July 21, 2015

The Feeling It Was Never Going To Stop

A report from The Southern Times. “Uncertainty continues to cloud the peace and stability that Namibia enjoys as the 31 July 2015 deadline draws near when the landless youths under the leadership of the Affirmative Repositioning (AR) movement are threatening to forcefully occupy land if government does not satisfactorily address their plight. Namibia’s leading social commentator Herbert Jauch said that the housing crisis is not something new and was allowed to develop over the last 20 years. According to Jauch, housing became a speculative target, a playground for the rich who bought housing not for their own needs but to make money, where speculative investment became the order of the day. ‘Now there are people owning 10 to 20 houses in Windhoek alone,’ he said.”

“Jauch said he remembers calculations done by the First National Bank which declared that housing was unaffordable to over 90 percent of the Namibian population. Jauch is of the opinion that at times developers build houses that cost N$200 000 to N$300 000 and sell them for N$3 million, which is absurd profitability with no regulation whatsoever. ‘The bubble needs to burst. Housing must reduce in cost relative to average income. Property developers benefitted from it because they only targeted the top echelons,’ he articulated.”

From Business Day on Dubai. “Once again, the hitherto sizzling Dubai property market has slumped. For close watchers of the global housing development, this development has significant impact on the world economy as Dubai has, in the last decade, had individual and institutional investors from different regions of the world come to invest in its expansive real estate market. ‘Demand is now plunging. During the year to April 2015, property transactions, both in number and value, plunged by 51.8 percent and 37.1 percent, respectively,’ the report notes, quoting real estate consultant, Jones Lang LaSalle, and the ratings agency, Standard & Poor’s, as expecting that average house prices in the emirate could fall by between 10 percent and 20 percent this year.”

Money Life on India. “With banks pulling back lending to developers and fear of Black Money Bill looming large among speculators the real estate market across India is witnessing sharp drop in transactions and new launch volumes, says a research report. ‘We are seeing a broad-based real estate pullback, with prices correcting in most tier -1 and tier-2 cities alongside sharp drops in transaction and new launch volumes. The result is not just a drop in demand for building materials and challenges for lenders with big mortgage, LAP and housing finance books, but also a generalised slowdown in GDP growth, as the sector which drives 50% of India’s capex and 30% of its jobs conks off,’ Ambit Capital, in a note says.”

“Real estate inventory has also started piling up in major cities across India. Data from property research houses suggest that regions like Mumbai and Delhi would take as much as 11-14 quarters to clear the existing inventory. ‘In Delhi, our meetings with businessmen who live in south Delhi suggest that prices in this prime part of Delhi are down 20-25% over the past year and transaction volumes have fallen sharply. In the smaller cities, the situation seems to be worse, with our contacts in Jaipur, Rajkot and Lucknow also pointing to a 15-20% YoY correction and sellers saying that it is hard to receive bids for properties that they have put up for sale,’ the report said.”

Radio New Zealand. “Farm mortgagee sales are climbing, and some in the sector are calling for mandatory debt negotiation, which would force banks to talk with farmers before they become insolvent. Rural debt negotiator Janette Walker said about 40 percent of dairy farmers would not making any money this year. A professor of Agri Business at Massey University, Hamish Gow, said the dairy bubble had burst and times were likely to get tougher. ‘That’s the million dollar question, how low will dairy prices go? I think they will stay low, some people think they will go higher. Will they go back up to $8? Absolutely not.’”

The Australian Financial Review. “West Australian mining equipment traders are selling machinery at less than half boom time prices, while lunch bars once frequented by engineers and other resources company staff are nearly empty. Steven Sakich, sales manager of Smith Broughton Industrial Auctioneers, said demand for earthmoving, mining and construction equipment had been hit hard. Prices are at least 50 per cent below levels in 2011 and 2012, he said.”

“Mining investment in Western Australia has decreased in line with the falling iron ore price. The iron ore spot price has dropped to below $US50 a tonne from $US187 in February 2011.”

“Highways Traffic Management owner Jim Capelli said he was fortunate not to invest too much during the mining boom. ‘During the course of doing business in the Pilbara I actually thought of moving north to open a sub-branch because you got the feeling it was never going to stop, but all of a sudden without really knowing, everything did stop,’ Mr Capelli said.”

From Mineweb. “There’s fear and panic in the market and the commodity super-cycle is over, according to Bloomberg Intelligence’s Global Head of Metal and Mining, Ken Hoffman. Hoffman: ‘What China did that I think changed is in 2008 the financial crisis hit and the Chinese government at the time…went to their localities and said spend, spend, spend. So China started this unprecedented building out of infrastructure. Obviously that was a huge boon to iron ore and all base metals, and they probably spent close to $2 trillion on infrastructure. The issue now is the new government comes in and sees that China uses an entire North American metal supply every 11 days. But they’ve really gone far, far out of control. By some measures they are building apartments for 3.2 billion people. They only have 1.2 billion.’”

“‘So they’ve massively overbuilt, they have ridiculous amounts of debt, trillions of dollars of debt – and they need to slow down. And until the mining industry realises just what the long-term plan of China is, they are really going to be in a bad state.”

“It’s been amazing how slow the industry has been to react and I guess it’s sort of the end of the super-cycle. Everyone just continues to wait for the cavalry to come running down, and that cavalry was China. And the cavalry just doesn’t seem to come. So they are sitting there waiting and waiting and finally the pain is becoming so great that they are starting to capitulate, but at a very slow rate.”

“And I think it’s because China is not very transparent on their policies and it’s very difficult to understand what they are doing. That’s why I go there as much as possible to really talk to people on the ground. You can see a lot of fear and panic in their faces, particularly earlier this year. When we came back and just said look, there are really, really bad things happening over there. You could see construction pretty much grind to a halt all over the country and we said this third plenum is for real. They are really cutting back. They are not going to come to the rescue – and they haven’t. They seem like they are coming to the rescue of their stock market, but they are definitely not coming to the rescue of the real-estate market, and that’s really causing a lot of pain for the metals industry and continues to cause that.”

“Why do we focus on China? Since 2000 China has represented between 90% and 140% of all the growth in the world – and so where it’s above 100% that means the rest of the world since 2000 has shrunk in its demand.”

