August 27, 2015

Like A Snake Trying To Eat An Elephant

A report from the New Zealand Herald. “An Auckland property agent is the latest beneficiary of a series of sales of a modest West Auckland house which has rocketed in price by $153,000 in 13 weeks. Barfoot and Thompson managing director Peter Thompson says he understands the three-bedroom home was sold at the weekend for a negotiated price of $628,000. That makes it the fourth time the property - which has a CV of $340,000 and was listed by his company just last week - has changed hands since late May. Neighbour Joanna Pou said no one had lived in the house since Mrs Wilson moved out on July 10 but the property kept going back on the market. ‘They’re all investors. It’s just constantly being flicked over.’”

The International Business Times on the UK. “Home sales to first-time buyers in the UK continue to decline, according to the latest market report. ‘It’s alarming that the number of sales being made to first-time buyers is steadily falling; with reports of house prices increasing and expectations of rising in the future, first-time buyers will continue to be pushed out of the market,’ said Mark Hayward, managing director at the estate agents’ association. A flood of housing coming on to the market has given some optimism to estate agents who hope that ‘over the next few months we’ll see activity in the market increasing and more sales completing,’ Hayward said.”

Bloomberg on Brazil. “Not long ago, Brazil’s real-estate market was one of the biggest symbols of the country’s burgeoning economic might. Now, it’s fallen victim to an ever-deepening recession. The real-estate industry, which is equal to about 10 percent of Brazil’s economy, is emerging as one of the latest casualties of a recession. Earlier this month, Rossi Residencial SA, which has 2.5 billion reais in debt, also brought in advisers to ‘restructure operations and review strategies.’ Since 2010, the builder has lost 99 percent of its stock-market value.”

“‘There is no real estate company that survives without sales,’ Bruno Mendonca Lima de Carvalho, the head of fixed income at Guide Investimentos SA, said from Sao Paulo. ‘You can’t import or export apartments. You’re relying solely on domestic activity.’”

“That’s a reversal from just two years ago, when real-estate prices in places like Rio de Janeiro and Sao Paulo had surged as much as 230 percent as rising incomes, a soaring real and record-low borrowing costs ignited a wave of home buying.”

CTV Kitchener in Canada. “In Waterloo, only a few years ago students were spreading into nearly every part of the city due to a rental shortage – people in the student housing industry say it’s more and more becoming the exception. Rob Jackson says he’s already felt a major shift to a market less favourable to landlords, and worries about what will happen once even more student housing comes online. Jackson rents out a converted house to students. He expected the income from that house to pay for an early retirement, but now says that’s unlikely to happen. ‘This isn’t the cash cow that people think it is,’ he said.”

“In recent years, he’s lost one of the five bedrooms he rented out – and now, he says, he might have to lower the rent just to attract tenants. ‘Utilities have increased. Property taxes have increased. I should be getting two per cent more than what I’m getting right now,’ he said. ‘(Students) know that they can wait until the very end and start negotiating down.’”

NDTV Profit on India. “A day after RBI governor Raghuram Rajan advised builders stuck with unsold inventories to cut rates, realtors’ body CREDAI today said there is no scope to reduce housing prices and demanded that interest rates on home loans as well as taxes should be reduced to boost demand. ‘From the developer’s side that a substantial reduction in prices has already happened across the country,’ CREDAI president Getamber Anand told PTI. ‘Any further decrease in sale prices would mean an out of pocket expense for the developers thereby acting as the last nail in the coffin of an industry which contributes so much to the economy and employment at large.’”

The Australian Financial Review. “While Chinese investors, the largest group of foreign investors in property, are still coming to Australia in droves many are more cautious about foreign-investment rules and are no longer thinking ‘just because we have money, we can buy anything,’ Asian property agent, House 18’s Michael Zhu said. ‘The rules have always been there. In the past, there were fewer Chinese investors and so the control of investments were not as tight. Now people especially the smaller investors are very worried.’”

