Fear Of Missing Out Is Gone
A report from Stuff New Zealand. “Bank competition for the apartment lending market is heating up as more Aucklanders opt for high-rise homes. The price per square metre has increased a lot over recent years. City Sales managing director Martin Dunn said: ‘I haven’t touted apartments as a capital gains vehicle, ever. But in the past four or five years they have increased 50 per cent from $4000 a square metre to $6000.’ He told his sales staff in March that the apartment market would increase to $9000 a square metre in two years. ‘They laughed at me but it happened in three months, we are now regularly selling existing apartments at $8000, $9000 or $10,000 a square metre.’”
“Nine out of 10 sales still go to investors but Dunn said Aucklanders were starting to realise that an apartment was a viable alternative to a house. Auckland was maturing into a vibrant, international city, he said. ‘All of the sex shops that were opposite my office [on Karangahape Rd] have all virtually shut. What’s going to spring up there is cafes and bars.’”
The Australian Financial Review. “Auction clearance rates in Sydney and Melbourne are “falling away” in what experts said was more evidence that “we’ve seen the top of the market”. ‘Even in Albert Park – the Cinderalla suburb – where magic happens because prices go through the roof, a few have passed in with a protracted post-auction negotiation,’ Melbourne buyers advocate, David Morrell said. ‘And three months ago, properties there were exceeding reserve by 10 per cent.’”
“‘Realism has hit but where reality is – defcon1, defcon2, defcon3 – it’s hard to say. But we might have seen the top of the market,’ Mr Morrell said. ‘Premium assets will always sell … but the market is in a state of flux. It’s wondering whether things are going up or down … Fear of missing out is gone.’”
The Calgary Herald in Canada. “A report released Tuesday by the Canadian Real Estate Association showed MLS sales in the Calgary region fell by 28.1 per cent to 2,139 in August from the level a year ago. Corinne Lyall, president of the Calgary Real Estate Board, said the combination of price declines and higher inventory levels in some segments of the market are influencing buying patterns in Calgary. ‘Improved selection in these segments is giving buyers the opportunity to be discerning about their purchase decisions,’ she said.”
The Rio Times in Brazil. “The FipeZap Index, which tracks the values of new leasing contracts in nine cities across Brazil was started in 2008, just as the country and especially Rio de Janeiro started to see wild growth in real estate value and rental rates. Now the index is showing a record monthly decrease in actual rent prices. In twelve months, the strongest drop occurs in Rio: 7.72 percent, almost double the second place, Curitiba, a decline of 3.98 percent. Raone Costa, an economist at the Economic Research Institute Foundation (Fipe), told O Globo that the main economic factors affecting the real estate market are income and credit. Costa said that the economic situation of the country reinforces the downward movement as a trend.”
The Business Standard on India. “Retail customers’ expectation of offers this festive season from banks and financial institutions could result in a letdown. For, most lenders are postponing such offers; some have ruled out any such scheme. ‘Considering that sentiments are subdued and the real estate markets are in a slowdown, banks have been going a little slow on introducing the festive season offers, especially around home loans. People are expecting prices to come down and there is a lot of inventory. As a result, there are no buyers and banks have been slow in launching these offers,’ said the head of retail lending at a public sector bank.”
Today Online on Singapore. “Sales of new private homes plunged 69 per cent last month as developers refrained from launching new projects. ‘There is an inertia to commit by buyers … due to ongoing measures and/or an anticipation of further price declines,’ said Mr Ismail Gafoor, chief executive of PropNex Realty.”
From MarketWatch. “On a visit to Shenzhen last week, there was no obvious sign of an economy in a generational slowdown. Bold new skyscrapers were still going up and there was still a lengthy line at the taxi rank. But what did stand out was the price of everything. Even a beer in a 5-star hotel came with sticker shock, some 20% higher than Hong Kong. One business associate told me he was advising a client to hire employees in Hong Kong, rather than Shenzhen. This would save money when all costs, including both wages and local government taxes, were considered. This might be anecdotal but it chimes with a lengthening list of manufacturers who report they are looking elsewhere to expand.”
“If you look across China’s economy, the dominant theme today is either falling prices or herculean efforts by the government to prevent them sliding. Earlier this year the focus was on protecting the property market from deflating, which culminated in a 3.2 trillion yuan municipal government debt for bond swap. Thereafter came the government’s controversial intervention to prop up stock prices. After that it was the currency’s turn.”
“One area where price falls have been impossible to hide or arrest is at the factory gate. In August, the producer price index slumped another 5.9%, marking the 42nd consecutive month of declines. The culprit here has been overcapacity across a range of heavy industries. Yet, with few companies exiting or going bankrupt, prices keep sinking.”
