November 10, 2015

If The Money Leaves You Have Chaos

The National Mirror reports from Nigeria. “It is no longer news that the FCT stands head and shoulders above other Nigerian cities in massive building construction. Investing in real estate business and massive building construction has held a certain fancy for most investors in the city. That fancy however, is suddenly being translated into a nightmare due to the cash crunch. Emmanuel Onoja, a building materials dealer in Wuse, noted that there had been a significant reduction in construction activity in the FCT for several months. He maintained that all the parties involved in house construction projects were currently battling with uncertainties surrounding their businesses, adding that ‘many of them are still owing commercial banks and that such banks are breathing down their necks to have them repay the loans they had procured.’”

CNBC TV 18 in India. “In two years, local Chennai builder VGN Developers claims its 10-acre land bank in Chennai will boast of some of the most inexpensive apartments within city limits. A week ago, it rattled the local real estate market by announcing 1,300 apartments at just Rs 7,000 per square foot, when the prevailing rate in the area is closer to Rs 9,500 a square foot. But, VGN says this discount is not just about the festival season. ‘As an organization, we needed cash-flows. So, we decided let us bring the prices down, increase the affordability and get cash flows into the company,’ the company’s MD Pratish Devadoss told CNBC-TV18.”

“Most of these developers have begun slashing launch prices with a view to enhance cash flows in a difficult property market. That’s why a discount anywhere between 25 and 33 percent on the prevailing market rate is the new normal. ‘At least 8-10 percent will correct. Because if they don’t, they’re just going to be unsold inventory you have just too much unsold inventory at the end of the day,’ said Sarita Hunt Managing Director - Chennai, Jones Lang La Salle India.”

From News In English on Norway. “Norway’s national real estate brokers’ association, Eiendom Norge, reported on Wednesday that the prices of homes sold in October were an average 1.2 percent lower than they were the month before. ‘It’s one of the weakest Octobers we’ve had in 10 years,’ the association’s director told state broadcaster NRK. Stavanger and Kristiansand have been hit especially hard by the slowdown in the oil industry caused by lower oil prices.”

“‘Stavanger has had a considerable inventory of homes on offer this year,’ said Christian Vammervold Dreyer. ‘The listings are very, very long.’ He also noted that the slowdown in Stavanger’s real estate market has clearly extended throughout Rogaland County and into other areas of Vestlandet and Sørlandet (western and southern Norway).”

The Vancouver Courier in Canada. “Andy Yan’s study of 172 multi-million dollar homes in Vancouver’s Dunbar neighbourhood touched a nerve earlier this week. For the study, Yan specifically isolated ‘non-anglicized Chinese’ names listed on land titles. Among his findings were that 66% of the buyers of the 172 homes in the study had non-anglicized Chinese names, indicating they were likely recent arrivals from mainland China, according to the study. There is a public perception that mainland Chinese homebuyers are buying Vancouver houses with cash, but in the properties Yan studied this was not the case: 82 per cent of the properties in the Nov. 2 study had a mortgage, while 69 per cent of mortgaged properties held mortgages from three banks: HSBC, CIBC and RBC.”

“What Yan reads into his own work is a story not of race but of wealth, the flow of money across international borders and the role banks play in facilitating transfers. ‘This isn’t a story of China, it’s a story of money,’ he said. ‘It’s this weird sense that money is no longer connected to what you do and where you live, it’s just this constant flow.’”

The International Business Times on China. “Two decades ago, when he first set up his business in China, the European businessman with an interest in design was captivated by seemingly boundless opportunities. But, on a recent fall morning, the businessman sat in the living room of his house in a suburban residential compound, waiting anxiously for the real estate agent to arrive. He was putting his home on the market, as he prepared to shut down what remained of his company and shift his base back to Europe.”

“‘We had some great times here,’ he said. ‘But now it’s time to leave.’ The businessman, who spoke on condition he not be named because of sensitivities over de-investing from China, said life had changed: ‘When I arrived people were kind, life felt straightforward. Now it’s all about money, people are under a lot of pressure. Rents are high, schools are expensive. And the pollution … So I’m tired, I really don’t want to stay anymore. Frustration at the slowing economy, and unpredictable shifts in business regulations were factors too, he added – and not just for him. ‘The real estate company said a lot of people are selling houses.’”