“Mr Fang, a Chinese investor from Suzhou said he has postponed an investment in a house in Melbourne. ‘I don’t want to break the law. I am happy to get a lawyer but it costs money so I have to think about it more carefully,’ he said. ‘I am buying to support my only child who may go to Australia to study but now I am not sure if I want to do it.’”

“Sydney prices have leapt 20 per cent in the last 12 months, and Melbourne prices nearly 12 per cent. The inter-governmental body, The Financial Action Task Force identified property as a ‘high risk’ sector for laundering in Australia and noted AUSTRAC had no power over real estate agents, accountants and lawyers. ‘Australian housing is viewed across Asia as an attractive vehicle for parking illicit funds, particularly among corrupt officials,’ its latest assessment has found.”

CNN on China. “Faced with this new rout, local investors — many of who are still reeling from the meltdown that began in June — posted reactions across Chinese social media ranging from dark humor and despair to a revealing mistrust of the government. ‘The stocks I bought have dropped so cruelly,’ one Weibo user posted. ‘In a previous session, I made 200,000 (yuan). Because I was greedy I wanted to make more, like a snake trying to eat an elephant.’”

“‘What a great Chinese dream! The stock market bubble should just burst… Last month, my father went back to his hometown of Jiangyang (in Sichuan),’ one cynic said on Weibo. ‘Our relatives said in the last two years many businesses have closed and even a large factory wasn’t able to get enough orders to keep going. Compared to 2011 when he visited, it’s day and night. Who are you fooling?’”

“Another chimed in: ‘If housing prices would fall like this that would be great, then the Chinese economy would completely collapse and the government would also collapse. (You) can only rebuild after it breaks.’”

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Comment by Ben Jones
2015-08-27 03:06:37

‘China has built over 70,000 kilometers of highways in the past decade — the longest distance in the world — and is facing major repayments of the construction loans this year, according to Guangzhou’s Southern Weekly.’

‘Facing heavy debts, some highway operators have ventured outside their core business to try to improve their profitability, said the report. Two of the popular sectors they have expanded into are property and financial services.’

‘A pawn shop business accounted for 2% of the profits earned by Anhui Expressway in 2014, while the leasing business contributed 12% to the profits of Dongguan Development Holdings, the parent company of the highway operator in Dongguan in Guangdong province.’

Comment by snake charmer
2015-08-27 07:24:42

Heh. “Expanding into financial services.” Sounds like General Electric. I read an article this morning that China plans to investigate some brokerage firms for fraud; I was wondering when the effort to find a scapegoat would get underway.

Comment by Ben Jones
2015-08-27 07:35:51

‘The ruling Communist Party’s official People’s Daily slammed foreign doomsayers for suggesting the country’s economic system would be shaken to its core in a commentary published on Thursday under the pen name “Zhong Sheng”, meaning “Voice of China”. “Some people around the world have rather impatiently spoken of the so-called end of the China model, or of a hidden financial crisis in China,” The People’s Daily said. “Of course, Chinese people are already unsurprised by the selective thinking in Western public opinion.”

“China is devoting rarely seen courage to comprehensively deepen reform. The world also needs to reform its perspectives on China,” the paper said.’–business.html

Stamp your little feet Zhong.

Comment by Professor Bear
2015-08-27 19:53:30

“Some people around the world have rather impatiently spoken of the so-called end of the China model, or of a hidden financial crisis in China,”

Crony capitalist communism is the way of the future.

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Comment by redmondjp
2015-08-27 09:34:53


Your GE comment is awesome. The US can switch places with China - we’ll take all of the manufacturing back, and they in turn can be the bean-churners that loan out the money to buy it all.

Comment by Rental Watch
2015-08-27 12:25:54

Expanding into financial services, but without Jack Welch or Jeffrey Immelt at the helm.

I’m reminded of my friend who trained Chinese nationals on how to fly. They were going directly to flying jumbo jets–having never driven a car before.