“Perhaps at some stage, the penny will drop that China has just gotten too expensive after years of unbridled credit expansion, a property and stock bubble, and a banking system where no one ever goes bust or calls in bad loans. It looks an impossible task for China to keep so many prices artificially high — particularly as money exits and the fault lines of distress keep spreading. One way or another the China price needs to come down. It could be through the currency, the stock market, or inflated real estate — but most likely all three.”
“Fear of missing out is gone.”
Take away the fear of missing out and your results will be:
1. A decrease in demand because the sense of urgency to buy will vanish, and
2. An increase in supply because those potential sellers who were holding out for higher prices will suddenly decide to sell.
One plus two = a market turning point - both a financial turning point and a psychological turning point.
One plus two = a market turning point - both a financial turning point and a psychological turning point.
AKA “look out below!”
‘China removed quotas for companies to raise funds in the overseas bond and loan markets, in a step that may help slow capital outflows spurred by a currency devaluation. The move comes amid mounting speculation China will do more to counter the flow of money out of the nation, after yuan positions at the central bank and financial institutions fell by the most on record in August. The nation’s foreign-exchange reserves tumbled an unprecedented $93.9 billion last month as the People’s Bank of China intervened to support the yuan following an Aug. 11 devaluation.’
“The move will help quicken the process for Chinese companies to borrow offshore,” said Ivan Chung, a senior vice president at Moody’s. “But it’s uncertain if the rule change will really result in more offshore bond issuances. After all, companies may be concerned about the rising costs after yuan depreciation.”
‘Asia’s richest man Li Ka-shing has been steadily diverting his empire away from China. He sold roughly $16 billion of assets he held in China and moved the money into Europe. The problem is that the Chinese regime is not quite happy about the move: On Sept. 12, Liaowang Institute, a nonprofit institution affiliated to Xinhua News Agency, published an article titled “Don’t Let Li Ka-shing Get Away With It.”
‘In the article, the author Luo Tianhao writes: “As we all know, in China, the real estate industry and [political] power are closely tied together. Without political influence, it is impossible to do real estate business [in China]. Thus, I am afraid it is not wise to just walk away.”
‘Maybe that’s exactly the reason Li moved out of China and even Hong Kong. Besides, Li probably couldn’t care less, as he hardly has any real estate assets left in China. “It seems that even people like Li Ka-shing are sensing they are losing their edge to the new princelings on the mainland,” said Edward Chin of pro-democracy group 2047 Hong Kong Monitor.’
‘Chin also said the growing influence of the Chinese Communist Party in Hong Kong is scaring away business people and that a registration in Singapore or the Cayman Islands is safer from a legal perspective, especially if most of the assets are held overseas anyway.’
Sounds like Ka-shing decided that it was better to Ca-ching and flee to a safe haven without firing squads.
+ 16 Billion!
When this guy started selling, he or his people would say, “we’re just diversifying, nothing is wrong.” Now he’s left the building. Doesn’t bode well when the richest person takes off and doesn’t even leave a door mat in Hong Kong.
The people in control are making hay. The rest are cannon fodder.
Remind me again: Who wins when prices are artificially inflated?
Does government (central bank) intervention to prop up prices amount to treating the symptoms of economic malaise in hopes of thereby curing the disease?
The wealthy who own most of the assets.
‘The last few weeks have seen a plethora of bad news relating to South Africa’s economy. The rand has been extremely volatile, gross domestic product (GDP) has dropped in the second quarter, and the JSE has been on a rollercoaster ride. Things have, indeed, been falling apart.’
‘In the face of this, the ruling class - big business and those that head the state - have been rallying to try to shield themselves from the fallout. The managers and large shareholders of mining and steel companies have announced that hundreds of thousands of jobs will be cut (not of course their own), adding to South Africa’s horrendous unemployment problem.’
‘The state too has weighed in. Without any sign of embarrassment, President Jacob Zuma has called on workers to be willing, in the context of the slowing economy and the recent turmoil, to ‘tighten their belts’ and to accept compromises in their wages.’
‘Even in China, manufacturing has been experiencing problems with over-production since 2007, and consequently profit margins have been falling. In fact, in 2007, the Chinese state intervened, spending $4 trillion to try to create demand for goods to prevent industrial collapse. This has now run out of steam and the crisis capitalism has been trying to pull itself out of since the 1970s has returned in full force; now China is at the centre of it and South Africa is caught in the wake.’
‘At least 19 sectors in China have been hit by falling prices since 2013 due to over-production, including steel, clothing, and ship-building. This has led to falling prices n in these sectors and thousands of companies have gone bankrupt. The result has been falling commodity prices globally as demand from China - which accounted for 40% of growth globally since 2007 - has declined.’
