easier to buy a home. Together with lawmakers who pushed favorable legislation, Fannie and Freddie helped create a market for mortgage backed securities by making sure there were standardized documentation and underwriting guidelines for mortgage-backed securities. Federal laws also did something similar for commercials real estate by encouraging the development of real estate investment trusts, or REITs.
Today, the global economy continues to suffer from the repercussions of the 2008 financial crash, and politicians continue to debate the wisdom of putting restrictions on global markets. As they do, it’s important to remember that government actions play a big role not just in regulating the free flow of money and property but also in allowing it to exist at all.
It’s a great idea to make a basic need like shelter into a speculative vehicle. What could possibly go wrong? Other than the non-FIRE sector getting field-stripped of wealth, little else.
Sometimes, as irksome as they can be, the unintended consequences are actually the weightier consequences than the intended ones.
It’s not a coincidence that all of these policies purportedly meant to benefit the average citizen may or may not, but they do always benefit the politically well connected.
As they do, it’s important to remember that government actions play a big role not just in regulating the free flow of money and property but also in allowing it to exist at all.
Absolutely. It’s called “privatize the profits, socialize the losses.”
Sometimes, as irksome as they can be, the unintended consequences are actually the weightier consequences than the intended ones.
Like keeping interest rates low encourages businesses to take on debt. But, in the absence of demand (in no small part due to households already having a massive debt load), corporations will still take on debt - but this time to execute stock buybacks and other mal-investment-type schemes familiar to leveraged buy out artists in order to pad executive salaries.
Again, just because one doesn’t approve of the unintended consequences, doesn’t mean they don’t exist.
Is margin debt in play to buy stocks currently lower or higher than just before the Great Crash in 1929?
Marketwatch dot com
What June gloom? Investors rack up record debt to buy this market
By Shawn Langlois
Published: June 1, 2015 5:30 a.m. ET
Critical intelligence before the U.S. market opens
Getty
June in San Francisco!
Welcome to June — a great month to be a kid, a bad month to be a San Francisco sunbather, and a relatively terrible month to be knee-deep in equities.
In fact, no other month really comes close when it comes to the poor June performance of the S&P over the past decade. This is especially true for financials, which have led all sectors into the toilet during this time frame. The SPDR Financial Select Sector ETF has lost more than 3%, on average, during the last 10 June months. Statistics and damn lies.
The tone will be set early, too, with plenty on tap in this first week to either rattle or propel markets.
Data-wise, there’s auto sales and the jobs number. On the international front, Greece’s debt talks and a European Central Bank meeting. There’s also the OPEC meeting at the end of the week.
All this while margin debt is reaching deeper into unsettling territory. Never before have investors racked up this much debt to fund their stock purchases, Doug Short of Advisor Perspectives notes. Not in 2000 and not in 2007. That’s fine when the bulls are in charge, as they have been, but when the momentum fades and things start to turn, beware the margin calls and the flood of selling that can accompany them.
…
‘Never before have investors racked up this much debt to fund their stock purchases, Doug Short of Advisor Perspectives notes. Not in 2000 and not in 2007.’
So, this is a possible repeat of 1999?
Maybe investors don’t think anything bad will happen to them:
https://www.youtube.com/watch?v=qpjHW4mr6qo
who is the latest round of sheep? Is it the mellenials?
This is getting insane.
Nah…perfectly consistent with a market that doesn’t believe the Fed really intends to raise interest rates any time soon.
how many rounds of QE will it take for a currency crisis?
Do u feel like your missing out on something?
Not missing anything. However I find it challenging to figure out how to diversify against the backdrop of such extreme uncertainty.
However I find it challenging to figure out how to diversify against the backdrop of such extreme uncertainty.
It is not the uncertainty that you need to diversity against.
Diversification is about ensuring that different portions of your portfolio are exposed to different risks, the idea being that not all risks can come home to roost at the same time. That allows the remainder of the portfolio to buffer against the risks that do occur.
Now consider that all asset classes are inflated by the same Fed actions, and all asset classes are exposed to the same risk of that changing/ending—at the same time.
IMO, those who think they are well diversified in the current climate are in for a rude awakening.
“Diversification is about ensuring that different portions of your portfolio are exposed to different risks, the idea being that not all risks can come home to roost at the same time.”
That’s exactly the problem. The massive distortion of QE1, QE2 and QE3 has concurrently lifted normally-diverse asset classes across the board, similar to how an incoming tsunami lifts all physical assets to an elevation well above sea level. The resulting massively correlated risk is hard to hedge.
For a case in point, I have my 85-year-old dad in one of those Target Retirement funds that conservatively balances stock and bond portfolio shares. But with interest rates so near zero in the U.S. and negative in parts of the eurozone, aren’t both bonds and stocks simultaneously at major downside risk if rates rocket back up to normal levels at some point?
“Now consider that all asset classes are inflated by the same Fed actions, and all asset classes are exposed to the same risk of that changing/ending—at the same time.”
You nailed it!