Nothing like jumping into the deep end, without being able to swim, with your arms tied behind your back, ankle weights, and eyes closed.

Not going to end well.

Comment by Senior Housing Analyst
2015-08-27 03:09:51

“Chinese Banks Expected To Report Slowed Profits, Bad Loans”

Comment by Ben Jones
2015-08-27 03:10:44

‘The latest trade figures show a dramatic annual drop in dairy exports, with tourism set to become New Zealand’s number one export earner. The figures show exports of milk powder, butter and cheese fell 24 percent, compared with the previous 12 months. In the same period, logs and wood products fell nearly 12 percent.’

‘In terms of buyers, exports for the same period to Australia fell four percent, while they dropped 27 percent to China.’

‘Infometrics senior economist Benje Patterson said the economy had reached a turning point. “We’ve got some of the staples over the past couple of years that were really driving up export activity - dairy and forestry - they’ve come off the boil, and that’s dragging down exports to China primarily.”

‘Annual visitor numbers reached 3 million last month. Simon Milne, director of the New Zealand Tourism Research Institute, said the industry had set itself a lofty target of of domestic and international tourism spend reaching $41 billion by 2025, about double where it is at now.’

‘Professor Milne said to reach that goal, visitor numbers would need to double, or the industry had to get tourists to pay more. And to increase tourist expenditure, local communities had to be on board and not feel overwhelmed by increased visitor numbers.’

“Tourism and its impacts are felt … at the park that you travel to with your family and find it crowded with visitors, they’re felt as you walk down the main street of your town and it’s parking, they’re felt when you walk out of your door and you see rubbish that’s been left by a freedom camper.”

‘Professor Milne said the industry created about 100,000 jobs directly, and in many cases were low-skilled, low-paid workers. However, he pointed out that as tourism destinations grew, so did price pressures.’

“You create through tourism a housing price bubble, a living standard bubble that becomes impossible for local communities to be able to cope with… that’s another one of the management issues, another one of the challenges that we face.”

Comment by Senior Housing Analyst
2015-08-27 03:11:46

“Brazil Defaults Rise To 19-Month High As Economy Slumps”

Comment by SFBayArea
2015-08-27 05:24:04

They are not defaulting they are simply extending their repayment structure indefinitely.

It’s different in Brazil! Brazil is special so real estate will never go down.

Comment by Ben Jones
2015-08-27 05:38:50

From the Bloomberg link:

‘The real-estate industry, which is equal to about 10 percent of Brazil’s economy, is emerging as one of the latest casualties of a recession that analysts forecast will be its longest since the 1930s. To make matters worse, interest rates are the highest in almost a decade while inflation is soaring.’

‘Australia is facing the equivalent of a recession in the next decade as incomes grow at only a fraction of the officially forecast pace, the National Reform Summit has been told. “Unless we actually grab this challenge by the horns and really get concrete about what are the priority issues, we are actually going to find ourselves sleepwalking into a real mess,” he said.’

‘Economic modeller Janine Dixon from Victoria University had told the summit the Treasury’s Intergenerational Report had painted a “rosy” picture of the future, projecting average growth in real income per person of 1.4 per cent, meaning that by 2055 Australians would enjoy real incomes 75 per cent higher.’

‘Her own modelling had real incomes growing by less than 1 per cent per year, meaning that by 2055 incomes would be only 44 per cent higher. “Put another way, it would take an extra 20 years to reach the income forecast in the Intergenerational Report for 2055,” she said.’

‘Asked to be specific about tax or spending measures that could help boost growth, Dr Parkinson said the most obvious way in which the tax system held growth back was the way in which it skewed tax concessions to the top end of the income distribution. “It’s not a retirement incomes policy, it’s a wealth accumulation policy,” he said. “That doesn’t make sense to me.”

‘The summit has brought together 100 business and community leaders to try and discuss issues the organisers believe the government is afraid to touch.’