“Official government data bear out the trend of capital flowing out of the country, with growing numbers of investors –foreign and Chinese –shifting assets out of China at an intensifying pace. Andy Xie, the former chief economist for Asia at Morgan Stanley, warned of parallels with the Asian financial crisis of the late 1990s, when speculative bubbles in real estate and stock markets in Southeast Asia, Hong Kong and South Korea eventually led to a crisis of confidence – causing dramatic falls in the value of currencies.”

“‘China’s story is the East Asian story in 1998,’ says Xie, who has long held more bearish views on the nation’s economic trajectory. ‘They’d over-invested, there was huge overcapacity due to speculation, and there were no real profitable opportunities – but the money supply kept growing. Then one day the speculation stopped, and there was too much money in the economy – but the government didn’t want to raise interest rates. And then people wanted to leave all at once and then the currency collapsed – and if the money leaves you have chaos.’”

News.com on Australia. “Chinese buyers have flooded billions into the Australian property market, but a new report suggests that demand could finally be falling. Analysts from investment bank Credit Suisse said in a report this week ‘anecdotal evidence’ suggested demand could slow by as much as 30 per cent in the year to December. The report blamed the slowdown on struggling Chinese consumer sentiment and poor conditions for Chinese middle-to-upper class. Credit Suisse analysts Damien Boey and Hasan Tevfik said based on limited data, the “weight of evidence suggests that at the very least, there has been some cooling of Chinese interest in recent times, off an historically high level.’”

“‘Even we have been surprised by the recent increase in Chinese demand for Australian housing,’ they wrote. ‘After such a strong pull-forward of demand, we could now be seeing some consolidation. In our view, it is the cyclical weakness in Chinese income and wealth that is driving cyclical weakness in Chinese property buying abroad.’”

The Australian Financial Review. “Sydney’s falling auction market hit a three-year low at the weekend as buyers reacted to higher interest rates and record listing numbers. The city’s auction clearance rate dropped below 60 per cent for the first time. Domain Group’s preliminary results put the clearance rate 59.2 per cent across 1011 auctions. Sydney could fall even further by Christmas, Domain Group senior economist Dr Andrew Wilson warned.”

“‘It’s not just that the market is tracking at its lowest levels in three years in Sydney but that we are also yet to find a floor,’ Dr Wilson said. ‘This has been a very sharp decline, we are not seeing an orderly correction phase. But we still have around 6000 auctions to come in Sydney before the end of the year.’”




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34 Comments »

Comment by Ben Jones
2015-11-10 05:05:22

The IBT article on China is full of information:

‘The forces propelling money out of China are many, but a prime factor is alarm over the government’s August decision to suddenly devalue the Chinese currency, the yuan, not long after officials denied such a move would take place. Falling exports and slowing economic growth also played a role, along with the spectacular boom and bust on China’s stock markets, which fell some 30 percent during the summer, unleashing questions about the extent of the authorities’ grip on the economy.’

‘For the European businessman, the drop in the value of the yuan was especially troubling. “This devaluation was in the air for many years,” he said, “but suddenly, whoosh, it goes from 6.1 yuan to the dollar to 6.4 in two days – just to improve the exports. And they didn’t explain clearly what was going on,” he added. “No-one does a devaluation like this – but in China you never know.”

‘It added to his sense of uncertainty about the security of his investments in China. Well-informed Chinese friends were advising him that real estate prices – which have risen again this year, after a three-year stagnation that followed a decade-long boom – could fall back in the next couple of years. “Of course, some Chinese people still say prices won’t go down, only up,” he said, but, “I think the prices are already very high compared to Europe.”

‘Another factor in his decision to sell was rising costs, both within his business and from suppliers. Hikes in rents, wages and the cost of land, as well as high import taxes, have made it ever more difficult to draw a sizeable profit. “Salaries have got very high, especially in the cities – and every factory in China is very expensive now. And when these factories buy new machines they want to get the money back in one year – in Europe they might wait five or ten years. So some of our products are actually cheaper to make in southern Europe now.”

‘Joerg Wuttke, President of the European Union Chamber of Commerce in China, agrees the events of the summer came as a shock. “Everybody’s concerned about this in varying degrees,” he says. “It has taken off the image of invincibility that the Chinese leadership had. This was seen as a very smooth policy machine – hence the surprise was bigger. It doesn’t take away the lure of the market size – but certainly people look at China differently, some are wondering where the next policy mistake is going to come from.”