But the alternative of going to cash stuffed under the mattress has its own downside risks. What if inflation is the next major trend, like in the late-1970s? In that case, posters on this board may have to eat a lot of crow for basic survival purposes. (Except for the PM hoarders, of course!)
But the alternative of going to cash stuffed under the mattress has its own downside risks.
Agreed that the alternatives are not good—or at least, I have not been able to identify a good one.
The most safe route to my eye has been to stay cash-heavy, in the hopes to be able to benefit on the short side as the lack of risk non-correlation slowly becomes clear to all. The risk for that position is that the potential correlated unwind does not occur, and inflation eats my lunch.
“The risk for that position is that the potential correlated unwind does not occur, and inflation eats my lunch.”
A related risk is that in trying to avoid the correlated unwind, the global central banking cartel accidentally triggers a nasty bout of fiat currency inflation.
What is one to do when stock prices are rising ever higher for all the wrong reasons?
Start preparing your list of shorts?
Rand Paul gives me hope for this country.
And me. But, just because “Patriot” Act provisions expired, doesn’t mean they’re not still active. Sigh.
Yeah. Rand himself said the expiration is only temporary.
But he was significant. His Facebook “likes” are 150% more than Hillary Clinton’s and 33% higher than Elizabeth Warren’s.
Only Rand Paul could say that Americans have the right to be left alone. No other Republican except perhaps his follower Massie would say that. Cruz would not say such a thing. Of course Democrats would rather die than leave Americans alone.
I hope his supporters put their money where their mouth is. Unlike HillaryJeb, he doesn’t have fat-cat oligarchs and neocons and their astro-turf PACs bankrolling him.
John McCain needs to retire from the Senate, go back to Arizona, and quietly die
I don’t care if he does it quietly or loudly, makes no nevermind to me.
Even if he does die his daughter Lindsey is waiting in the wings:
http://www.nytimes.com/2015/06/02/us/politics/lindsey-graham-presidential-campaign.html
Political dynastic families are the North Korea, er, ‘Murican way.
+4 and take Lindsey G, McConnel, Cruz, and Boehner with him.
VOTE THEM ALL OUT!
The Republicans are evil, the Democrats will save us all!
No they wont. Vote for the person, not the party. Both suck, but GOP sucks way more, just ask my portfolio.
Somehow “the person” always seems to be a Democrat?
See also:
http://www.washingtonpost.com/politics/in-iowa-gop-voters-are-uneasy-about-pauls-crusade-against-nsa-spying/2015/05/31/0b528f46-0775-11e5-a7ad-b430fc1d3f5c_story.html
I hope if Paul doesn’t get the GOP nomination he still runs as an independent.
He seems like the kind of politician to NOT compromise his positions to get a nomination. I hope he doesn’t disappoint people who hate the “take an extreme position to get the nomination, and move to the middle when nominated”.
I hope if Paul doesn’t get the GOP nomination he still runs as an independent.
I doubt that he’ll do that. One interesting issue will come up when Bush or Cruz gets the nomination. The question will come up as to whether Rand should endorse the Republican nominee. If he does, he’ll lose some of the supporters that he inherited from his father.
And when will you Free $hitters offer up RuPaul?
Nevermind. He can’t run again.
Why would Israel, GM, BofA, Exxon and Alcoa offer RuPaul?
get back in your cave, old man!
Lolas and Liberaces.
“Lolas and Liberaces.”
You can take whoever you want to your cave. lol!
re: RP: me too. I like the fact that FOX and the GOP do not like him and he is not an attorney.
The TV in the hallway has Fox news on or something and there was some guy bashing Rand Paul/Patriot act as leaving us insecure and what not. Then it cut to ads for Catherers. Telling of the viewers.
http://www.shanghaidaily.com/business/Chinese-shares-soar-5-Monday/shdaily.shtml
Seems like their stock market bubble knows no limits!
Is further indication of a contraction in China a sure sign that more stimulus is on the way?
China HSBC PMI contracts for third month in May
By MarketWatch
Published: May 31, 2015 11:20 p.m. ET
BEIJING–China’s manufacturing activity continued to deteriorate in May despite government measures to support the economy, a closely watched survey showed Monday.
The HSBC China Manufacturing Purchasing Managers Index rose to a final reading of 49.2 in May from 48.9 in April, but the result was in negative territory for the third month in a row. Anything below the 50 mark indicates contraction.
…
There was no contraction except in the small and medium business Index of HSBC. The overall manufacturing index increased as did the services index.
CHINESE shares soared on Monday after positive data on China’s manufacturing activities in May.
The benchmark Shanghai Composite Index soared 4.71 percent to finish at 4,828.74 points. The Shenzhen Component Index rocketed 5.07 percent to close at 16,917.53 points.
The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, gained 4.97 percent to end at 3,718.75 points.
Total turnover on the two bourses shrank to 1.81 trillion yuan (US$296.65 billion U.S. dollars) from the previous trading day. Nearly 450 shares rose by the daily limit of 10 percent.