Comment by snake charmer
2015-08-27 07:34:26

Funny. I don’t do any economic modeling, but it seems like the only disagreement among those in that line of work is over the degree of growth, not whether growth will occur at all. I mean, really, real incomes that are 75% higher versus 44% higher? My prediction is that 2055 real incomes in Australia will be substantially lower than they are today, if indeed “Australia” even exists as a political entity on that date.

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Comment by Jingle Male
2015-08-28 04:21:12

Not for me…..”in the end we’re all dead!”

Comment by redmondjp
2015-08-27 10:04:24

“Unless we actually grab this challenge by the horns and really get concrete about what are the priority issues, we are actually going to find ourselves sleepwalking into a real mess.”

Translation: Unless China keeps buying our raw materials, we’re all F’d!

I just love tearing these kinds of political nonsensespeak statements apart.

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Comment by Jingle Male
2015-08-28 04:06:16

Since China isn’t buying more beef or cement, grabbing the bull by the horns and making concrete plans will just leave leave Australia holding more inventory.

Policy changes have little effect on the fundamentals of supply and demand!

Comment by Senior Housing Analyst
2015-08-27 03:16:36

San Diego, CA Housing Prices Crater 10% YoY

Comment by taxpayers
2015-08-27 04:06:02

other than san fran is there a “HOT” market in the US?

Comment by Mafia Blocks
2015-08-27 04:20:12

Are you sure?

Alameda, CA Housing Prices Fall 10% YoY

Comment by Ben Jones
2015-08-27 04:39:09

From the New Zealand Herald article:

‘May 24: Sue Wilson sells her three-bedroom Henderson home at auction for $475,000.
July 12: Purchaser Xiaoli Zhen sells his new home for $522,500, only two days after settlement date.’

‘July 16: A trust sells the property to a new purchaser for $559,000 - an overall capital gain of $84,000 in less than two months.
August 23: The staged, vacant property sells for an undisclosed price within a week of being relisted for the fourth time in three months.’

‘A woman who owned the house for three years before selling it on May 24 for $475,000 said earlier that the quick-fire action since it left her hands “beggars belief.”

‘Sue Wilson paid $291,500 in 2012 for the property. “I was horrified,” she said of two subsequent sales, which rocketed the price to $559,000 on July 16, ahead of the latest deal. “What annoyed me most as we’re trying to get young people into houses and this sort of thing is going on with them bumping up the price.”

‘The quick-fire sales - blamed on “changing vendor circumstances” - have renewed warnings rampant property speculation is shutting first-home buyers out of the market, sparking calls for a crackdown on speculators and ban on non-resident buyers.’

‘Ray White agent Ronald Hachache sold the property last month on behalf of the initial purchaser, Mr Zhen. He said his client was not a speculator taking advantage of the market. He had bought it for his in-laws to live in but decided the area had too many state homes. “He just wanted to sell it and move on.”

‘Labour’s housing spokesman, Phil Twyford, said the Auckland housing market was “beyond a joke”. “The market is gripped by rampant property speculation. Speculators are making a killing at the expense of Generation Rent.”

Not that long ago we heard of houses in San Francisco going $1 million over asking.

Comment by snake charmer
2015-08-27 11:09:19

West Auckland, proudly, is not upscale. I’m trying to imagine the “westies” being priced out of their own neighborhoods so that people like Xiaoli Zhen can flip the houses amongst themselves.

Comment by Jingle Male
2015-08-28 04:07:39

Denver. Seattle, Boston, Dallas?

Comment by Mafia Blocks
2015-08-28 04:45:08

All grossly inflated and falling Jingle_Fraud.

Comment by Ben Jones
2015-08-27 04:13:26

‘India developers dangle promos and discounts to lure buyers as sales continue ‘downhill ride’

“There is no denying that there has been a decent correction in prices in some markets and inventory pile-up across metros over the last year,” says Sumit Jain, the co-founder and chief executive of’

‘Depressed sales have pushed developers into coming up with innovative offers to tempt buyers. “Developers are coming up with a range of new initiatives to infuse more positivity into the market,” says Rahul Purohit, the principal partner at Square Yards, an Indian real estate consultancy. “Increasingly these initiatives are becoming popular all over India.”