‘China is South Africa’s main export market, so it is not surprising that with Chinese demand falling, the local economy shrank 1.3% in the second quarter of 2015. It is also not surprising that Chinese companies are dumping steel in countries such as South Africa - thereby threatening local production - as due to overproduction Chinese companies are desperately looking to offload steel even if that means selling it at below cost elsewhere.’
‘States have been intervening in very specific ways to try to create outlets for capital beyond manufacturing. One way states, including in South Africa, have done this has been through financial liberalisation.’
‘States have assisted capital to create new areas of ‘investment’, such as floating currencies and encouraging the emergence of all sorts of financial ‘instruments’. Added to this, to boost stock markets, states - including in South Africa - have even made it legal for companies to buy back their own shares to push up prices.’
the ruling class - big business and those that head the state
Funny how the ANC was more than happy to get into bed with big business.
SA had the fastest rising house prices about a year ago. Watch out for that tree!
‘Tuesday started like any other day at NoBroker Technologies Solutions Pvt. Ltd., the Bengaluru-based online real estate rental firm. At 11 am, about 40 real estate brokers and hooligans started shouting slogans against the startup, saying they were losing out on brokerage fees because NoBroker was facilitating owners and prospective tenants to come together, removing the middleman broker from the process.’
‘About half an hour later, some of the brokers barged in the office with the intent of destroying the company’s computers and infrastructure, said Amit Agarwal in a phone interview. “They beat up some of our employees, who were visibly shaken but did not hit back.”
‘Others managed to stave off the attackers and moved them outside the building, where the number of brokers had swelled to 80. The employees rushed outside, and locked the door to the office and slammed shut another iron door over it. “That prevented others from barging in,” said Agarwal.’
“We never ever dreamt that the situation would escalate and we would be attacked physically,” a shaken Amit tells me. He, Akhil, and a few of their managers tried to reason with the angry brokers who wanted the startup to shut shop. Soon, more and more brokers joined in and things got out of hand.’
“But after some of us left for the police station, more brokers arrived at our office, many of them drunk. By the end, there were close to 100 of them,” Amit says. The mob tried to break in but the NoBroker staff – also numbering about 100 – stopped them.’
“Then they started hitting our staff. They tried to break down the wooden door but a quick-thinking employee shut the iron-door outside. We have around 30 women employees. Many of them were crying. The cops told us to install CCTV cameras at the door and inside the office. We are doing that now and we are also getting security guards,” Amit says, “I can’t believe this happened in Bangalore!”
‘India might be one of the hottest places for startups in the world but they are losing talented employees and senior management to more established competition, as investors demand results after over-hiring during years of cash-burning growth.’
‘More people were hired than were required. For instance, TaxiForSure had 1,800 employees and was India’s smallest taxi-hailing service with presence in 47 cities before Ola acquired it. In contrast, Uber has less than 900 employees with operations in over 50 countries.’
‘At Bangalore-based Housing.com, which is among India’s highest valued startups, 600 employees will be laid off by November. TinyOwl, the online food ordering startup, is cutting its workforce by 100 people. “There is no doubt that Indian startups have gone overboard with hiring in the last few years, and that has happened because they raised so much money and they had to spend it in some way,” said Kris Lakshmikanth, chairman and managing director, Head Hunters India, a recruitment consultancy.’
Years of cash-burning growth will get ya’ every time.
This is a wild story. Could something similar occur at AirBnB? Suggests avoiding a bricks&mortar presence for your cloud-based business.
There are contentious local government meetings all the time about airbnb.
I’ve been thinking about this sharing stuff. What is uber? You contact a guy who drives you somewhere for money. If I pay someone to sleep in an empty room and bed, doesn’t that mean another bed is empty at the hotel? OK, prices are driven down; who doesn’t love a bargain? Years of cash burning growth!
The strange thing is that unlike the taxi/Uber example, despite the rise of AirBNB, hotels are doing very well. Nationwide room rates were up 6% year on year in July, with occupancy also up to 75%.
I think the reality is that a lot of AirBNB tenants would otherwise not travel at all if they couldn’t get the price of an AirBNB bed.
Like I said, AirheadBNB will morph into 2hr room rentals for hookers and johns. Anything illegal? Use AirheadBNB. And the empty pocketed home debtors in Californica will establish the trend. Washing sheets, disposing condom wrappers and cleaning toilets. Yep…. You’ve really come a long way.
AirHeadBNB…. poster child for a money losing failed business.
‘hotels are doing very well’
As they were in 2004.
What happens when they use your bedroom for a meth lab, and leave everything except for the final product behind?
You call the cops, and then the county health dept. shows up a few hours later and red-tags your house as unlivable. God help you if the EPA gets involved after that . . .
Livin’ the AirBnB Dream!
What if you get stung by a bee when you go outside?