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Comment by Ben Jones
2015-07-21 03:40:59

‘Significant progress has been made over the past several decades. This success is what makes the financial problems in China so alarming. The debt-GDP ratio is rising faster than it is in other emerging markets. Indeed, it may be the fastest absolute build-up ever. McKinsey reports that China’s total debt in 2007 held by private households, independent firms and government institutions hit 158 percent of the country’s GDP, among the worlds highest for major economies. It had risen to 200 percent by 2014 and continues to climb.’

‘Fundamental governance problems are being exposed. Nearly half of local government revenues come from the sale of land. Most of rest comes from loans from local government financing vehicles (LGFVs), using public land as collateral, funded the feverish growth in highways, high-speed railways, airports, subways, and other infrastructure. Local governments have tried to keep real estate prices high by strategically selling incrementally smaller plots of land. Local governments also created their own LGFVs to purchase the land from themselves in order to create the appearance of demand and to keep land prices and government revenues high.’

‘LGFVs have been so clever at circumventing Beijing’s prohibitions against local government borrowing that nobody, not even the Ministry of Finance seems to know how much many of the local governments owe. Estimates reach $5-7 trillion.’

‘There is a worrisome excess supply, by at least one estimate a 20 percent vacancy rate in urban housing. A recent Goldman Sachs report estimates that there is 75 billion square feet of space under construction or ready to occupy – a five year supply at current sales/occupation rates.’

‘Even more troublesome, Zhang Zhiwei, chief China economist for Deutsche Bank, suggests that 43 percent of land auctions in Jaingsu Province in 2014 were won by local government-owned shell entities formed to bid up prices and keep land valuations high. Such phantom sales cannot keep land values from falling for long. They make borrowing harder and paying off existing debt extremely difficult, if not impossible.’

Comment by Wang6Pack
2015-07-21 16:35:02

“By some measures they are building apartments for 3.2 billion people. They only have 1.2 billion.”
Sounds like the apocolypse. :(
But have no fear!
Just have to turn ol’ Wang and the Mrs. loose, BOOM. ;D

Comment by Ben Jones
2015-07-21 03:44:39

‘Islington’s Labour-controlled council has adopted pioneering new planning measures that require new homes in the borough to be regularly occupied in a bid to stop the rise of so-called “buy to leave” properties.’

‘These are homes purchased, typically by wealthy investors, who do not even let them out. Instead they are left unoccupied, to be sold after sufficient capital appreciation has been secured to satisfy the investor.’

‘Islington council is using a supplementary planning document, just endorsed by the authority’s executive committee, to oblige owners of new homes not to leave their properties empty for longer than three months.’

“London is facing a housing crisis and it’s vital that all new homes help meet the huge demand for places to live. It’s wrong if new homes are sold off-plan to investors who don’t even rent the properties out. It’s truly galling for Londoners who are desperately trying to find somewhere to live” says councillor James Murray, Islington’s executive member for housing and development.’

“Our new measures make it clear that buy to leave is unacceptable. They make clear that new homes have to, at the very least, be lived in - I think that’s a pretty reasonable thing to ask” he says.’

Comment by Ben Jones
2015-07-21 03:46:10

‘House prices in the most expensive London boroughs have unexpectedly dipped, according to figures published today, but prices across the country continue to edge up.’

‘During July, prices in the most expensive London borough, Kensington and Chelsea, fell 7.2 per cent. City AM notes significant falls in other high-value areas of the capital, such as Camden and Richmond-Upon-Thames, with the five worst-performing boroughs in the report all boasting average prices of above £618,000.’

Comment by Ben Jones
2015-07-21 03:47:59

‘A ‘ghost airport’ in Spain which cost €1bn to build has been sold at a bankruptcy auction for €10,000.’

‘Ciudad Real’s La Mancha airport, also known as Don Quixote airport, opened in 2008. It opened to international flights in 2010 but went bankrupt and closed in 2012 after it failed to attract interest from airlines. The site has lain abandoned since.’

Comment by taxpayers
2015-07-21 07:27:43

priv /public Keynesian investment
like stadiums

Comment by Senior Housing Analyst
2015-07-21 03:52:02

Seattle, WA Housing Prices Fall 11%


Comment by Ben Jones
2015-07-21 03:54:05

‘It simply isn’t true to claim that Australian property always goes up and serious questions need to be asked of anyone who suggests otherwise. The main reason that interest rates will remain at a low level is the unravelling of our terms-of-trade boom and its impact on household and national income growth. We are already in an ‘income recession’, even though we have avoided a technical recession, and this will put downward pressure on real dwelling prices and our capacity to service our residential mortgages.’

‘So while low interest rates should support dwelling price growth it may be, in reality, a poisoned chalice. The market would undoubtedly be better off if the economic environment was sufficient to support moderately higher interest rates.’

‘Against this backdrop we have a distinct shift in sentiment against the property market. While we once celebrated rapid house price growth, there is now greater concern regarding not just its sustainability but whether the market constitutes a systemic risk to Australia’s financial system.’

‘An ageing population may be the more significant factor in the medium term. This will fundamentally shift market power away from baby boomers towards the less wealthy and financially secure Generation X and Y’s.’

‘Unfortunately for baby boomers, they tend to be asset rich but cash poor and typically possess inadequate superannuation to maintain their standard of living. Some will manage to live off a combination of the pension and their rental income but others will look to downsize or liquidate their property assets.’

‘By this point though, market power will rest with a generation of Australians who for years have been shut out of the property market. They won’t have the same purchasing power and, in any case, will enjoy inferior job security and dimmer economic prospects owing to the end of Australia’s terms-of-trade boom.’

‘Whether or not the Australian property market is in a ‘bubble’ is largely immaterial at this point; there has clearly been a period in which Australians have had the capacity to pay extraordinary amounts for ordinary property. But that doesn’t mean that this capacity or willingness will last forever.’

Comment by Blue Skye
2015-07-21 07:04:49

“asset rich but cash poor”

It was a credit bubble, not a wealth boom.

Comment by Ben Jones
2015-07-21 03:56:54

‘Properties in Australia purchased by Chinese investors remain empty most of the time. Residents who live around these empty houses have been complaining about this situation, reports China News.’

‘Chinese buyers have purchased some 4,000 homes in Australia since 2013. According to The Australian, most of the China-based buyers who spent millions of dollars on these properties often just leave them vacant. Charles Tarbey of realty compnay 21th Century, said that those home owners, especially Hong Kongers and Chinese, buy them simply to sell them later at a higher price.’