‘In Mumbai, for example, research by Knight Frank reveals that the housing market is “reeling under tremendous pressure” with a 47-per-cent drop in new launches in the first half of the year, while there are 200,000 unsold homes in the Mumbai metropolitan region, as sales continue their “downhill ride”. Demand has dropped by 30 per cent over the last two years, the firm’s figures show.’

‘Home sales of 28,446 properties and new launches of 18,887 units between January and June this year made it “the worst half-yearly period in the post global financial crisis era”, according to Knight Frank.’

‘The premium market in Mumbai in particular has struggled, with no new launch in the last six months, it says. Factors including a soft rupee and high inflation over the past couple of years have had an effect on home sales. “Several reasons erupting over the last few years have contributed to the current mess,” according to Knight Frank.’

Comment by Ben Jones
2015-08-27 04:17:06

‘British buyers are flocking back to France, attracted by the favourable exchange rate, reduced house prices and the availability of cheap long-term mortgages. Lloyd Hughes, of property investment firm Athena Advisors, said buyers can save up to 40pc on the overall cost of buying French property compared to 18 months ago.’

‘But some areas of France are holding their value better than others. “There are concerns that property prices could fall further, but properties in popular areas and good locations have retained their value,” he said. “Those who buy older properties in more rural areas of France are more exposed to price movements.”

Comment by In Colorado
2015-08-27 07:19:59

Will be visiting relatives in Dorset, UK, tomorrow. Just for kicks I checked out RE prices in their town, Wimborne. Perfectly ordinary houses, under 2000 sq feet … 700,000 pounds. This is two hours from London.

Comment by taxpayers
2015-08-27 08:18:29

what does a council flat cost?

Comment by Mafia Blocks
2015-08-27 08:25:54

Don’t forget to snap a couple photos of these shacks. We look forward to your observations.

Comment by Ben Jones
2015-08-27 04:20:08

‘A Queensland real estate agent says people are willing to buy houses “in any condition” after a property marketed as Australia’s worst house sold for almost $170,000 over reserve. In a sign the housing market has gone truly bonkers, a crowd of more than 100 people gathered to watch 25 bidders battle over the dilapidated cottage in the central Brisbane suburb of Dutton Park.’

‘Mr Behrendt, a former builder, says it’s the first time he’s sold a property where the terrible state of the home has been a selling point. Mr Behrendt credited the unusual selling point and massive media exposure, started by, with building interest in the unique property. TV crews and reporters joined the crowd of bidders and spectators.’

‘After the intense interest in the property, Mr Behrendt says he now has a book full of people that are willing to buy houses in any condition.’

Comment by Mr. Banker
2015-08-27 05:41:40

Lemons into lemonade.

“Mr Behrendt, a former builder, says it’s the first time he’s sold a property where the terrible state of the home has been a selling point.”

P.T. Barnum would be proud.

“Mr Behrendt credited the unusual selling point and massive media exposure, started by, with building interest in the unique property.”

The best part …

“TV crews and reporters joined the crowd of bidders and spectators.”

People are smart.

“After the intense interest in the property, Mr Behrendt says he now has a book full of people that are willing to buy houses in any condition.”

Reminds me of the artist who was able to sell people cans of sh1t because he was able to convince them that it was art.

Comment by Jingle Male
2015-08-28 04:15:12

Are you dissin Andy Warhol? LOL

Comment by snake charmer
2015-08-27 07:38:20

“‘Australian housing is viewed across Asia as an attractive vehicle for parking illicit funds, particularly among corrupt officials,’ its latest assessment has found.”

You don’t say. I’m amazed.