Got Fear? Some people dont and do quite well.
the de-regulationarians are here
+1
Riviera Beach, FL Housing Prices Crater 9% YoY
http://www.zillow.com/riviera-beach-fl/home-values/
‘Rodrigo Muchinelli, owner of a computer sales and repair store in Rio, said his business was in the red for the first three months of this year and is still limping. “It is a fight, daily,” said the 38-year-old businessman. Laercio Soares closed a lucrative deal with a Rio samba school for his embroidery company in December. He used the money to close a family business whose workforce had fallen from 60 to eight. “We saw the perspective was bad,” said Soares, 65. “That’s why we took this drastic decision.”
I read yesterday that Brazil was going into austerity to pay the bills. I think one sad panda won’t be around to post about the Brazilian miracle anymore.
‘He used the money to close a family business whose workforce had fallen from 60 to eight’
I’ve been thinking about when exactly money goes away. Totally disappears. (A poster this morning was pondering that wealth can be printed, but color me skeptical.)
Is it when “money” is used to close a business? When the Chinese government says it “wasted” over 6 trillion bucks? This would suggest it is when assets are written down. Individuals usually don’t keep balance sheets, but the same process applies. Some of my neighbors park their cars in the sun because the garage is full of crap they probably don’t use. Is that money poof?
I think one sad panda won’t be around to post about the Brazilian miracle anymore.
I think you misunderstand a huge part the “Brazilian Miracle”. It’s a lot more basic than economic “growth” levels that mostly benefit the rich. Millions used to starve in Brazil just 20 years ago and had no hope. Millions don’t go hungry anymore even in a major recession. Is that not a “miracle”? Now that people aren’t hungry, Brazil needs to work on social justice, economic reforms and massive corruption. But ending hunger and give Brazilians economic hope was a “miracle” that keeps on giving. Brazil is in economic trouble? Yawn. I’ve seen this show before.
“”At the end of my time in office, every Brazilian will have a breakfast, a lunch and an evening meal,” President Lula da Silva promised as he took office in 2003.
When he handed over to his successor, Dilma Rousseff, Lula’s achievements were impressive. Brazil had become the first Latin American country to fulfill its first millennium goal - based on 1990 figures, Brazil had cut the number of people living in hunger by 50 percent.
By 2010 the country had achieved goals it had expected to reach only five years later. Lula da Silva was honored for his achievements with this year’s World Food Prize.
Thanks to the social program rolled out by his administration, 20 million Brazilians are said to have overcome poverty.
Every second Brazilian, it’s estimated, has made the leap up into the country’s lower middle class. People’s growing prosperity has seen consumer demand rise and help consolidate the economy….
dw dot com
I knew Brazil was headed for recession years ago, because I knew this:
‘residential property prices in São Paulo had doubled within five years, while prices in Rio had tripled. Since then they have continued to climb with prices in São Paulo now tripled since 2008, while prices in Rio have almost quadrupled. A nation-wide price series began in mid-2010 and shows that prices at a national level have increased by seventy percent in just four years.’
‘Millions don’t go hungry anymore even in a major recession.’
Oh, but we’re just getting started. Why they might even come confiscate your money and that shanty you used to brag about all the time. Because that’s what socialists do.
‘Yawn’
Yawn it up sleepy head. The big ka-boom is here, and you’re neck-deep in it.
I knew Brazil was headed for recession years ago,
Countries have recessions all the time. I’ve been saying that for years. Brazil didn’t even really have one in 2008. Everyone knew Brazil would have a recession “someday”. It’s the capitalistic business cycle.
they might even come confiscate your money and that shanty you used to brag about all the time. Because that’s what socialists do.
But Brazil is not “Socialist”. Brazil is a capitalistic democratic republic with about 20 political parties from far right to far left. Brazil is not Venezuela by any means. Besides, I’m much more afraid of the damage USA’s right-wing can do to America than Brazilian “socialists” can do in Brazil.
The big ka-boom is here, and you’re neck-deep in it.
I doubt it imo. It’s not the end of the world. I’ve been hearing “end of the world” stuff for 30 years on two continents and two languages. We always seem to muddle along. And I have a “get out of jail” card. I can leave any time I want. (But I don’t want to.)
‘I can leave any time I want’
You’ll be leaving alright, maybe even with a shirt on your back. I can see it now; one morning you are yawning in your jammies, and hear strains of Tropícalía in the air. You hear a crowd outside, then banging on the door. “Gringo, wake up Gringo!” As you lay on the street, watching the house burn, a poor steps on your hands passing by, wearing your cowboy hat and boots, saying “I got his coxinha!” “Good,” another says, “I’m starving.”
Have you read the new book “Dancing with the Devil in the City of God”? It’s by a Brazilian journalist, born in Rio de Janeiro, who returned to the city after an extended period spent living abroad. I was checking it out at the bookstore and might buy it, once I make a dent in my backlog of other unread books.