‘One Asian couple purchased a property in Australia for US$1.5 million two years ago and has never even stayed in the house, said the report. Another home which was purchased by a Beijinger for US$2.28 million in 2013 has come to the same fate, said the report.’

‘Neighbors said that these homes have become community eye sores as they are full of overgrown grasses, adding that nobody even wants to walk past these lots.’

‘Most Chinese buyers would rather keep the house empty than rent it out, according to the report. A realtor told the reporter that a Chinese client refused to rent his home out even though he was being offered US$15,000-US$20,000 as a weekly payment, said the report.’

Comment by snake charmer
2015-07-21 07:41:05

Wait, you mean there are adverse consequences to all of this? Does Australian political leadership know?

There are hundreds of thousands, if not millions, of empty houses in China, and there are tens of thousands of empty houses around the world owned by Chinese. What is a house worth to a community if no one lives there? I say zero.

Comment by Ben Jones
2015-07-21 03:59:04

‘Falling iron ore prices are not helping Chinese steel companies because of even sharper declines in steel prices amid weak demand, an industry observer said.’

‘Iron ore prices have fallen over 20% since June 11, but Xu Xiangchun, director of steel market information provider Shanghai Ganglian E-Commerce, said the market has yet to bottom out.’

‘According to Xu, the fundamentals in the iron ore market have not changed and are deteriorating, and demand for both iron ore and steel in China is weak. Yet despite the weak demand, cheap supplies of iron ore continue to enter the market, further weighing on iron ore prices, with China’s steel sector remaining in a downturn, according to American investment firm Sanford C. Bernstein.’

‘Out of 13 listed Chinese steel companies that gave guidance on their first-half results, seven said they would post a loss for the first six months of the year, including SGIS Songshan, which estimated its losses at 680 million yuan (US$109.50 million) over that time.’

‘Chinese steel companies also face a challenging market because the industry is in its traditionally slow season, made worse by the arrival of the rainy season. This has come after their joint efforts to control prices failed.’

Comment by Mafia Blocks
2015-07-21 04:01:12

“efforts to control prices”

This never works. Ever. Good luck trying.

Comment by taxpayers
2015-07-21 07:29:09

hilery will offer to make hc more affordable and sheeple will vote for her
pols promise to change the vaule of things and fools believe them

Comment by AmazingRuss
2015-07-21 11:50:21

Hitlery could eat a puppy on live tv and still beat Trump. The GOP is being devoted by the monster Fox news created.

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Comment by AmazingRuss
2015-07-21 12:17:10

DEVOURED, not devoted. Stupid autocorrect.

Comment by Ben Jones
2015-07-21 04:01:51

‘The prospects look grim for the Singaporean property market even after posting seven quarters of decline in home process. In a report from bworldonline.com, the recent June housing data showing sales declining by a further 42 percent with no end in sight.’

‘According to Knight Frank LLP’s Head of Consultancy and Research Alice Tan, “The momentum is very weak, it doesn’t bode well for the residential market.”

‘With home sales last month at just 375, which is about half of what is needed to be considered as a ‘healthy market’ according to Tan. It is also the lowest number of transactions for the month of June since data was cumulated from 2007.’

‘One of the material consequences of the continued doldrums are the increase of defaults in the payments for housing purchases.’

Comment by Ben Jones
2015-07-21 04:23:59

‘U.S. banks are setting aside more money to cover bad loans to energy companies after oil prices plunged over the last year, raising the possibility that deteriorating loans could start to weigh on their earnings, some analysts said.’

I was surprised to read yesterday that platinum is cheaper than gold, as it’s an industrial metal. (I don’t follow metals very closely so I don’t know how long this has been the case). And it hit a 6.5 year low yesterday.

‘Since 2000 China has represented between 90% and 140% of all the growth in the world – and so where it’s above 100% that means the rest of the world since 2000 has shrunk in its demand.’

Probably the most significant thing about the China stock crash reaction is, they’ve gone banana-republic on us. (Bamboo-republic?)

From above:

‘Zhang Zhiwei, chief China economist for Deutsche Bank, suggests that 43 percent of land auctions in Jaingsu Province in 2014 were won by local government-owned shell entities formed to bid up prices and keep land valuations high.’

Comment by Ben Jones
2015-07-21 04:45:19

‘China may be throwing its all at the stock market not because that is its most important problem, but it’s the one Beijing can most easily, if ham-handedly, control.’

‘Intimidating short-sellers is, after all, a lot easier, and cheaper, than breathing life into a sagging housing market suffering chronic (and worsening) over-supply.’

‘Allowing people to pledge their houses as collateral for the purchase of more shares is easier than managing the transition from over-investment to, well, whatever comes after.’

‘Chinese media reported on Friday that the state-run China Securities Finance Corp. (CSF) had received 1.3 trillion yuan ($209 billion) in loans from banks, money which in turn will be made available for stock purchase loans through brokers.’

‘Last week the CSF, not satisfied with rules that since last year have allowed brokers to issue short-term debt to fund margin loans for stock purchases, took the decision to allow those loans themselves to be securitized and sold to free up more capital for - yes that’s right - more margin loans.’

“In our opinion, China’s combination of a triple bubble (with the third-biggest credit bubble, the biggest investment bubble and second-biggest real estate bubble of all time) remains the biggest risk to the global economy,” Credit Suisse strategists led by Andrew Garthwaite wrote in a note to clients.’

‘Take housing. Despite falling prices and despite sky-high valuations, with Beijing and Shanghai buyers paying average prices that are more than 20 times average incomes, supply continues to flow unabated. Housing starts in China are running at 12 percent above demand, according to a Credit Suisse estimate, and 18 percent of completed homes become vacant.’

‘It is not at all surprising that a housing bubble has gone hand-in-hand with a credit bubble, one that Credit Suisse calls the third-biggest they’ve seen, behind only Spain and Ireland during the last lamentable excess. The ratio of private sector debt to GDP is not only nearly 200 percent, but the rate of ascent has risen very steeply since 2011, taking it 40 percent above trend. Bank for International Settlements research has found that many financial crises are proceeded by credit rising by only 10 percent above trend.’