Coal sector led the rise and gained 7.93 percent. China Shenhua Energy Co., the country’s largest coal producer, gained by 10 percent to 22.62 yuan per share.
The official manufacturing purchasing managers’ index (PMI), a key measure of factory activity in China, was 50.2 in May, up from 50.1 in April and March.
But the HSBC/Markit PMI for China’s manufacturing sector was less optimistic. It stood at 49.2 in May, indicating contraction.
The Chinese stock market experienced sharp rises and falls last week.
On Thursday, the benchmark Shanghai Composite Index dived 6.5 percent to finish at 4,620.27 points, after closing at a fresh seven-year high the previous day.
We witnessed similarly violent volatility in homebuilder stock prices leading into the massive selloff during the Great Recession.
If you notice coal stocks were big winners and this is why:
http://en.chinamining.com.cn/News/2015-06-01/1433123537d72389.html
Coking coal is down over 70% day trader. Ten year lows. There is no evidence of growth anywhere except in your (yes, you called them “we” over the weekend) CCP dispatches.
If I called them “we” it was a drafting mistake. However, the board can pretend that China will not be the largest economy soon, not just by purchasing power as now, but by all measures. It is just like we ignore what our welfare system was doing by encouraging single mothers to have children from “baby daddies” and now we have Baltimore situations. Hope is not a strategy and hoping China will collapse will not deal with the problem. The decline of the U.S. is not an accident it is by design of the globalists, the plan is to transfer wealth from rich countries to poor countries by having them produce goods. That is why we do not follow supply side economics in this country because then the wealth would not transfer. Of course, the globalists make sure a major part of the profits transfer to their personal bank accounts.
But China now that it has some wealth refuses to stop producing things and become more of a “demand” country making the globalists quite mad, particularly since its factories are competing against their sweat shops in other parts of the world.
(BTU) might get bought by a Chinese co after BK.
Excerpt from China Mining link:
CNTV)
Updated: 2015-06-01 09:51
Counter:
The 2015 Pacific Energy Summit is now in its final day in Beijing. Friday’s session focuses on topics such as technology and policy to improve coal use, as well as clean air policies, and building a resilient global oil market.
The three-day event aims to explore innovative solutions to the dual challenges of rising energy demand, and a changing climate. It has attracted around two hundred leaders from government, business, and research organizations.
The National Energy Administration says China’s energy use has entered a period of medium to low growth, as the economy heads towards a more sustainable model.
But the country’s primary energy consumption is expected to expand by an average 3.4 percent annually for the next five years, no doubt increasing demand in China for coal and oil, as well as new energy.
‘The benchmark Shanghai Composite Index soared 4.71 percent to finish at 4,828.74 points. The Shenzhen Component Index rocketed 5.07 percent’
Yes, the square dancing women and janitors have taken to the easy money crack pipe quite nicely. To the moon, I say. It will make the future that much more interesting.
From China Daily:
Editor’s Note: The official People’s Daily newspaper has interviewed an “authoritative insider” who anonymously addressed pressing issues affecting the Chinese economy, while expressing confidence in growth prospects. In a Q&A, the insider advocated that China squarely face up to the economic problems and maintain a strategic focus in the process of restructuring.
Q: Economic growth has been slowing since the year started. What is your assessment of the current situation and outlook?
A: Overall, economic growth is in line with the targets set in the Government Work Report released earlier this year. China’s economy is still functioning within a “reasonable range” and within expectations.
The economy grew 7 percent year-on-year in the first quarter, which is still a rapid pace in the global context. Urban job creation and household income growth remain solid.
Notably, while the growth rate slowed, the quality of growth steadily improved and economic restructuring continued. The service industry accelerated.
While investment growth slowed, consumption growth remained stable. The gap between urban and rural incomes narrowed. Energy intensity (the amount of energy required to produce a unit of economic growth) fell 5.6 percent from a year earlier. New businesses, new industries and new products continued to emerge.
What is your assessment of China’s economic prospects?
When we look at the economy, we have to take short-, medium-and long-term views at the same time. An issue might seem very “significant” in the short term, but in the longer term, it may appear much “smaller”.
While some acute problems, especially short-term problems, need to be taken seriously, some problems are long-term in nature and are unstoppable trends. The fundamentals of the Chinese economy remain sound, as the country has the world’s highest household savings rate and maximum room for macroeconomic policy maneuvers.
China’s economy is very resilient, and the nation has an upper hand regarding institutional systems. There will not be serious problems as long as we react carefully to economic trends.
How do you view divergences among different regions and industries?
The eastern regions that have proactively restructured their economies are better prepared for a downturn. Other regions, especially resource-rich regions, face stronger downward pressure.
In terms of industries, those plagued by overcapacity are having tough times. That is also true of sectors that need large amounts of energy and resources and/or produce high levels of pollution.
But the high-technology and service industries are thriving. Overall, those who proactively adapt to the economic “new normal” - a phrase introduced by President Xi Jinping to describe slower growth, but of better quality - respond to market demand, innovate and target the “medium-to high-end market” will fare better.