I have no idea what, if any, countries will be a safe haven in the event of an epic financial or social dislocation. I have no idea where the rule of law will prevail.
Have you read the new book “Dancing with the Devil in the City of God”?
I’ve read about the gist of it. It sounds like a very good book but her and my perspective are totally different imo. FWIU she’s a middle-class Brazilian who left very young to first world countries, now she goes back to “her” Brazil and explores the unfamiliar poor Brazilian areas and gets bummed out on the unfulfilled potential of those poor areas. With her background who wouldn’t get kind of bummed at the bad parts about Brazil? I get bummed out too but not like a Brazilian would.
I’m not Brazilian so I look at the good, bad, progress and unfulfilled potential of Brazil more objectively than most Brazilians. I don’t get as bummed out because as I said, I’m not Brazilian, didn’t grow up here and can leave when I want.
What I do know is those poor areas she’s bummed out about are not starving anymore and have more hope than when the author of that book left Brazil as a child.
‘I can leave any time I want’
Isn’t it ironic that his previous tune of “I can sell anytime.” has deteriorated to this.
‘I can leave any time I want’ Isn’t it ironic that his previous tune of “I can sell anytime.” has deteriorated to this.
It’s not “ironic”. It’s English and factual. Anyone can sell anytime they want when their house is paid for. Why couldn’t I? That’s the beauty of a paid off house and no other debt.
Do the math. My house had paid for its cost to build almost 2 years ago by money saved on rent. If I literally give it away I have no loss. None. What can be “ironic” about that?
You might not like me but your misunderstanding of math doesn’t create “irony”.
Irony, not math.
You were bragging about making bank on the Brazil Bubble and half of it just went poof. Now you’re thinking about having to get out of the country. That’s the irony.
lol@Lola
looks like millions will be starving again
Dilma ran out of other peoples’s money
OPM
looks like millions will be starving again
Dilma ran out of other peoples’s money
Your math is sooo off. (Why is the right’s math so, consistantly bad?) How would Dilma “running out of other people’s money” lead to Brazilians starving again? The program that feeds the poor in Brazil runs only .3% of Brazil’s GDP. .3% You think Brazil is going to let it’s people starve again to “save” .3% of Brazil’s GDP. Why and How? The Brazilian progress on starvation is already in the bag.
“The Bolsa Familia program (Feeding the poor) is a small part of the (Brazilian) federal budget…..The cost falls in line with most of the other similar conditional cash aid programs in Latin America — about 0.3 percent of a country’s gross domestic product”
washingtonpost dot com “Cash Aid Program Bolsters Lula’s Reelection Prospects”
I hope that continues, but I’m sure you will agree with me that, in Latin America, official corruption is capable of infiltrating even the most well-intentioned poverty assistance program.
in Latin America, official corruption is capable of infiltrating even the most well-intentioned poverty assistance program.
Totally. It’s here and real. Brazil is not just suffering from a global commodity bust and a cyclical recession. The biggest drag is the current massive political corruption being uncovered on unimaginable levels. The country is paralyzed on a political and economic level right now. The country is like it got clubbed in the head by a 12 pound mackerel. “Shocked” “Shocked” and stunned. They can’t impeach the left wing president because the right wing behind here are just as corrupt.
If the country goes down the tubes it’s because of a political failure and corruption by all parties, not because of left-wing policies of feeding the starving breaking the bank.
The bank is already broken. You’ll pay more taxes and get less for it starting immediately. Unfortunately, Rio will still be an open sewer when the Olympics arrive next year.
20% of your population living on less than $4/day. That’s not prosperity. Call it $2/day since the currency collapsed.
“They can’t impeach the left wing president because the right wing behind here are just as corrupt.”
_________________________/
I remember reading about President Collor de Mello in the 1990s. He was young and charismatic, like a shiny new car. But he was thoroughly corrupt and resigned in disgrace. And after reviving his political career years later, he’s now been charged with involvement in the Petrobras scandal! How cynical is that?
Rio will still be an open sewer when the Olympics arrive next year.
I’m sure. It’s funny the IOC believed it would get cleaned up. (It’s a closed bay, not the beaches.)
20% of (Brazil’s) population living on less than $4/day.
And their momma’s wear combat boots but they’re not starving anymore - the Brazilian “miracle”.
You were bragging about making bank on the Brazil Bubble
You miss “subtlety” in writing and situations. How could I really be bragging about possible bubble money when I admitted my home value could go down since 2009. (I have the posts.) I was stating the market realities at the time interjected with caveats it was a bubble since 2012 and I didn’t care. (I actually might have been bragging that I didn’t care.)
half of it just went poof.