‘Investment as a percent of output is now running at 44 percent, compared with the peak of 36 percent in Japan in the early 1970s when it was rapidly industrializing. China recognizes that investment-led growth is a process with a finite limit, and that its economy must transition to one with higher consumption and services as opposed to exports and the laying of concrete over ground.’

Comment by Blue Skye
2015-07-21 07:17:06

“behind only Spain and Ireland…”

In terms of percentage, but not in terms of sheer size.

Comment by snake charmer
2015-07-21 07:47:02

“China recognizes that investment-led growth is a process with a finite limit, and that its economy must transition to one with higher consumption and services as opposed to exports and the laying of concrete over ground.”

They recognize that? Looking at the reality, the transition has been from investment-led growth to stock market mania. The government didn’t tell people to go shopping.

Comment by Ben Jones
2015-07-21 04:27:30

‘Real estate firm SARE Homes launched its Olympia housing project in Gurgaon, pricing 1,295 sq. ft three-bedroom flats at an all-inclusive Rs.90 lakh, sharply lower from the Rs.1.5 crore at which it had sold similar homes a year and a half ago.’

‘The company has also added easier payment schemes to attract buyers for the 330 apartments in the project located at Sector 92. SARE Homes, part of London-based asset management firm Duet Group, has launched the 17-acre sports-oriented project at a time when most developers in the national capital region (NCR) are struggling to sell premium homes.’

“We are launching a project after almost one and a half years, when we had priced the homes at about Rs 1.5 crore. Today, the biggest issue in the market is the ticket price and we wanted to address that,” managing director Vineet Relia said over the phone.’

‘Customers are also given the option to pay 10% at the time booking and nothing more till possession.’

Comment by Ben Jones
2015-07-21 04:29:10

‘A professor of Agri Business at Massey University, Hamish Gow, said the dairy bubble had burst and times were likely to get tougher’

The Chinese went on a dairy farm buying spree in New Zealand.

Comment by Blue Skye
2015-07-21 07:31:30

“A last player stays in the backstage and cannot wait to join the bandwagon: the European milk sector, which has been hampered for 30 years by a quota system that still freezes its production to 154.6 million tons per year (20% of the world production). But in March 2015, quotas will disappear, restoring production freedom, one result of the “Green Europe” overall reform. Countries like Ireland, Denmark, the Netherlands, Germany or France are busy investing into further capacities: almost all their extra production will go to China.”


“The 53-year-old Chinese farmer has slaughtered 180 dairy cattle—about 20% of his herd—in recent months as a global glut of milk drove prices to six-year lows. Mr. Pi, who began in the industry as a 16-year-old milker, held out for months. “I don’t think I could bear it if I had to kill any more of the cows,” he said.”


Comment by Ben Jones
2015-07-21 04:34:41

‘It was the lure of fast and easy money, lots of it, that made James Lam jump at the chance to be a Malaysia property speculator or property flipping. That was two years ago and he immediately signed up for a series of training when his friend told him about it. The thought of buying properties and selling them quick for a good profit excited him.’

“I was greedy,” says the 53-year-old who is in the top management of a multinational company. He already has a well-paying job, but the opportunity was too good to resist. In the Malaysia property speculation training, he was taught how to look for good bargains in the secondary residential property and different ways of beating the system. “I managed to sell a couple of houses and made a decent amount of money,” Mr Lam tells The Establishment Post.’

‘But this did not happen for the two properties in a prime area in Kuala Lumpur that he now has. “I cannot get a buyer. Not even a tenant (to rent). I have to start paying the banks for the loans with my own money.” He also realises that the property market is slowing down and his chances of selling these properties off is getting slimmer by the day. With Real Property Gains Tax made steeper in 2014 at 30 per cent for properties sold within three years, he would need to have a huge profit margin to offset the tax.’

‘The number of property speculators, or flippers, caught between a rock and a hard place are likely to increase as the market slows, says the chief executive officer of the Agency of PPC International Sdn Bhd. PPC International is a 24-year-old company that handles a wide range of services from valuation to estate agency, property management, research and consultancy.’

“A sharp rise in value (of properties) creates the flipping culture,” he tells The Establishment Post. “In 2010, 2011 and 2012, thousands of properties were sold to flippers. These are people who neither need the property nor can afford to buy it. They buy it purely on speculation,” adds Mr Shanker, the immediate past president of the Malaysian Institute of Estate Agents.’

‘Flippers may be forced to sell their properties at much reduced, or even lower than the purchase price, so not to be saddled with a property they cannot afford to hold. So when a Residential property transactions in Malaysiasizeable number of properties are made available in the market at much reduced prices, it is not going to be pretty for property investors and owners.’

Comment by Ben Jones
2015-07-21 04:36:27

From the Dubai link:

‘During the boom days, the Dubai property market had it so good that returns on investment were mind-boggling with investors getting as high as 85 percent returns on their investment in as short a period as 12 months.’

‘Abdul Rahman Kadiri, managing director/CEO of Arkgold Properties Limited, who was a vendor in Dubai during those hay days, told BusinessDay in Lagos that some Nigerians who bought some apartments from him at 1.8 million Dirham, an equivalent of $491,000 each, sold same apartments after eight months for 3 million Dirham (about $815,000), representing about 85 percent value appreciation.’

‘Kadiri said because of the global stock market meltdown at the time, coupled with the crash of property markets in Europe and America, “many investors are therefore, bringing in money from these locations to invest in Dubai because they see stability and increase.’

“We keep telling our friends in Nigeria that Dubai property market is one of the safest and best investment portfolios. Right now, there is good appreciation because stocks have crashed worldwide, properties have crashed in Europe and America, but Dubai property is still very stable and in upward swing. So, anybody who enters the market now is still going to make it.”

‘According to him, what was driving price up in Dubai was because there was much demand whereas there was shortage of supply, as 70 percent of multinationals that moved their businesses to Dubai did not have accommodation either for offices or for residence.’

‘That was then and, though the market has seen upward and downward swings in-between, the reality now is that demand is low, prices are down and the market is festered with high vacancy rate.’

Comment by snake charmer
2015-07-21 07:50:12

You know it’s bad when even Nigerians are getting scammed. It would be quite the irony if they were being solicited by e-mail for some kind of advance-fee transaction.