Destocking and deleveraging” are proceeding, and it is a very painful process in many cases. What does it mean for the Chinese economy?
Economic restructuring is a task we cannot avoid or delay. The only option is to do it proactively, and the sooner, the better. China should concentrate on restructuring the economy instead of becoming preoccupied with minor fluctuations in the growth rate. Under no circumstances should it become so anxious as to resort to strong stimulus.
The economy faces downward pressure and many enterprises are finding it tough to survive. Meanwhile, some problems are brewing. How do we cope with this combination?
Downward pressure is inevitable given such problems as shrinking external demand and the transition to new growth drivers. Problems such as weak demand and overcapacity will persist, so we must be prepared with appropriate measures.
There is no need to panic. Macroeconomic policies should make stable growth a priority while avoiding the old growth model that put pressure on resources and the environment. Short-term policies should also promote long-term development goals. Reforms to promote sustained and sound economic development could be accelerated. There are some measures that would be beneficial for reform in the long run, but they may increase companies’ burdens, so using such measures should be carefully weighed.
Could investment and consumption provide more economic momentum?
Investment still plays a crucial role in boosting growth, and it is important to provide sustainable funding sources for this area. China has high household savings, so it is crucial to turn them into an effective funding source for investment. We should also further explore the potential of private capital.
Consumption plays a fundamental role in boosting growth. Wages and other income need to be adjusted, and the social security system needs to be improved to unleash potential consumption. Chinese consumers’ purchasing power is robust, and there is increasing demand for personalized and diversified products. There is nothing we can do about declining external demand in the short term; the solution to that problem lies in innovation and restructuring.
As the economy slows, new risks are likely to emerge. How should China respond?
Currently, most risks are under control, but the government needs to remain vigilant when it comes to specific areas such as high leverage and bubbles. In recent years, non-financial enterprises have seen the fastest growth in debt, particularly those in the property sector or those with excess capacity.
These industries should be closely watched, as should local government debts. If the economy continues to decline in some regions, there may be an impact on the labor market. The property market is having a tough time digesting inventories. The country needs a long-term mechanism for the sound development of the real estate market, combined with a new urbanization model.
Some people advocate a “strong stimulus” for the economy. What role do you think macroeconomic policies should play at this stage?
Without putting macroeconomic policies into effect, it is hard to achieve steady growth and ensure the economy operates within a reasonable range. But if you resort to the old methods of large-scale investment and strong stimulation, new burdens and contradictions may occur. We need growth, but it must be qualified, cost-effective growth.
Steady growth and restructuring should work together with the implementation of the proactive fiscal policy and prudent monetary policy, to keep economic growth from plunging. The monetary policy stance should ensure that money flows into the real economy. It is important to achieve a balance between stable growth and lower leverage.
Clear policy signals are key to stable market expectations. It is clear that the Party and the government are on track to promote market-oriented reform and support for entrepreneurs. We are consistent in sticking to the reform of State-owned enterprises, protection of property rights of private enterprises, and the policies of opening-up and attracting foreign investment.
‘There is no need to panic.’
Unless you are short China or have been making predictions about its imminent collapse. Caw.
Data Dan data…
China GDP Sinks; Plummets 45% Since 2008
https://globalriskanalysis.files.wordpress.com/2014/01/china-gdp.jpg
The number of articles recently that say such and such is in contraction….but…”growth is still 7%” is amusing.
Rural incomes are going up faster than urban. That’s interesting, especially with the collapse of farm product prices.
“A profitable Chinese duck processing company has defaulted on its debts after banks refused to roll over its loans — in a sign of lenders’ wariness over refinancings as China’s economy slows.
“Until recently, Chinese banks have been reluctant to write off big debts, preferring to keep businesses alive by rolling over their loans. But privately owned Zhongao has cited banks’ tighter lending policies as a reason why it lacked the funds to repay Rmb282m ($45m) in principal and interest despite turning a profit last year.
“It has now defaulted on debt from 13 banks, and warned it may not be able to repay Rmb200m in bonds maturing on June 12.
“If it fails to pay its bondholders, it will add to a series of recent defaults in China’s bond market where — until recently — many investors had assumed the government would not allow them to take losses.
http://www.ft.com/intl/cms/s/0/3f8b9d38-082a-11e5-95f4-00144feabdc0.html#axzz3bqbzUImM
Quack!
“All the new loans are being used to repay the old loans.”
Now the old loans cannot so easily be rolled over. This is the death knell to a credit pyramid.
Didn’t we read here recently that the central planners had made it illegal not to roll over the old loans?? How can this be happening in the face of that declaration?
Just like our government, forget what they say, and watch what they do. Especially when something happens that isn’t part of the plan.
Like the GOP supporting the Patriot Act that takes away our freedom.
Rand Paul 2016!
http://www.shanghaidaily.com/business/real-estate/New-homes-prices-rise-again-in-May/shdaily.shtml
Dr. Doom warns another crash might be pending.
http://www.businessinsider.com/roubini-theres-a-market-time-bomb-raising-the-risk-of-a-dramatic-collapse-2015-6
Yes, and Greece is leaving the Eurozone. snark.