Which half went poof? I’m sitting in my house right now and it’s all here. I always said my house was foremost a place to live and I walk the walk.
you’re thinking about having to get out of the country
Not at all. I said when I “want” to leave. Not when I “have” to leave. I don’t want or have to leave. Irony? The drop in the Real has made my US dollars much stronger here than they are in the USA. (Now there’s your irony)
And what’s it like to be grounded in a three sided shanty in a third world slum Lola?
Pretending now to be earning USD in Brazil. LOL.
Pretending now to be earning USD in Brazil.
You have no point as usual. I’ve always said I was diversified in USA and Brazilian assets. I’m American. What American who could afford to pay USA cash for a house in Brazil would not have access to US dollars?
Makes no sense.
You’re backpedalling.
Falling prices my friend. Nothing accelerates the economy like falling prices. Nothing.
Pomona, CA Housing Prices Dive 11% YoY On Population Decline Statwide
http://www.zillow.com/pomona-ca-91766/home-values/
Your employer pays you now in USD? Quite dubious. Down there living off of “assets”, more dubious. Spent your inheritance in Brazil on a bubble flat, sorry how unfortunate. Sorry for your loss (really).
Still, in our perspective, you’ve lost 50% on the flat in a very short time. I wonder when the riots will start back up and with what intensity. It is pretty funny, your country spending 0.3% of its budget helping the starving. Wow. Mission Accomplished!
Your employer pays you now in USD?
You don’t pay attention. I have no employer. I’ve been self employed and/or a business owner for decades.
in our perspective, you’ve lost 50% on the flat in a very short time.
Who cares about your and biased perspective? You “perspective” is warped by your hate of my politics. You don’t even make sense. In my reality, my “flat” paid for itself in “free rent” two years ago, is awesome and will pay for itself again in a few years and will give me serious money when and if I sell. (And I’m supposed to care what you think?)
Spent your inheritance flat, sorry how unfortunate. Sorry for your loss (really)
Sorry you are projecting.
You “perspective”
“Your perspective.” (I’m distracted watching the Repub debate.) Good stuff. My take so far.
Trump just got punked by Carly Fiorina on the “face” thing.
Cruz made some good points to the Repub base so far.
Trump is not Presidential material and a pathological narcissist but is “awesome” for this race.
Jeb is OK but out of his element attacking Trump.
Kasich makes sense. And Christi is too NJersyesque for the USA. fogettaboutit.
“serious money when and if I sell”
So, you are suddenly a financial kingpin. You didn’t go down there to be helpful to your parents. The exchange rate doesn’t affect you. You live off of your deals. You do your deals in USD. Your flat just lost 50% but it is seriously in the money. It is so hard to keep the profile of an angry poser straight.
So, you are suddenly a financial kingpin.
That’s a boring strawman.
“Serious money” to me means buying a nice USA house for cash when I return. My Rio house will do that.
Bottom line:
Tonight I’ve proved you wrong about USA/Debt affecting currency values, NASA pointing out things you said they didn’t and Brazil feeding it’s hungry for .3% of GDP.
And all you’ve pushed is “my house lost 50%“. Because you’re angry about my politics. Well done.
The fact that your shanty is worth half what you paid makes me happy Lola.
And proved my point on the NASA press release. Irresponsible hysteria. Thank you very much.
And proved my point on the NASA press release.
What? But you didn’t prove anything. What reality are you posting in?
Irresponsible hysteria.
I think you need a different clinical term of your condition.
Don’t you see the connection between the rise of the BRICs and the demise of the middle class in the US?
I recall hearing someone ask Bill Gates about wealth inequality in the US–his reply was that if you widen your lens to the global economy, we have seen the greatest reduction ever seen in wealth inequality globally in the past few decades.
This is exemplified by the millions who are no longer starving in Brazil.
Before you attribute the success to the politicians, consider that the Brazilian import/export growth story has been going on for more than 40 years.
From 1970 to 2012, Brazilian exports have grown (in current $ terms) from less than $10B to more than $150B. These are things that are now produced in Brazil that presumably were previously made elsewhere. Great for lifting Brazilians out of poverty, not as good for people who used to produce those goods in other countries.
And before you think I’m totally negative on trade, Brazil’s imports also rose from about $20B annually to a bit above $225B annually.
They are producing things for which they have an economic advantage, and importing things for which they don’t.
People are quick to place blame and heap praise upon politicians, when global economics has much to do with what has been happening over the prior several decades.
Given the freedom to do so, water flows downhill.
Given the freedom to do so, production moves to locations where costs are lower.
If you are starting out as a lower cost producer (for your product), things look pretty good.
If you are starting out as a higher cost producer (for your product), it’s tough sledding.
Don’t you see the connection between the rise of the BRICs and the demise of the middle class in the US?