Comment by taxpayers
2015-07-21 09:22:13

I still have my 50,000,000,000 check in hand

Comment by Senior Housing Analyst
2015-07-21 04:39:14

Frisco, TX Housing Prices Fall 13%


Comment by Ben Jones
2015-07-21 04:40:30

‘As of last Tuesday, 159 people were arrested, detained or questioned in 24 Chinese cities and provinces. According to the China Human Rights Lawyers Concern Group, a Hong Kong-based advocacy group, although 135 people had been released, 10 were still detained and the whereabouts of 14 others were unknown. The crackdown on the human rights activists is believed to be unprecedented in size and scale.’

‘Among those detained were four lawyers from Beijing Fengrui, a law firm that specializes in human rights cases, an assistant and the husband of one of the lawyers. Two days earlier, the People’s Daily, the organ of the Chinese Communist Party, said that the law firm is a “major criminal gang” that “organized, planned and hyped more than 40 sensitive cases since 2012, seriously disturbing social order.”

‘On the same day, the state-run China Central TV said that the crackdown across the nation is aimed at destroying networks of human rights lawyers and other activists. The next day, the Global Times, affiliated with People’s Daily, severely criticized the targets of the crackdown by saying that among them were people who have problems in the realm of thought and that they do not basically accept the political system of China. This statement points to the possibility that those being held may be charged with serious crimes such as instigation of subversion of the state.’

‘What is conspicuous about the latest wave of repression is that it targeted those who had refrained from direct criticism of the country’s communist regime…It is noteworthy that the crackdown took place at a time when the Chinese economy is slowing down, which can sow the seeds of discontent among people on matters such as the growing gap between rich and poor and urban housing woes. If the slowdown deepens, people’s frustration will grow. The Chinese leadership may fear that dissatisfied people could team up with networks of human rights lawyers, forming a potent force for explicitly criticizing the Xi regime.’

‘The crackdown followed on the heels of China’s enactment of a new national security law. Under it, a national security review mechanism will cover all actions “that impact or might impact national security.” This will cover an extremely broad range of activities ranging from the Internet to foreign investment.’

‘Last year, the Communist Party’s Central Committee decided to push for the rule of law, but the party is embracing “democratic dictatorship and the system of socialism with Chinese character” — not Western-style democracy.’

Comment by Ben Jones
2015-07-21 04:47:24

About a year ago, I could do an entire post on China once a week, using many locally sourced articles. Then that stopped. I can hardly find a single local report that isn’t useless as far as knowing what’s going on there.

Comment by Mafia Blocks
2015-07-21 04:50:16

It seems China now uses the federal res playbook. If you can’t hide it, twist it, distort it, obscure it, cloud it, bury it….. or just plain lie about it.

Comment by Ben Jones
2015-07-21 05:05:28

‘China now uses the federal res playbook’

Yes, China may look ridiculous to us, but remember that the Federal Reserve was creating money, buying US treasuries and then giving the interest earned back to the US government. As one poster said, the more you borrow the more you earn.

In Japan, they are using QE to buy stocks and REITs. Europe is running a QE too. A lot of running around with scissors if you ask me.

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Comment by Albuquerquedan
2015-07-21 06:07:55

Too many meeting to answer all the posts this may be it for the day. But if china has been responsible for 100% ot the world’s growth it means its numbers have been as accurate as the rest of the world. The people that claim China is not growing as claimed have been saying it for decades. China has the ability to support both it’s stock market and its economy for many years. Meanwhile shale oil is to the US what China is to the world. Without 80 oil it is a dying industry. It has created most of the jobs in this recovery and both the industry and the recovery are at risk.

Comment by Blue Skye
2015-07-21 07:44:26

Two websites that I was reading daily specializing in news about the Chinese stock market are not reporting anything now. It is as if the “market” has ceased to exist.

Comment by Ben Jones
2015-07-21 07:56:51

‘China has the ability to support both it’s stock market and its economy for many years’

Those years are up. If a country is going to print money, it will have recessions, like night follows day.

Comment by Blue Skye
2015-07-21 09:03:06

..and the rest of the world is all lined up like a dominoes tournament.

Comment by AmazingRuss
2015-07-21 12:07:17

Just ask Dan. He has psychic China powers.

Comment by snake charmer
2015-07-21 08:00:08

This might be the clearest sign that big trouble is on the way. I mean, really, arresting people “with problems in the realm of thought.” How about arresting people with problems in the realm of theft, bribery, and money laundering? When criminals are in charge of the state, it’s never long before the concepts of law and justice are perverted.

Comment by Ben Jones
2015-07-21 08:09:12

I was thinking about going to China to make some video’s, but after I watched the show about Ai Weiwei, I decided I wouldn’t take the chance.

Comment by redmondjp
2015-07-21 14:09:57

A very wise decision.

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Comment by Senior Housing Analyst
2015-07-21 04:42:47

Oxnard, CA Housing Prices Fall 5%


Comment by Combotechie
2015-07-21 05:07:12

““Mining investment in Western Australia has decreased in line with the falling iron ore price. The iron ore spot price has dropped to below $US50 a tonne from $US187 in February 2011.”

A (somewhat) related article:

“The Latest Sign That Coal Is Getting Killed”


Comment by Ben Jones
2015-07-21 05:10:28

‘During the subprime mortgage meltdown, the hardest-hit regions saw home price declines that exceeded 50%.’

‘Fast forward to the headlines today:

Vancouver’s detached home prices at record high as demand soars (Globe and Mail, July 3)
Hong Kong’s first-half home sales, prices at record high as Chinese buyers pile back in (Reuters, July 2)
Manhattan real estate prices hit record (CNBC, July 1)
House prices hit a record high in Greater Toronto Area (Toronto Star, June 26)
House prices [in England and Wales]: Average asking price soars to record (The Independent, June 15)
Silicon Valley home prices hit record highs, again (San Jose Mercury News, May 21)’

‘The list could go on. Even so, the chief economist for the National Association of Realtors recently made this claim on CNBC: “This is clearly not a bubble.”

‘We beg to differ. Homebuilding stocks are a leading indicator of house prices, and square footage is a lagging indicator. As shown in [the chart], the S&P index of homebuilding stocks topped in 2005; home prices topped in 2006; and the average square footage of newly built houses peaked in 2008. This progression should repeat in the current cycle…’

‘The only graph on this chart making a new high today is the average square footage of a house. Fewer people are buying new homes, but those who are in the market are building mansions. This is like a [countertrend] top in the stock market in which only blue chips are making new highs. It will surely end with a … collapse in all three of these graphs.’