How many times after 2009 has Roubini warned of some sort of new crash?
Of course he’ll be right eventually, but a prediction without any predictive power (because there is no timing attached) is pretty useless.
The crash in demand is ongoing Rental_Fraud.
You may be able to time the stock market if you’re lucky, but since people stay in houses for years, knowing that a housing crash is coming is more important than knowing when.
knowing that a housing crash is coming is more important than knowing when.
Knowing when would certainly be nice; I left ALOT [sic] of money on the table by being half-a-decade early!
How many times after 2009 has Roubini warned of some sort of new crash?
I don’t think that is an accurate critique, RW. I remember Roubini changing his forecast to something relatively benign shortly after the last crash; I thought he was being too optimistic, but in retrospect, I think he was accurately factoring in the effects of the central banks’ pumping. He is not always bearish.
Greeks new radical-left leaders whining like petulant children about actually being expected to pay the debts successive corrupt Greek administrations have run up by promising entitlements for votes.
http://www.independent.co.uk/news/business/news/greece-counts-down-to-default-after-tsipras-slams-eu-demands-as-unreasonable-10288087.html
Hey they voted for it:
The uncertainty has tipped Greece’s devastated economy back into recession, while fears over default and a potential “Grexit” from the euro have prompted savers to pull cash out of the nation’s banks, which are being propped up by emergency support from the ECB. Households and businesses pulled out nearly €5bn in April amid worries that euro-denominated savings could be forcibly converted into vastly cheaper drachmas. Deposits could also be seized to recapitalise banks in a rescue akin to the “bail-in” of Cypriot banks two years ago, savers fear.
No one but the Greek banking sector really knows the full magnitude of the stealth bank run now underway as Greeks pull their deposits to avoid a potential bail-in. Remember, in a time of universal fraud, possession is nine-tenths of the law. If this anecdotal account is anything to go by, the Syriza government may be forced to imposed capital controls very shortly to avoid a full-fledged run on the banking system.
http://www.zerohedge.com/news/2015-05-31/first-hand-account-greek-bank-run
Greeks new radical-left leaders whining like petulant children about actually being expected to pay the debts successive corrupt Greek administrations have run up by promising entitlements for votes.
Greece is also famous for having a lot of people who don’t pay the taxes that they owe and a taxing authority that does little about it. It could be said that’s a big part of their problem, but it’s more fun to blame the FSA.
Greeks see no irony at all in railing about poor social services while doing all they can to fiddle the taxman and get their cut of public funds. They are the Apex Free Sh*tters, the logical nexus of socialism and IDIOCRACY. Not so different from ‘Muricans, in other words.
What makes the Greek government radical-left just because they don’t want Greeks to live in poverty to pay back the banks?
Not a sign of an economy falling apart, it is a sign of an economy about to take off:
PRICES of new residential properties rose again in China in May amid continuously improving sentiment among buyers, a report released today by the China Index Academy showed.
The average cost of new houses in 100 cities edged up 0.45 percent from a month earlier to 10,569 yuan (US$1,705) per square meter, the first month-over-month increase since February, the academy said.
Nationwide, 48 cities recorded monthly price growth, an increase of 9 from April. The rest 52 cities registered price falls, a decrease of 8 from a month earlier.
Among the country’s 10 largest cities including Beijing and Shanghai, the average new home price rose nearly 1 percent from a month earlier to 19,148 yuan per square meter. That accelerated from a 0.12 percent month-on-month gain in April.
“The central bank’s further cut in interest rate in May, favourable public housing fund policies introduced by some local governments, coupled with abundant new supply released by real estate developers, jointly fueled new home transactions in some cities,” the academy said. “Looking forward, an overall rebound in residential property market has become quite evident now but high inventory still exists in some cities.”
In Shanghai, for example, new home prices rose to a record in May amid robust sales, according to a separate industry report released today.
The average price of new houses, excluding government-subsidized affordable housing, jumped 8.2 percent from April to 31,832 yuan per square meter last month, the highest ever registered in the city. The area of new homes sold, meanwhile, climbed 14.7 percent from a month earlier to 1.43 million square meters, the highest volume for May since 2010, Shanghai Deovolente Realty Co said.
“Medium- to high-end homes accounted for more than half of the transaction in May with 51 percent of new houses sold last month bearing a price tag of 25,000 yuan per square meter and above, pushing the average price to a record then,” said Lu Qilin, a researcher at Deovolente. “That was an increase of 5.9 percentage points from April and a rise of 12.6 percentage points from same period a year ago.”
On the supply side, 1.07 million square meters of new residential developments were released in the city last month, a rise of 6 percent from April, Deovolente data showed.