Comment by snake charmer
2015-11-10 11:03:24

We’ve got to dig deep and find ways to be less shocked by predictable developments. If Chinese leaders had an aura of invincibility, it was wrongly conferred upon them by hapless or self-interested officials, media, and industry analysts.

Comment by Ben Jones
2015-11-10 11:26:22

But why? IMO because the entire globalist experiment (and that’s all it is) hangs on the Chinese Miracle. The Chinese economy was invincible because globalism is inevitable. It all was sold to us on the basis that history could not be denied, no matter what path we chose, we would end up with a garage full of Chinese crap bought with credit cards. There isn’t anything that’s worked out the way we were told. The people in Mexico have no middle class to speak of, who were going to buy our software and lift all boats. The Chinese were going to become a new-era economic juggernaut. Instead they have turned out to be a bunch of brutal, incompetent crooks.

It’s funny how this story about their money-laundering has played out; “oh the Chinese can see, Vancouver is worth much more than the locals ever dreamed!” (Like when Californians waltzed into Arizona or Arkansas and declared, “my gosh they are selling these houses for only $400,000! I’ll take two!”)

Now it is slowly dawning on everyone, they are bailing out of China, and the reason is, it stinks there. And if the Chinese economy stinks, the globalist engine is out of oil, about to seize up. I have no idea how this is going to turn out. But these mammoth amounts of debt, more than ever incurred in history, don’t look so good if we are going into a global recession.

Comment by Mafia Blocks
2015-11-10 11:45:30

“don’t look so good if we are going into a global recession.”

Let her rip. You don’t get to the good(falling prices to dramatically lower and more affordable levels accelerating the economy) until you go through the bad(grossly inflated prices and a moribund economy.)

Let her rip.

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Comment by Combotechie
2015-11-10 14:04:57

“But these mammoth amounts of debt, more than ever incurred in history, don’t look so good if we are going into a global recession.”

I’ve said this before but it is worth saying again:

When an equity market that is financed by debt takes a enduring hit then two groups of people take this hit. One group of people takes their hit right away and the other group of people takes their hit down the road a bit.

The first group to take the hit is the equity group and Mr. Market decides - decides immediately - on when the hit will take place and just how severe the hit will be.

The second group to take the hit is the debt group: This is the group that has its value connected to the price of the equity that is used for its backing. When the equity takes its hit then the backing takes a hit - but it doesn’t take its hit right away; There is a passage of time that must go by before it slowly dawns on the debt holders that the money they are owed - the money that shows up on their account statements - is really no longer there.

In sum: Mr. Market decides on the values of equity - and it makes its decision rather quickly, and accountants and such decide on the values of the debt that was backed by the equity and they tend to take their time; They take their time because hope is kept alive among these folks that the prices of the equity will come back. But when it becomes obvious that prices are not coming back then that’s the time that the second hit, the hit to the no-longer-backed-debt, is taken.

If the debt to equity ratio is huge - meaning if there is a lot of debt backed by little equity - then it follows that the second hit (the hit to the debt) will be huge as compared to the hit to the equity.

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Comment by redmondjp
2015-11-10 11:44:35

Well if it’s getting too expensive to make things in China, then there is some hope for getting some manufacturing jobs back here. But I am not optimistic about it.

 
 
Comment by Ben Jones
2015-11-10 05:12:05

‘Data Mining Reveals the Extent of China’s Ghost Cities. Overdevelopment in China has created urban regions known as ghost cities that are more or less uninhabited. Nobody knew how bad the problem was until Baidu used its Big Data Lab to find out.’

‘Not only does the team identify more than 50 ghost cities in China, they are also able to analyze their spatial distribution and how it relates to the surrounding geography and urban setting.’

“Instead of just counting the number of homes with light at night in certain residential areas as the indicator of “ghost city,” Baidu big data can count the population precisely, in real time, and in national scale,” say Guanghua and co.’

‘That should help the Chinese government make better planning decisions in future and should also inform people thinking of moving to these areas. (Baidu has been careful not to rank the ghost cities in this study for fear of influencing property prices there.)’

Comment by Professor Bear
2015-11-10 08:03:50

‘That should help the Chinese government make better planning decisions in future and should also inform people thinking of moving to these areas. (Baidu has been careful not to rank the ghost cities in this study for fear of influencing property prices there.)’