Comment by Mafia Blocks
2015-07-21 05:15:13

“This is like a [countertrend] top in the stock market in which only blue chips are making new highs.”

Nailed it.

Comment by Senior Housing Analyst
2015-07-21 05:12:46

Vero Beach, FL Housing Prices Fall 29%


Comment by taxpayers
2015-07-21 07:31:35

not eh data points vero

Comment by Mafia Blocks
2015-07-21 08:43:13

Houses can and do fall to less than zero.

So it is with any depreciating asset. Houses included.

Comment by taxpayers
2015-07-21 11:39:35

not ebough data points- Vero beach may be off 2%
not 26

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Comment by Mafia Blocks
2015-07-21 11:45:13

Not really. Not at all. Down 29%….. And falling.

With housing demand at 20 year lows and 25 million excess empty and defaulted houses, did you anticipate something besides falling prices?

Comment by Ben Jones
2015-07-21 05:13:52

‘The economists at Zillow recently published a prediction for home prices in Orange County through the end of 2015 and into 2016. In July, the company reported it expects to see an annual change of -0.5% in Orange County house values. In other words, they believe prices will actually dip slightly over the next year or so (July 2015 – July 2016).’

‘This seems logical. After all, house values typically don’t outpace local wage growth — at least not for long. So perhaps that’s what we are seeing within the Orange County real estate market. Perhaps home prices in the area are about to start leveling off. Only time will tell. But it certainly looks like a high-water mark has been reached.’

‘As early as January of this year, some housing analysts and economists were suggesting that Orange County home prices might be nearing their peak. Dr. Esmael Adibi, an economics professor at Chapman University, pointed to the disparity between housing appreciation and income growth in the area. He told the Los Angeles Times that “[e]verything goes back to affordability. The increase in income is not really keeping up with the increase in home prices.”

‘In other words, house values in Orange County have risen so fast, and so sharply, that they are now creating housing affordability issues for many residents. Typically when that occurs, house values begin to level off onto a plateau. The exception to this “rule” is when there’s a severe shortage of inventory. But housing inventory appears to be on the rise in O.C.’

‘Also in 2015, Orange County, California was ranked as the second most overvalued real estate market in the country, behind Austin, Texas (#1). According to the economists at Trulia, home prices in the metro area are overinflated relative to such fundamentals as historical prices, incomes and rents.’

Comment by Senior Housing Analyst
2015-07-21 05:18:30

Austin, TX Housing Prices Fall 7%


Comment by Ben Jones
2015-07-21 05:20:30

‘The biggest challenge for many would-be buyers is that there are not enough homes on the market. In some areas with low inventory, homes are being snatched up within a matter of days. That’s despite the rise in home prices, which increased by 4.9 percent in April from the year before, according to the most recent data from the Standard & Poor’s/Case-Shiller 20-city home price index. “Good for homeowners, not good for potential buyers,” says Lawrence Yun, chief economist for the National Association of Realtors.’

‘So what should home buyers do in such a tight market? Before you do anything, get a pre-approval letter. In some markets, you may not get to see a house more than once or twice before you move in, so a pre-approval letter also can help you act quickly when you see a home you love.’

‘Make sure your broker knows the competition. Knowing how many people are interested in the house can help you come in with an offer that will be taken seriously, says Brian Block, a realtor in northern Virginia. Your broker might be able to find out from the listing agent how many people came to the open house and if it is likely to receive multiple offers, he says. Something that is too below the asking price or that doesn’t match with the seller’s timeline might get rejected. “That in turn will inform me as to how aggressive we have to be,” he says. It also lets buyers know if they should prepare for a bidding war.’

‘Add an escalation clause to your arsenal. Bidding wars reached record levels leading up to the housing bubble of the early 2000s, and they haven’t really gone away since then. If you expect to compete with multiple offers on a property, consider using an escalation clause, which lays out how much more you are willing to pay over a competing offer.’

‘Tug at the heart strings. Are you and the person selling your home both veterans? Can you already picture little Jonnie playing on the tire swing or attending that great school in the neighborhood? When sellers are facing multiple offers, getting a personal letter from buyers that shows why they love the house or how they plan to use it might help to set the offer apart, Wiard says. Sure, many sellers are just going to go with the highest bidder. But some people with emotional attachments to the home they’re selling may want to know it’s going to a family or couple that will look after it and appreciate it as much as they did, Wiard says.’

And don’t forget this:


Comment by Mafia Blocks
2015-07-21 05:25:35

And for the participants arranging this charade and lining up these suckers….

Call your attorney.

Comment by Ben Jones
2015-07-21 05:24:34

‘The whole Baofeng story might sound a bit crazy. After its IPO in March, Baofeng’s share price grew 3,300% in three months, a rise that as some said presciently was a sure sign of a bubble. The company halted trading on June 11, one day before China’s market peak, after its price set a record high of 307 yuan ($49.45) on the previous trading day, promising a material disclosure.’

‘When Baofeng prepared to start trading one month later, after China’s indexes had sunk by about a third, the company’s CEO Feng Xin knew it couldn’t escape a hit (link in Chinese): “There’s no way we can hide from the plunge,” he said.’

‘Yet Feng has tried his best to soften the blow. On July 16 he encouraged his employees to buy more company shares, by promising to make up any losses they might suffer, according to a public disclosure (link in Chinese) on the Shenzhen stock exchange: “Here I propose all the Baofeng staff members to actively buy Baofeng Technology’s stock. Meanwhile, I guarantee that I will compensate for all the losses for those who buy shares from July 17 to July 21 2015 and hold them for over six months. If you suffered losses for holding more stocks, I’ll pay for back; if the stock price goes up, you get the earnings.”

“For employees who have stayed in the company for over three years and have never bought any company shares, I’ll subsidize you 50% of the money.”

Comment by Ethan in Northern VA
2015-07-21 13:12:11

Wow. They make software defined radio chipset based ham radios and other two way radios. Their $40 UV-5R is a kind of clone of the $450 Yeasu VX-7R ham radio. The Beofengs are so cheap I see them everywhere. Ham radio people and non-licensed people using them. When I couldn’t find mine I bought another one because well, lol it’s $40. I didn’t know they IPO’ed but I bet they’re hurting the Japanese Icom and Yeasu. They’re not as good as the $450 radio but.. it’s $40.