Chuck Fina
Why you should care:
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/11640302/Exclusive-interview-Ian-Bremmer-says-America-is-no-longer-indispensible-and-thats-bad-news-for-Britain.html
Excerpt:
In the past 35 years there’s only been one geopolitical constant in the entire world. Only one. And that’s the rise of China. What’s really dangerous is that China is the only country of size right now that has a global strategy. We should not pretend that that’s not true. They have money, they’re spending it. They’re building architecture and infrastructure. They’re trying to align countries more with their long term strategic and economic interests as they see them. The fact is the Americans, by far a greater power than China in every aspect, have nothing to respond to that with. That’s ludicrous.
“I think we massively underestimate the Chinese. We spend virtually no time thinking about them. There’s no question that China has very real problems, and those problems are going to affect them a great deal over the long term. But they understand what they need to do to resolve them; they are taking very significant steps both domestically and internationally. And we’re not. It’s one thing to cede space to the Chinese out of a strategy. We’re ceding them space that we haven’t even considered.”
“…..understand what they need to do to resolve them.”
Like building islands in disputed territorial waters. Which BTW, pizzes off all of the neighbors.
China, aka “The Greater East Asia Co-Prosperity Sphere, Part II”….basically replacing a supposed US Empire with a Chinese one.
Has anyone ever run a supposed “empire” as badly as the USA?
- Pays by far the majority of the costs of maintaining order. (Money and lives)
- Transfers wealth and jobs to the offshore subjects, creating and/or improving their economies, while screwing the workers in the home economy.
China’s leaders are stumbling from one financial crisis to the next, and have shown their incompetence by doubling down on the policies that got them in trouble in the first place.
“Transfers wealth and jobs to the offshore subjects, creating and/or improving their economies, while screwing the workers in the home economy.”
Excellent point. We even create jobs in countries that are plotting against us i.e. China.
- Transfers wealth and jobs to the offshore subjects, creating and/or improving their economies, while screwing the workers in the home economy.
Transferring wealth and jobs sounds bad, but here is something far worse: we also transferred the industrial-production know-how. In every war throughout history, the ability to produce and manufacture the gears of war has been critical.
+1
Are the Fed’s asset bubbles on the verge of crashing back to earth?
http://charleshughsmith.blogspot.com/2015/05/is-our-economys-cinderella-carriage.html
the party will end when wall street decides. They are sucking in every last bagholder they can. then the media will go negative on some sort of event. They are masters at this game.
Remember this is about sentiment.
There are even more stock buyers than house buyers who can be conned into buying at the top.
exactly dude look at the margin debt hitting all time lows. Of course they keep running articles on cnbc how stocks aren’t overvalued. Its is robbery at its finest.
Its like the casinos. they give u the illusion you can get rich but there the ones making the money.
the party will end when wall street decides.
I was thinking about how prescient the big hedge fund cum rental companies were in buying up houses during a period of escalating rents.
But it didn’t “just happen” and they lucked out. This was one prong of a program that the business, government and central bank working together, helped make happen.
Calmly buy precious metals periodically and keep stacking. Because eventually the stocks, bonds, and real estate will be the hot potato and it will be too late to rush to the exits. Precious metals are insurance and should be a small asset class in everyone’s portfolio: ten percent to thirty percent of ones net worth should be in the precious.
PMs are popping nicely this morning. When the flight to safe haven assets begins in earnest, methinks the rise in physical metals (not the paper kind sold by the likes of JP Morgan) is going to be epic.
http://www.kitco.com/market/
The people of Spain are pushing back on becoming a Goldman-Blackstone colony ripe for looting and asset-stripping.
http://wolfstreet.com/2015/05/31/is-goldman-about-to-lose-a-tentacle/
Record margin debt is fueling the melt-up of the Wall Street-Federal Reserve Ponzi market.
http://www.marketwatch.com/story/what-june-gloom-investors-rack-up-record-debt-to-buy-this-market-2015-06-01?link=MW_latest_news
A good day for the Little People challenging the 1% PTB. Kudos to Rand Paul for his principled stand. And, Bernie Sanders is drawing big crowds in Iowa. Hillary’s people are getting nervous.
http://www.nytimes.com/2015/06/01/us/politics/challenging-hillary-clinton-bernie-sanders-gains-momentum-in-iowa.html?_r=0
Heck, I might change my outlook on Toupees.
I don’t care about toupees as long as the big banks/Koch lobbyists get their long-overdue haircut….
How much taxpayer money is going to continue to go to Musk?
http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#page=1
As far as I’m concerned, the modern-day Leonardo da Vinci can have as much as he wants.
Modern day P.T Barnum you mean.
Afraid Musk might invent something that disturbs the oil industry status quo?
No. Even if he invented something today it would be more than a decade before it would even start to make a dent in consumption.
Albuquerquedan - that is loser talk
Question…would you bet against Elon Musk? Would you short Tesla? I’m not long Tesla, but I wouldn’t short it.
If you are right, and it costs $70-$80 per barrel to add oil supply, doesn’t that support the contention that electric cars will be more and more viable?