I would see that connection much more if America’s wealth had declined per capita while the BRICS were rising. But the fact is even while the BRICs have risen, America’s wealth per capita has skyrocketed as well. So the wealth was there to grow the American middle class even while the BRICS were rising. But why didn’t the USA middle class grow while USA GDP per capita was rising strongly?
The USA middle class didn’t grow while American GDP per capita was rising strongly because the massive productivity gains and rising GDP per capita were only redistributed to the very wealthy.
Productivity gains “redistributed” to the very wealthy? WTF are you talking about? You make it sound like someone decided to give GDP growth to one group over another.
Due to advances in technology, combined with global markets opening up, few people can get remarkably wealthy without much labor input at all.
Facebook can be created by a handful of people, and have 1 Billion users within a decade of it’s creation.
Similar story with Google.
This was not productivity gains or GDP growth “redistributed”. This was GDP growth driven by businesses that need less labor. This is technology negating the need for large amounts of labor, driving productivity gains. Who benefits? On one end, those who own the business. On the other, the consumers of the cheaper products.
At the same time, cheaper labor markets opened up elsewhere. That one-two punch hurt the middle class…it had nothing about “redistribution” of productivity and GDP gains to the wealthy.
“because the massive productivity gains and rising GDP per capita were only redistributed to the very wealthy.”
yes they own the production. Didn’t this happen before back with the rise of the industrial age , weavers, artisans, all put out of work because of factories.
won’t this always happen ? The economy will adapt over time how I have no idea.
As a consumer I think quality has to go up all this cheap junk that doesn’t last is wasteful and polluting. I wonder if they could distribute manufacturing machines all over instead of concentrating them , same with energy production.
I get this kind of stuff all the time
Established heatsink manufacturing processes such as extrusion and casting, impose constraints on the methods used to design the heatsink. These affect both allowable geometry topologies and absolute sizes. The advent of 3D printing (additive manufacture) may remove many of these constraints, forcing us to reconsider the approach.
make my own shoes next ?
You make it sound like someone decided to give GDP growth to one group over another.
Exactly - through changed public policy due to the capture of government by Corporations and the super rich. Why would the BRIC’s need to have caused America’s middle-class demise even while USA’s GDP per capita was growing? Why? Because SupplySide policies defaulted on (for the past 40 years,) the Social Contract between Labor, Capital and Government. See below.
Productivity gains “redistributed” to the very wealthy? WTF are you talking about?
I’m talking about productivity gains the past 3 decades being redistributed most only to the very wealthy.
What used to be and what changed:
All productivity gains in every modern economy and government in history has systems in place to distribute productivity gains among capital and labor. In America, the systems included a power balance between labor and capital keeping the distribution of the productivity gains in a balance that allowed the middle-class to grow as it did. Part of that system was government’s encouragement of collective bargaining, pro labor laws, Unions and a min wage that kept up with inflation.
The other part of the system that distributed America’s productivity more equally was highly progressive taxation that foiled the pooling of massive amounts of productivity gains only in the rich’s hands, and spent those progressive taxes to re-invest in education, training, basic research, infrastructure etc. which bolstered the middle-class and poor and not just the rich.
Your point that technology needs less labor argues even more in favor for a highly progressive tax to foil massive wealth inequality that is harmful to economies.
Now this balanced system between labor and capital is broken in the USA and now most all the productivity gains go to the very rich.
See chart:
https://thecurrentmoment.files.wordpress.com/2011/08/productivity-and-real-wages.jpg
So “wtf” I’m talking about is productivity gains the past 3 decades being redistributed most only to the very wealthy due to government’s collusion with capital over the interests of labor and massive TaxCutsForTheRich.
We both see that the middle class is getting screwed.
I believe that technology and globalization are the big culprits.
You believe that proper government policies–including higher taxes to spend on those policies–would solve this problem–and that policies over the prior 4+ decades have been terrible for workers (you forgot the 70’s).
Nice chart.
Can you show where Democratic policies or Republican policies changed those lines in any way, shape or form?
Given that no one has been able to stem the tide of this sea change since the early 1970s (which interestingly coincides with the rise of semiconductors), what makes you think that tax and spend policies will work?
BTW, the highest marginal tax rate when this divergence began was 70%…and that tax rate lasted until 1981.
Owners in private businesses see their personal income tax as simply another cost. Whether you push higher income taxes on them, or push higher wages on them, the result will be the same…in addition to trying to grow their business (which they do anyway) they will look to find ways to reduce their costs. If technology exists to automate certain tasks, that’s the low hanging fruit.
I believe that technology and globalization are the big culprits. You believe that proper government policies…would solve this problem
Ultimately, government is the only thing that can solve USA’s problems. When government manages capitol and labor, capitol and labor can both win as did both capital and labor win in the USA for decades. When labor manages government and capitol, we get forms of communism. When capitol manages labor and government, we get the USA today.