Comment by Ben Jones
2015-07-21 05:28:50

‘Global commodity prices have slumped amid a glut of supply and low demand – and now experts are foreseeing the prospect of deflation in the West. A basket of commodities measured by the Bloomberg commodities index has fallen to an 11-year low, and the index is down 42 per cent since its peak in 2008.’

‘Perhaps most telling is the price of copper, which is trading around its lowest level since the financial crisis. Known as Dr Copper due to its use as a barometer of global economic health, the industrial metal fell to $5,240 a metric tonne last week, heading towards weakness last seen in the summer of 2008.’

‘The slump in copper is a “direct consequence of the actions we are seeing in China, the increasingly flustered and desperate government [measures]”, says Alastair McCaig at IG Index.’

‘The nation accounts for 50 per cent of global copper demand, and despite official GDP data released last week stating that growth has confounded expectations to hit seven per cent in the second quarter, the figures have been widely ridiculed.’

‘A range of other indicators show China is struggling. Not only is the debt-laden country going through a difficult transition from infrastructure-led growth to a consumption-led economy, but a stock market bubble has recently burst and $3 trillion (£1.9 trillion) has been wiped off the value of local shares. Authorities have taken a heavy-handed approach, banning the sale of some stocks for six months and going after short sellers.’

“All of those [measures] independently might not be seen as too much of an issue but bundle them all together and we are seeing increasingly nervous oversight of the Chinese economy,” McCaig says.’

‘Black gold plays a large part in dictating inflation levels in the West. The last round of inflation data — showing the UK had zero consumer price inflation — was correlated before the latest squeeze on oil prices kicked in. “The latest fall in oil prices will push many economies including the UK into deflation in the next month or two,” says Michael Pearce at Capital Economics.’

Comment by Ben Jones
2015-07-21 05:40:26

‘About $2 billion was erased from the value of exchange-traded products tracking gold, silver, platinum and palladium on Monday. Investors pulled about $530 million from exchange-traded funds tracking commodities last week, or almost 1 percent of the funds’ market value. Citigroup Inc. analyst Aakash Doshi estimates that $2.3 billion was pulled from investments linked to commodity indexes in the week ended July 14, bringing total withdrawals since June 30 to $2.8 billion.’

‘Commodities producers led declines in U.S. equity markets Monday. Newmont Mining Corp., the largest U.S. gold producer, was the worst performer on the Standard & Poor’s 500 Index, dropping 12 percent in the biggest one-day drop in more than six years. Gold in New York added 0.1 percent to $1,107.70 an ounce by 10:09 a.m. in London, after an eight-day decline that was the longest run since 2009.’

Comment by rj chicago
2015-07-21 08:21:17

Ben -
Not sure if this fits the lack in demand at present but ‘paper’ gold and ‘paper’ silver - though I really don’t fully understand what the ‘paper’ is in its depth has an odor to it that tells me that there is little to no actual metal in the vault relative to the ‘claim’ noted on the ‘paper’ that investors hold.
Jesse’s Cafe Amercain tracks these flows of metal everyday and the comments there indicate that China is hoarding physical gold at the present time - Germany wants it’s physical metal repatriated and Texas the same - and yet there is no indication in the MSM or alternative press that this repatriation is actually taking place with actual physical metal.
Like everything these days - the ability to take possession of any physical asset is becomming highly compromised and highly suspicious as the PTB continue to chirp that they have it all under control.

Comment by Ben Jones
2015-07-21 08:58:17

‘Precious metals have stabilised a little after Monday’s vicious bear onslaught, which saw gold drop by a huge $45 in the space of a few minutes during the Asian session. That was apparently sparked by large sell volumes on the gold exchange in Shanghai.’

‘Evidently, gold is continuing to lose its appeal as investment asset, which explains part of the reason for the subdued demand from China and India, the world’s largest gold consumer nations. Switzerland exported 98.5 tons of the stuff in June, which is a little over 7% less than the previous month. Of this, only about half was shipped to India, China and Hong Kong compared to three quarters in May.’


Comment by Ben Jones
2015-07-21 09:24:53

‘Bank of Japan Governor Haruhiko Kuroda said on Tuesday he expected inflation to accelerate considerably in the coming months due to a tight labour market, and he brushed off the idea of needing more quantitative easing.’

‘Kuroda, in response to questions after giving a speech, also said consumer prices are still on track to meet the central bank’s 2 percent inflation target sometime around the first half of fiscal 2016.’

‘Kuroda’s optimism is in contrast with growing worries that turbulence in the global economy could cause oil prices to resume their decline and place more downward pressure on Japan’s consumer prices.’

“Right now, the inflation rate is close to zero,” Kuroda said. “The inflation rate should start to accelerate considerably in coming months.”


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Comment by redmondjp
2015-07-21 23:18:22

It’s funny; after WWII, we wouldn’t learn from their QC gurus, but they sure have learned well from our central-planning bankers!

Tootsy the inflation train sez: “I think I can, I think I can, I know I can, I know I can . . . “

Comment by Ben Jones
2015-07-21 05:31:52

‘Domestic agricultural equipment sales in Brazil in the first half of this year have fallen by 25 per cent when compared to the same period last year, according to data published last week by Brazil’s Associação Nacional dos Fabricantes de Veículos Automotores (ANFAVEA), the country’s National Automobile Manufacturers Association.’

‘These six months represent the worst period for Brazil’s domestic farm equipment sales since 2009, although it is possible that a recovery may be in sight, conditional on the global grain markets witnessing a sustained improvement in the second half of the year.’

‘Massey Ferguson, Brazil’s best-selling brand of tractors, has reported that its sales fell by only 20 per cent. On the other hand, the manufacturer John Deere, which accounts for the vast majority of domestic sales of combine harvesters, reported a 38 per cent fall in sales. The total value of agricultural machinery exports was down 41 per cent, with the number of units shipped down 18 per cent.’

‘Brazil’s economy has witnessed bubble-like increases in credit-to-GDP ratio since 2010, and currently struggles to recover from the excesses caused by earlier lax policies.’

‘The government has revised its GDP estimate for this year to a contraction of 1.20 percent, which would be Brazil’s worst economic performance since 1990.’