Central planning generally leads to this kind of ubiquitous economic crash. I wouldn’t bother being too careful with rankings, as any city which starts out 90% empty and stays there for a protracted period fo time is economically doomed from the get-go.

 
 
Comment by Ben Jones
2015-11-10 05:18:53

‘As the Federal Reserve readies to raise interest rates, on the other side of the world one asset class is bracing for the fallout — bricks and mortar in Hong Kong. In the past seven years, Hong Kong property has risen by more than 150%, and in that period most analysts have just about given up trying to benchmark prices to any fundamental yardstick. What we do know is the two big drivers have been the U.S. on one side and China on the other.’

‘Thanks to the dollar peg, Hong Kong maintained basement interest rates at the same time its gross domestic product was strengthening due to buoyant mainland Chinese demand. Brokerage firm Jefferies refers to this in a new report as an “irregular economic mechanism,” which caused this property overshoot. But now these twin drivers are poised to reverse.’

‘A consensus is forming that we are at a turning point; property transactions slumped to a 19-month low in October, and last week the government was unable to sell a plot of land as all nine bids came in below the reserve price.’

‘Analysts are also calling time on Hong Kong’s property bull run. Jefferies became the latest to predict the end of the property bull run, forecasting a 30% fall in home prices and a new “normalization” of the market. Another indicator of lower prices is the share-price weakness in developer stocks, which are now at back at 2011 levels.’

‘Back in August 2012, Barclays urged caution on local property, noting the price-to-household-income ratio had reached 11 times, against a long-term average of 7.1 times income. Today that ratio has blown out to a massive 17 times household income, according to Jefferies’s latest calculation.’

‘What made that Barclay’s report stand out was that it introduced a novel approach to analyzing Hong Kong housing, suggesting apartments should be likened to “deposit boxes,” where their main function was for somewhere for investors to store wealth, rather than a place for people to actually live.’

‘This thinking was based on the declining number of owner-occupiers and a reduction in overall leverage in the market as cash-rich investors priced genuine home buyers out of the market.’

‘This analogy appeared prescient when, in recent years, developers introduced a new phenomenon of building microapartments with some coming in at 180 square feet. So small were these properties, it led to a debate whether there was more space in a cell in Stanley prison.’

Don’t you hate it when this happens?

‘now these twin drivers are poised to reverse’

Comment by Ben Jones
2015-11-10 11:28:54

’suggesting apartments should be likened to “deposit boxes,” where their main function was for somewhere for investors to store wealth, rather than a place for people to actually live…with some coming in at 180 square feet’

The suggestion is these things aren’t even housing.

Comment by Ed G
2015-11-10 12:32:39

The problem with this thinking is it assumes no one will ever sell. Except when someone passes, or runs into financial difficulty, they will have to sell into an illiquid market. Safe deposit boxes should carry things that can be liquidated in an emergency right? Stocks, bonds, jewelry, things that can be sold quickly to make money.

It takes a long time to close on a property, the property is taxed at a much higher rate than the safety deposit box rate, requires maintenance, and its generally an illiquid market. I would not want to tie my money up in property as ’savings’ because I couldn’t get to it when I need it most.

Comment by Ben Jones
2015-11-10 12:49:55

‘I would not want to tie my money up in property’

We see different explanations; the Chinese have a cultural inclination toward real estate. Uh, so hows all this money getting out if they have a $50,000 limit? Doesn’t the fact that money-laundering is most easily facilitated by buying real estate have anything to do with it? Jeebus, if you get caught with a briefcase of money coming into Canada, they just make you pay a few thousand and they hand it right back to you!

From the other day:

http://thehousingbubbleblog.com/?p=9328

The Hong Kong Standard. “Three Midland Realty agents have bought a flat in Tin Shui Wai at a price that is 30 percent below market values. They bought a 441-square-foot unit in Kingswood Villa for HK$2.6 million, or HK$5,856 per sq ft, following a HK$1.1 million price cut. The price was 28 percent, or HK$1.03 million, lower than other units of a similar size in the same housing estate. Midland Realty’s residential department chief executive Sammy Po Siu-ming said the homeowner had put the unit on the market in August, but no one had shown interest.”