Comment by Jingle Male
2015-08-28 04:19:00

The new subprime. Steal public funds in China, buy a house in Australia. Easy money, no equity in the purchase, = main street Joe Sixpack is FB’d

Comment by Ben Jones
2015-08-27 04:45:02

‘China’s richest man said on Thursday the government needs to give up any “fantasy” of maintaining high economic growth rates, unusually bold comments at a time when Beijing is grappling to contain a market meltdown that has hammered global equities.’

‘Billionaire Wang Jianlin added that the key was whether economic growth is “sustainable and safe”. “China’s economy needs to transform from relying on investment and exports to consumption. That’s a painful process. If the transformation doesn’t happen now, it would be even more painful in the future,” Wang said. “China needs to drop the fantasy of keeping a high growth rate of 7 or 8 percent and just accept 6, 7 or even 5 percent,” Wang said.’

‘Analysts have long harboured doubts on the credibility of China’s GDP figures, if only because they can be produced just two weeks after the end of a quarter.’

Comment by Ben Jones
2015-08-27 04:50:08

‘China accounted for almost 40 percent of global growth last year. Its appetite for raw materials has undergirded economies from Australia to Brazil to South Africa, and its production capabilities have lowered prices of industrial machines and consumer goods everywhere money changes hands.’

‘But it’s also kind of a mess. Fueled by real estate and shadow banking, China’s debt quadrupled from 2007 to 2014, according to a McKinsey analysis. Its economic growth is slowing, pollution is awful, and a hawkish foreign policy is alienating neighbors. Investors were willing to ignore all that because of their faith in the technocratic excellence of China’s economic managers, but that faith has been destroyed by this year’s bungling of the stock and foreign exchange markets.’

‘The way this meltdown occurred—first slowly and locally, then rapidly and globally—says a lot about the nature of the world economy and markets today. Many investors don’t trust stock valuations, which they think have been inflated by easy money from the central banks. The tripling of U.S. stock prices since their 2009 bottom had a lot of them ready to sell at the first sign of trouble. “We believe that this has been the most doubted, second-guessed, and frankly hated stock market rally in history,” Brian Belski, chief investment strategist at BMO Capital Markets, wrote to clients.’

‘In a genuinely globalized economy, excesses and imbalances in one corner of the world inevitably affect other countries. (The last example: the U.S. subprime mortgage bubble.) China is home to some of the biggest excesses, with vast overinvestment in everything from chemicals to apartments.’

‘Global investors reacted to China’s clumsiness first with amusement, then with fear. The overdue decline in the fairly small, underdeveloped Chinese stock market caused such a ruckus because it awoke larger fears. It “crystallized something the market ought to have been aware of, which is that there is a very, very major slowdown occurring in China,” says Adair Lord Turner, chairman of the Institute for New Economic Thinking and past chairman of the U.K. Financial Services Authority. “Every single major global recession in the last 50 years has started in the United States,” Ruchir Sharma, head of emerging markets for Morgan Stanley Investment Management, said. “The next global recession will be made in China.”

‘Financial markets don’t mesh well with command-and-control economies, either. Traders react instantly to new information, constantly updating prices on the latest intel. Viewed up close, the process of adjustment can look choppy to China’s leaders. They try to keep a lid on volatility the opposite way—by fixing prices and rates—but all they manage to do is bottle it for a time. “The first marker of a fragile state is a concentrated decision-making system,” wrote Nassim Nicholas Taleb and Gregory Treverton in Foreign Affairs.’

Comment by Mafia Blocks
2015-08-27 04:52:24

“Fueled by real estate and shadow banking”

Hmmm…. remarkably familiar to whats going on in the US.

Comment by Professor Bear
2015-08-27 19:59:49

If China really was.40 percent of global growth last year, I wonder how markets will react if hints that July 2015 growth was negative prove true?

Comment by snake charmer
2015-08-27 07:45:20

China shifting from its current model to a consumer economy within a few years, much less within a generation, would be like shifting from fifth gear to reverse on the fly while driving at freeway speed. Not going to happen, especially after the accumulated savings that could have been deployed for that purpose have been destroyed by asset bubbles.