They will become more viable and I have not suggested anyone short it because people want the company to succeed and are maybe willing to hold on despite bad news and more importantly have been successful in getting government subsidies. When will the subsidies end, no one can predict that so it is not a good short. But what Tesla had not been able to do is produce a car that is affordable for the masses even with huge subsidies both federal and state.
BTW, speaking of cars, CNBC just announced that the average length of an auto loan is now 67 months.
As long as he has a bunch of his Silicon Valley buddies, and people in the government baffled with BS, he’ll do okay.
See “Eclipse Aviation”
I’d short the hell out of it, except there are too many people with vested interests trying to bail him out. Just like the banksters.
Neither has Porshe nor Jaguar. Tesla hasn’t been able to make econoboxes because they don’t compete in that segment.
“and it costs $70-$80 per barrel to add oil supply”
It doesn’t Rental_Fraud. Saudi Arabia is profitable at $6/bbl.
They are not getting massive government subsidies, if the rich want play things and want to spend their own money, I have no problem with that.
I’d short the hell out of it, except there are too many people with vested interests trying to bail him out. Just like the banksters.
Yes, QE to infinity.
http://www.reuters.com/article/2015/06/01/us-usa-fed-rosengren-idUSKBN0OH2FS20150601
But they need to compete in that segment, because the market for a $80K electric car (built at a loss) isn’t very big.
They’ve got to have a product in the 35-40K range to help cover the fixed costs.
The fact that they are hawking their battery tech to the public tells me that either:
-They are unfocused, or
-They realize that they can’t build a competitive, money-making car, and are “diversifying/leveraging” their knowledge to help cover costs.
‘See “Eclipse Aviation”’
changed hands a few times:
http://en.wikipedia.org/wiki/One_Aviation
One of the manufacturing sites is down the road from me, on the old closed Brunswick base.
If Tesla were a real profit earning company, it would have been bought out a long ago, but it’s just another product of cheap money and subsidies. As often as ADan is wrong on China, he got this one right.
I see Teslas here and there. They’re nice looking.
Tesla has a 30k-40k car coming out. I rode to lunch today in an all electric car. Electric cars are here, battery technology is getting really good.
I see more and more charging stations at parking lots. I see the spots often all taken as well.
We have a Tesla Super charging station on the central coast.
You can keep your Koch bros and Fox News.
Elon is da man! He inspires million of kids to think outside the Fox.
30% gov workers,high min wage and free,er hc in greeeeeeece
“As far as I’m concerned, the modern-day Leonardo da Vinci can have as much as he wants.”
EM gets stuff done! Not many people like that these days!
To the haters: He only created ~6000 US jobs in NV, let the states be free to give out candy to whoever they want to play with.
Musk - hmmmm…..got Solendra?
Yes, one company, Solyndra, failed when the got undercut by cheap Chinese solar panels. And based on that one experience let’s completely stop investing in R&D and advanced technology.
His new battery factory better go better than his space port in NM.
People are idiots, part MCMXXX.
http://tinyurl.com/ntwxlg5
That’s not duct tape. It’s a thin aluminum tape with a strong adhesive on the back. I’ve got a couple of rolls in the shop. Useful for all kinds of airplane stiff, inside and outside, including patching small, non-structural holes in flaps, unpressurized exterior skins, radomes temporarily to get the aircraft to a shop to be fixed.
My guess: The paint right behind engine inlet rings and leading edge surfaces has a bad habit of peeling off. Usually, this is prevented by sealing the gap with some kind of sealant. Trouble is, this sealant takes a while to dry. They must have had the inlet ring off. So to prevent paint peeling/damage on the engine nacelle aft of the ring, he’s applying aluminum tape over the joint temporarily.
That wouldn’t alarm me if he was using duct tape. Dat engine is just a big duct, right?
Can China start sending Israel Billions while we step aside? Rand Paul 2016!!! Now is the time!!!
srael has been preparing for war with Western support since 1948 and it will most likely continue well into 2028. Israel and its American-Israeli Public Affairs Committee (AIPAC) lobby have political influence over the U.S. congress and the Obama administration. Will Israel get the amount they are asking for? Most likely, yes. According to Defense News, a military news organization based in Virginia:
Israel is seeking a hefty surge in annual security assistance from Washington and has begun preliminary talks with the US administration on a long-term package that would provide up to $45 billion in grant aid through 2028. In recent months, working-level bilateral groups have begun to assess Israel’s projected security needs in the context of a new 10-year foreign military financing (FMF) deal that will kick in once the current agreement expires in 2017
Israel is not America’s 51st state.
Christian Zionism is anti-semitic. How? Why? Because it dehumanizes Jewish people, it treats them like they are some kind of religious mascot, who must be herded into the land of Israel, for the primary reason of hastening the Rapture of Christian Zionists.
My dad was an ardent supporter of Israel and a devout evangelical Christian, so I suppose that would have made him a “Christian Zionist.” He also had a deep admiration for Israelis and viewed Jews as God’s literal Chosen People. So your “anti-Semitic” canard may not fit in some or most cases.