The New Zealand Herald. “Auckland average residential asking prices have dropped more than $18,000 in just a month, from $851,531 in September to $832,713 last month. Data from realestate.co.nz showed Auckland’s drop was reflected elsewhere: nationally, the asking price fell from $568,215 in August to $539,823 last month. ‘Chinese buyers have also backed off as they see a lengthening series of small roadblocks put in their way - consider wealth lost through China’s sharemarket rout and struggle to get funds out of China amidst a new crackdown on capital outflows by the authorities,’ said BNZ chief economist Tony Alexander.”

“‘The number of new listings coming onto the market in October is up significantly on last month’”

http://thehousingbubbleblog.com/?p=9321

“While many people flock to make a fortune from the local property market, Oknha Yum Sui Sang, chairman of Union Commercial Bank PLC (UCB), chooses not to invest in this sector until Cambodia’s mortgage law system is better developed. ‘Whether the property market is blooming or not depends on how you see it,’ said Yum, a Hong Kong native. ‘Both investors and buyers in the local property market are mainly from overseas. Local people have a weak consuming power in terms of buying property, and many of them can only afford apartments priced at the range of several tens of thousands.’”

“However, the good news is that no matter how unpredictable the overseas business environment is, Chinese investors are still eager to ‘go out’. ‘China’s economy is very bad now. There is a Chinese saying that it is doomed if staying in China, but it could delay the doom if going out,’ said Yum.”

“Even the Chinese government encourages enterprises to ‘go out’ with the ‘one belt, one road’ initiative. In reality, as many Chinese investors told Yum, it is not that easy for them to liquefy their assets in China for overseas investment. ‘The problem of China’s economy is that the government only helps state-owned enterprises,’ said Yum. ‘Other small enterprises cannot get loans and are left on their own.’”

A Chinese businessman quoted in an English language Cambodian newspaper:

‘China’s economy is very bad now. There is a Chinese saying that it is doomed if staying in China, but it could delay the doom if going out’

They’ve even got a “saying” for how freaking bad it is!

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Comment by Ben Jones
2015-11-10 05:24:45

‘It is easy to imagine the smiles on faces of millions of Chinese men and women over this great piece of news: The Chinese government has decided to reverse the one-child policy that has been in force since 1979 and allow families to have more than one child.’

‘It is not easy for people, wherever they may live, to accept such strictures as limits on the number of children they may bear, and the Chinese cannot be different. Such choices are intimate and they belong in the realm of the individual family. What business does the state have interfering in such matters?’

‘That rhetorical question may be justified. Still, we have to concede that in extraordinary circumstances, extraordinary measures are called for, and there can be very little doubt that the demographics of China are quite extraordinary. It has a population estimated at 1.4 billion souls, a moderate growth rate of 0.4 per annum, and a death rate of seven people in every thousand.’

‘We have our own demographic concerns in Africa too, not necessarily because there are too many of us, but because the small populations we have we manage badly.’

‘Armed rebellions and terrorist groups easily become the schools and factories that we denied to our youth in our usual cluelessness. If you look carefully, the cost of combating delinquency, crime and terror may be the same as what we could have been required to cough up if we had built more schools, paid our teachers well and churned out smart young men and women to feed our factories and research labs.’

‘But we are doing nothing of the sort. And the Chinese look at us and see a market of fools who will buy their cheap goods made in factories that employ their youth, and we, the job exporters, make it possible for the Chinese to give themselves a two-child bonus because they have earned it.’

Comment by Combotechie
2015-11-10 06:32:15

“‘And the Chinese look at us and see a market of fools who will buy their cheap goods made in factories that employ their youth, and we, the job exporters, make it possible for the Chinese to give themselves a two-child bonus because they have earned it.’”

Africa, the guy was talking about Africa. He could have just as well have been talking about the U.S.

 
Comment by snake charmer
2015-11-10 11:17:12

Very interesting editorial. I would have liked some commentary on the Chinese physical presence in Africa, because Chinese leaders appear to see the continent not just as a market, but as an alternative to their own environmentally-destroyed land. The problem is, there are people already there.

 
 
Comment by Ben Jones
2015-11-10 05:33:57

‘January 11, 2013′

‘The high cost of accommodation in Abuja has been a source of worry to the residents of the Federal Capital Territory, FCT. Rent has been priced beyond the reach of ordinary income earners.’

‘Abuja home owners and landlords are mostly made up retired military officers, retired and active permanent secretaries/top civil servants and politicians. The problem is not unconnected with the fact that civil servants on whose shoulders the responsibility of issuing out land to people lies are those that are withholding the land meant for ordinary people, only to sell it at exorbitant rates to those that can afford to buy it.’