Comment by Ben Jones
2015-08-27 08:20:17

Not only that, China is headed into recession or worse. There ain’t gonna be 5% or 7% growth. Economists have forgotten what a recession is and why it occurs. Look who finds themselves in recession all of a sudden (even if they won’t admit it): Brazil, Chile, Canada, Australia some oil states. All tied to China. India’s real estate market is certainly in recession. And today we find yet another China article with workers saying jobs are drying up.

The emerging markets are big. Most have real estate bubbles, like Indonesia, the Philippines, Singapore, Nigeria, Kenya. Turkey has a huge bubble, as does Israel and Iran. Let’s not forget the oil reliant Scandinavians. On the UK link is a companion article from July about money-laundering in London air boxes and mansions that I posted when it came out.

Comment by taxpayers
2015-08-27 04:50:23
Zillow has Fayetteville nc as plus 2% while these guys have it on the shot list
Ft hood is getting smaller
Zillow is pretty sloppy for a b1-b publicly traded company

Comment by Senior Housing Analyst
2015-08-27 05:43:17

Forecasting and projecting aren’t their strong suits. At least their data reporting is accurate.

Our one year forecast is -5% average for all 374 MSA’s.

Comment by Ben Jones
2015-08-27 04:53:08

‘China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.’

‘Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.’

‘China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”

‘The PBOC and the U.S. Embassy in Beijing didn’t immediately respond to requests for comment. Bill Gross, who manages the $1.47 billion Janus Global Unconstrained Bond Fund, tweeted Wednesday “China selling long Treasuries ????”.

Oh dear.

Comment by Professor Bear
2015-08-27 06:15:38

“It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”

Could QE4 be rolled out on short notice to offset such a development?

Comment by Mafia Blocks
2015-08-27 06:39:32

How is QE rolled out when the largest buyer of Treasuries is selling……treasuries.

QE4=collapsing demand to 50 year lows.

Comment by Ben Jones
2015-08-27 05:15:36

‘At the height of the 2008 financial crisis, as Wall Street slashed jobs, Beijing took advantage of the disarray to poach top Chinese financial talent from overseas to help reform its stock markets. By summer 2015, China’s Securities Regulatory Commission (CSRC) needed them more than ever; a year-long market boom had imploded in a few weeks, and the government was desperate to keep the crisis from widening.’

‘But the best and brightest returnees, known in China as “sea turtles”, had already left for the private sector, disillusioned and disappointed. Their idealism soon turned to cynicism. Their pay was a fraction of what they could earn in the private sector, and the CSRC didn’t seem to value them.’

“Several years passed, and none of us got promoted,” said the official. “Some of us didn’t even obtain a concrete position.” “Just at the time they needed people with both domestic and international experience, those most internationally experienced people were forced out,” said Liu Li-Gang, China economist at ANZ.’

‘Insiders who spoke to Reuters point to a rising wave of resignations within the regulatory apparatus over the last 12 months, just when sound advice was most needed. “Nearly every week, there are people submitting resignation letters,” said an official at the Shanghai Stock Exchange. “And the pace of people leaving appears to be accelerating.”

‘An official still at the CSRC said regulators failed to grasp the significance of the surge in margin finance used for stock speculation that many warned was destabilizing the markets. It’s also criticized for botching reform of the IPO market. It re-opened the market in early 2014 after a year’s suspension, but under new pricing guidelines that inadvertently made IPOs a one-way bet that sucked funds from the wider market.’

‘Such failures have hammered government’s credibility, not least with investors who trusted Beijing to rescue the market in July and bought back in. Government directed 900 billion yuan ($140 billion) into stocks, but indexes continued to fall after a brief hiatus, wiping out all the year’s gains, and more than $4.5 trillion in market value - more than Germany’s gross domestic product.’