‘Brazil, together with Russia, another member of the so-called BRIC block of countries, has been struggling to get out of a deep recession. With the aggregate BRIC growth rate down to only about 2 per cent in April, and the potential for economic success seemingly held back for another generation, some may wonder whether it is time to bury the BRIC acronym altogether.’

Comment by Combotechie
2015-07-21 05:38:22

They’re talking about China …

“So they’ve massively overbuilt, they have ridiculous amounts of debt, trillions of dollars of debt – and they need to slow down.”


“Why do we focus on China? Since 2000 China has represented between 90% and 140% of all the growth in the world – and so where it’s above 100% that means the rest of the world since 2000 has shrunk in its demand.”


“ridiculous amounts of debt, trillions of dollars of debt” = Somebody’s else’s money

“90% and 140% of all the growth in the world” was financed by somebody else’s money. And a lot of people - these “somebody else” people - who think they have lots of money are going to discover that the money they thought they had isn’t going to be there. They may think they are rich because an account statement says they are rich but these account statements are destined to be “adjusted”, and when these adjustments take place then a lot of money will then go to the land of Poofville.

Two ways money travels to Poofville:

1. The destruction of EQUITY (which is based on prices, which in turn is based on opinions of people who have possibly lost their minds) and …

2. The destruction of DEBT (which is backed by equity, which in turn is based on prices, which is based on opinions of people who have possibly lost their minds).

And there are two steps that money takes on its way to Poofville:

Step 1. The destruction of equity due to the destruction of prices that supported the equity. Step 1 is when stockholders take the hit and they take their hit right off the bat.

Step 2. The destruction of debt that is due to the destruction of prices that supported the equity that backed the debt. The holders of debt do not take their hit right away; It takes a while for the dawning of debt holders to finally “get it”, to finally realize that the money that they are owed - the money that they thought they had because an account statement said so - isn’t going to be there after certain adjustments to reality takes its shot.

Interesting Times are at hand. Stay tuned.

Comment by WPA
2015-07-21 09:02:43

“[China] massively overbuilt, they have ridiculous amounts of debt, trillions of dollars of debt – and they need to slow down.”

Kudos to Ben for collecting some really hard-hitting information that lays bare the Chinese crisis-in-the-making. The eternal optimist in me hopes that in the long run maybe, just maybe, a China meltdown might be bullish for America in that some of the manufacturing jobs might be repatriated here at home.

Comment by Mafia Blocks
2015-07-21 09:17:22

It’s all about falling prices my friend.

Comment by In Colorado
2015-07-21 09:17:39

According to Jauch, housing became a speculative target, a playground for the rich who bought housing not for their own needs but to make money, where speculative investment became the order of the day. ‘Now there are people owning 10 to 20 houses in Windhoek (Namibia) alone,’ he said.”

If you’re gonna own a bunch of houses, own them in a stable country and not in a banana republic where after a revolution they will confiscated.

Comment by taxpers
2015-07-21 10:21:27

I love house haters international when they go to south American countries w no extradition laws

Comment by snake charmer
2015-07-21 12:10:14

I too find that show amusing, for a different reason, that being the almost comical naïvete of Anglo-American buyers. I saw one show where a couple was looking to buy in Colombia. Their list of priorities? View, charm, environmentally-friendly. Security wasn’t on the list.

The second most-amusing show was “Locked Up Abroad.” In the re-enactments, you’d see Westerners talking into smuggling drugs, by taping duct-taping them to their bodies in such quantity that they looked like the Michelin Man. No way you’ll get caught by customs looking like that!

Comment by redmondjp
2015-07-21 14:14:59

Which is exactly why the Chinese are on a buying spree in our coastal cities right now.

Comment by Mafia Blocks
2015-07-21 20:18:42

Well not really. Not at all. Remember, housing demand is at 20 year lows and falling.

Comment by In Colorado
2015-07-21 09:26:27

“Why do we focus on China? Since 2000 China has represented between 90% and 140% of all the growth in the world – and so where it’s above 100% that means the rest of the world since 2000 has shrunk in its demand.”

And now China is slowing down too. Big surprise, as its customers are broke.

As for the emerging Chinese middle class, an anecdote. My Beijing colleagues earn less than half of what we do here in Broomfield and about 1/3 of what the Santa Clarans get. And their housing is comparable in price (for now) to the Bay Area.

One of my ChiCom colleagues showed me a picture of his toddler, taken in their home. The place had a 3rd world squalor to it, at least it did in the photo. Middle class, my azz.

Comment by Mafia Blocks
2015-07-21 11:48:06

China isn’t just “slowing down”. China is plummeting.

Comment by Ben Jones
2015-07-21 14:16:25

‘Moody’s Analytics has warned that the European Central Bank’s (ECB) €1.1tn quantitative easing (QE) programme could be creating a new property bubble.’

‘The report says that Norway, the UK and Germany are the most at risk of developing dangerously inflated property markets as loose money is pumped into the global economy. Anna Zabrodzka, the report’s author, said rising prices and the ECB’s stimulus package are causing “the risk of house price bubbles” resurfacing.’

‘Since 2010 average house prices in Norway have increased by more than 30 percent, German prices are up by almost 25 percent, while UK properties are 15 percent more expensive.’

‘The report says that properties in cities like London, Oslo and Munich are “becoming increasingly overvalued.”

‘As far back as 2013 the Bundesbank warned that properties in the German market could be overvalued by as much as 10 percent, and 20 percent in major cities.’

‘Norway is considered to be the country which is most at risk - its Financial Supervisory Authority warned earlier in this year that low interest rates are putting upward pressure the country’s housing market. Confronted with low oil prices the country’s central bank has continued to cut interest rates.’


Comment by Ben Jones
2015-07-21 14:33:05

‘Here’s a Bond Backed by Dirty Laundry’

‘Another esoteric deal to hit the market’


Comment by Raymond K Hessel
2015-07-21 18:59:16

In the spirit of ships sailing from a sinking rat, a massive capital outflow from China appears to be underway. Will this be Chinese embezzlers’ last chance to park their ill-gotten loot in California real estate?


Comment by Ben Jones
2015-07-21 19:55:11

Huh, this index did the exact same thing yesterday. And immediate straight down spike followed by the PTT.

Shanghai Composite Index


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