Can you show where Democratic policies or Republican policies changed those lines in any way, shape or form?
We enacted TrickleDown polices for 35 years under the promise of wealth trickling down, and the middle-class got screwed.
Whether you push higher income taxes on them, or push higher wages on them, the result will be the same…
Many would say higher wages benefit economies more - most every company is on the same playing field if wages are generally high all around thus most companies are not at a competitive disadvantage. Henry Ford knew his workers needed high enough wages to buy his product and he paid it. This is lost on many modern day “capitalists” imo.
I have heard this story many manufacturers are locating back in the USA because American designers like to visits the place were their designs are going to be made and not have to travel half way around the world to do that.
“…wealth can be printed, but color me skeptical”
Borrowing wealth doesn’t seem to have a happy ending either.
Santa Monica, CA Housing Prices Fall 4% YoY; Population Declines Statewide
http://www.movoto.com/santa-monica-ca/market-trends/
‘The current growth model, dependent on exports and financial bubbles, has clearly run its course, and is now leaving financial, economic and ecological devastation in its wake.’
‘What a difference a year makes. Even until just a year ago, the “emerging market economies” were being lauded as the hope of global capitalism. This apparent dynamism contrasted sharply with the secular stagnation that seemed to have gripped advanced capitalism, creating a “new normal” or even what the International Monetary Fund (IMF) has called “the new mediocre” of low and spluttering growth of economic activity with even lower growth of employment.’
‘In the eyes of global investors and their cheerleaders in the financial media, for a while it seemed that the emerging markets could do no wrong, and they certainly became destinations for hot money flows at a time when loose monetary policy in the U.S. and Europe had rendered real interest rates close to negative there.’
‘Now the discussion has turned completely, and the same countries that were earlier seen as full of growth promise are suddenly decried as replete with economic problems that are only going to get worse, and likely to be facing serious downturns. Problems of falling exports and slowing domestic economic activity are being compounded by capital flight from these countries, amounting to more than $1 trillion in the past year. And this has occurred even before interest rates in the U.S. have been raised, as they are expected to be in the near future.’
Thelma Dickerson: [with a cliff in front of them and cops behind them]
Thelma Dickerson: OK, then listen; let’s not get caught.
Louise Sawyer: What’re you talkin’ about?
Thelma Dickerson: Let’s keep goin’!
Louise Sawyer: What d’you mean?
Thelma Dickerson: …Go.
Thelma Dickerson: [Thelma nods ahead of them]
Louise Sawyer: You sure?
Thelma Dickerson: Yeah.
http://www.imdb.com/title/tt0103074/quotes
‘China’s slowdown is the biggest risk to New Zealand’s economy according to economist Shamubeel Eaqub - and his main worry is the dairy industry, including Fonterra. But Fonterra is fighting back, saying it is in a strong position for whatever lies ahead.’
Speaking to a crowd of 260 at the New Zealand Shareholders’ Association annual general meeting in Hamilton on Saturday, Eaqub said the slowdown not only had a direct impact “in terms of the export of our goods, in terms of our prices, but the spillover of the cost that has to economies around Asia”.
‘He said the scale of the impact was obvious in the fact that the current dairy payout to farmers from Fonterra was the lowest in real terms since 1912. “The consequence of the slowdown in China is going to be really important for New Zealand. This is a really big deal,” said Eaqub.’
‘He said New Zealand had benefited from an unprecedented amount of investment into the Chinese economy, which was now cooling off. “China has poured more concrete in the last three years than America did in 100 years. Does that give you a sense of the scale of the amount of money that was borrowed, the amount of stimulus that was put into the economy? It’s humungous and, at the same time, we know those kinds of things are not sustainable forever.”
‘Eaqub also said there were questions Fonterra, needed to answer. “You guys should be asking [Fonterra] about why [it] has so much debt when the economy was doing so well, why it went into this downturn so unprepared, why it is not looking after its users?”
‘why [it] has so much debt when the economy was doing so well’
Years of cash burning growth?
China has poured more concrete in the last three years than America did in 100 years
There’s gonna be a HUGE surplus of ready-mix plants and trucks in China.
Used iron=scrap price.
‘the 42nd consecutive month of declines. The culprit here has been overcapacity across a range of heavy industries. Yet, with few companies exiting or going bankrupt, prices keep sinking’
This is a version of the dry-cleaning effect I mentioned before.
http://thehousingbubbleblog.com/?p=9231#comment-2477583
Coral Gables, FL Housing Prices Plunge 18% YoY; Foreign Owner Exit Market
http://www.zillow.com/coral-gables-fl/home-values/