‘Former officials said most of the returnees left due to frustration over their lack of influence over policy, limited opportunities for promotion, and low pay. Others spoke of resentment from colleagues. Some were effectively forced out by the fallout from Beijing’s anti-corruption drive, which led to salary cuts for senior staff and a campaign against “naked officials” - those who move family members and assets overseas in case the official is arrested.’

Comment by Professor Bear
2015-08-27 05:37:21

‘You can’t import or export apartments. You’re relying solely on domestic activity.’

There’s no need to export an apartment when you can sell to an all-cash Chinese investor.

Comment by Ben Jones
2015-08-27 06:05:48

But the Brazilians are supposed to buy those Miami condos?

Comment by snake charmer
2015-08-27 07:52:49

In the past few years, I have seen more Brazilian tourists than I have ever seen. Now that it’s nearly twice as expensive as it was in 2012, I expect that to fall off substantially.

Comment by Senior Housing Analyst
2015-08-27 08:17:57
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Comment by Professor Bear
2015-08-27 05:44:14

‘If housing prices would fall like this that would be great, then the Chinese economy would completely collapse and the government would also collapse. (You) can only rebuild after it breaks.’

You have to admire such bullish optimism in the face of dispair!

Comment by Senior Housing Analyst
2015-08-27 05:45:56

Fayetteville, NC Housing Prices Crater 21% YoY

Comment by Mafia Blocks
2015-08-27 06:34:26

Miami, FL

22,912 properties found Miami, FL Real Estate and Homes for Sale

7,288 properties found Miami, FL Price Reduced Homes for Sale

Theres a whole lot of losses yet to be acknowledged going back to 2003.

Comment by taxpayers
2015-08-27 06:36:23

is the army expanding ?
fayettville is on par w Ferguson

Comment by Ben Jones
2015-08-27 11:58:51
Comment by Mafia Blocks
2015-08-27 12:16:14

That’s beautiful. Soundtrack is “Agape Calypso Rage”, a Cheetos bag and…… no shortage of land or houses.

“It’s the land!” Nope

“There’s a shortage houses!” Nope

It sure looks like any other suburban area any where in the US, coast to coast. Excess, empty houses and miles of land in every direction.

Comment by Rental Watch
2015-08-27 12:39:37

Did you go into any of the sales offices?

I’ve found that the agents on-site are typically not able to hide their euphoria or depression if things are REALLY great, or REALLY bad. Everything in the middle it’s just the usual vacant stare.

Comment by Ben Jones
2015-08-27 16:50:08

I’ll do more of that kind of thing when it’s not 105 degrees. I wish I could video tape questions about promotions. I’m trying to figure that out especially for the Miami beach condo sales staff.

Comment by scdave
2015-08-27 14:19:26

Wow Ben…Thanks for the effort…My goodness…Whats the date on final phase out there 2045 ?? Gee’s…

Comment by Wang6Pack
2015-08-27 16:26:29

I’ll take two!
This will complement my Ordos portfolio perfectly.
I’m gonna be a real estate TYCOOON.

Comment by Professor Bear
2015-08-27 18:41:54

Is China’s economy actually in worse shape than people think?

Where will the stock market go when the truth is revealed?

Comment by Professor Bear
2015-08-27 18:44:01

Marketwatch dot com
Emerging Markets Report
China’s economy may be in worse shape than people think
By Sue Chang
Published: Aug 27, 2015 5:32 p.m. ET

China may be in worse shape than authorities in Beijing are willing to admit.

An analyst at Evercore ISI crunched the numbers and estimated that the Chinese economy actually shrank in July, suggesting that China’s forecast for 2015 is overly optimistic, if not unrealistic.

“Our proprietary Synthetic Growth Index (SGI) fell 1.1% month-on-month in July, and was also down 1.1% year-on-year,” said analyst David Straszheim at Evercore ISI.

“Even if we adjust our SGI upward (for too-little representation of services—lack of data), we believe actual economic growth in China is far below the official 7.0% year-on-year. And it is not improving.”

The SGI is a weighted average of seven components including railway freight, airline passengers, and electricity consumption.

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