Your daily missive from the City of drooping shoulders:
“Officials: Chicago schools chief resigns amid federal probe
In a short letter released by the school district, Byrd-Bennett notified David Vitale, the president of the board of education, that she was submitting her resignation, effective Monday.
“I remain forever thankful for the opportunity to serve the children of Chicago and the District,” she wrote.
Neither that letter nor subsequent statements released by Mayor Rahm Emanuel and Vitale discussed the investigation that prompted Byrd-Bennett to take a paid leave of absence from her position with the nation’s third-largest school district.
But Emanuel alluded to the investigation.
“I am saddened by the circumstances that have led to Barbara’s resignation and I wish her well,” Emanuel said in a two-sentence statement released by his office Monday.”
Translation - Get the f….outta here before you mess up my 1,000 dollar suit!!!
Adding a 120GB SSD drive to a 5 yr old i5 laptop. Boot up time should go from 1.5 mins to 30 secs. Anyone do this? Gotta get my laptop working for my vacation trip to Hawaii on Sat.
Lola Live From Hawaii
King BA will be in the water.
Falling housing prices my friend…. falling housing prices.
Oxnard, CA Housing Prices Fall 22%
http://www.movoto.com/oxnard-ca/market-trends/
SHANTY BOY
Stick with the data Poet
Arvada, CO Housing Prices Fall 6%
http://www.movoto.com/arvada-co/market-trends/
Your losses are uncalcuable.
Houses always result in losses Poet. Houses depreciate.
Weston, TX Housing Prices Plummet 36%
http://www.movoto.com/weston-tx/market-trends/
The Battle of Jutland, May 31-June 1, 1915
“The Run to the South”
The first near kill of the Run to the South occurred at 1600, when a 12 inch shell from SMS Lutzow wrecked the “Q” turret amidships on Beatty’s flagship, HMS Lion. Dozens of crewmen were instantly killed, but far larger destruction was averted when the mortally wounded turret commander, Major Francis Harvey of the Royal Marines, ordered the magazine doors shut and the magazine flooded. This prevented a magazine explosion at 16:28 a flash fire ignited cordite charges beneath the turret…..
….at 1602, HMS Indefatigable ….was smashed aft by three 11 inch shells from SMS Von Der Tann, detonating “X” magazine aft. Soon another shell…..hit “A” turret forward. Indefatigable was ripped apart by another magazine explosion, sinking immediately with her crew of 1019 ……leaving two survivors.
At 1625…..when HMS Queen Mary was hit. She disintegrated when both forward magazines exploded…..sinking will all but nine of her 1275 man crew……
Shortly after 1626, a salvo struck on and around HMS Princess Royal, which was obscured by smoke and spray from shell bursts. A signalman leapt on the bridge of HMS Lion and announced “Princess Royal has blown up, sir”
Beatty famously turned to his Flag Captain and said “Chatfield, there seems to be something wrong with our bloody ships today……..”
(Which may sound callous, until you remember that he is standing on the bridge of a sister ship to the two battlecruisers he just watched blow up….and continued to engage the German ships)
“QE is not money creation; it’s more accurately a reserve creation. A central bank buys securities and pays for them with bank reserves (liabilities of the central bank and assets of commercial banks), thereby increasing the central bank’s balance sheet and the reserves of its member banks.
The linkage between QE and the money supply is indirect. Banks will use new reserves to create money, but only when reserves are an active constraint on lending. When banks do not wish to lend and/or borrowers do not wish to borrow, then reserves are an inactive constraint. When banks seek to increase their capital and borrowers strive to pay down their debts, QE does not increase the money supply and therefore does not cause inflation. ”
http://www.zerohedge.com/news/2015-06-01/qe-forever-and-ever-and-ever-and-ever
Does this making any sense to anyone? Something seems off here.
Newcastle, WA Housing Prices Fall 8%
http://www.movoto.com/newcastle-wa/market-trends/
Median List Price down 8% YoY; Median House Size down 14% YoY.
More interesting result: Median $/Sq. Ft. down 1% YoY. Hey, it’s a start!
Falling transaction prices my friend.
Right you are—it has fallen 1% per square foot year over year. At least it is finally moving in the right direction! I celebrate that.
And fallen 8% per transaction year over year.
Supreme Court rules against FBs trying to weasel out of their financial obligations.
http://www.marketwatch.com/story/supreme-court-hands-defeat-to-struggling-homeowners-2015-06-01?link=MW_home_latest_news
“Supreme Court rules against FBs trying to weasel out of their financial obligations.”
HELOC Hell. Hehe!
Wow — the Supreme Court ruled in favor of honest repayment of debts?
Kudos to them!
No worries—the executive will save them!!
“Wow — the Supreme Court ruled in favor of honest repayment of debts?”
Yeah, they upheld contract law. Amazing!
Un-possible!
Region IV
Now AG Lynch is going after…movie theaters. While Jon Corzine is free as a bird along with the other Wall Street miscreants who almost took down the financial system with their fraud and swindles.
http://www.wsj.com/articles/justice-department-investigates-theater-clearance-practices-at-amc-1433171433