‘There is also the cost to purchase properties in Abuja. The cost at which these properties are sold is alarming. The Abuja Times gathered that most of these homes are not even occupied; they are just purchased for hundreds of millions and some even billions of stolen money and just left there. Our reporters went to view a home in Maitaima with a selling price of N1.3B. Further investigations shows that the home has been on sale for 3 years at the same price. The owner remains anonymous. The question we all asked today who owns this home and who will purchase it. The agent who accompanied us informed us that a house was sold for the same amount a few weeks earlier but refused to give out details of the buyer. Further pressing revealed it was a civil servant. The question is where do they get this money from and why is it invested in properties?’

‘The housing market in Abuja is the highest form of money laundering, because these monies cannot be put into bank accounts but it is used to purchase homes as investment.’

‘The Abuja Times compared the cost of a home here in Abuja and a home in California. A Property in Abuja: N 350 000 000 = Just over $2m.’

‘A Property in Califonia: 5 bedroom house for sale $1,000,000 =N155M. The pictures tells the story themselves. You don’t have to be a rocket scientist to figure it out. It’s all a scam in Abuja and something must be done.’

 
Comment by Mafia Blocks
2015-11-10 06:41:39

“Global Stocks Fall For 5th Day On Disturbing Chinese Inflation Data; Renewed Rate Hike Fears; Copper At 6 Year Low”

http://www.zerohedge.com/news/2015-11-10/global-stocks-fall-fifth-day-disturbingly-weak-chinese-inflation-data-renewed-rate-h

Remember….. Nothing accelerates the economy like falling prices to dramatically lower and more affordable levels. Nothing.

Comment by taxpayers
2015-11-10 07:26:38

worked in 1921- but no big gov bail then
now everyone is Keynesian and turning Japanese

 
 
Comment by Combotechie
2015-11-10 07:20:33

“If The Money Leaves You Have Chaos”

I enough money leaves you have Bodie:

https://www.google.com/search?q=bodie+ca&biw=1360&bih=643&source=lnms&tbm=isch&sa=X&ved=0CAcQ_AUoAmoVChMIsIzChYaGyQIVR9ZjCh31cgef

Money flow: If enough money flows in you have Aspen, if enough money flows out you have Bodie.

 
Comment by Ben Jones
2015-11-10 07:40:43

‘The head of the Reserve Bank of India (RBI) has warned about the risks of easy money, urging the United States to raise the cost of borrowing sooner rather than later regardless of the jolt this may give markets. Speaking at an event with the head of Germany’s Bundesbank, who sent a similar message, Raghuram Rajan said that low borrowing costs and money printing were a threat to financial stability and would lose effectiveness over time.’

‘Rajan, who is worried that shrinking returns on investments in Europe prompt a flood of investment and inflation in India, said “extremely aggressive monetary policy … eventually may have tremendous consequences for financial stability”. “If everyone is doing it, you won’t get much benefit out of it,” he said.’

Comment by Ben Jones
2015-11-10 07:45:47

It’s too late Raghuram:

‘Corporate leverage is now at its highest level in a decade, according to a new analysis from Goldman Sachs. Years of low interest rates and eager investors have encouraged Corporate America to go on a shopping spree; on the list are share buybacks and dividend hikes to reward equity investors, as well as a series of M&A deals, all funded through a generous bond market. Since cash flow has not kept up with the boom in bond sales, the splurge has left Corporate America with its highest debt load in about 10 years, according to the bank.’

“Companies in the United States have taken advantage of low interest rates to issue record levels of debt over the past few years to fund buybacks and M&A,” Goldman analysts led by Robert Boroujerdi wrote in the note. “This has driven the total amount of debt on balance sheets to more than double pre-crisis levels.”

‘Goldman joins Citigroup in warning that investors may be growing more wary of rewarding leverage-increasing corporate actions as the credit cycle turns. “The spectre of rising rates, potential global disinflation (dare we say ‘deflation’?), declining operating profits and wider credit spreads continues to create near-term consternation for weak balance sheet stocks,” the analysts conclude.’

‘Goldman points out that central bank balance sheets have doubled since the crisis, yet global GDP growth is running at a mere 3 percent for the fourth straight year.’

Comment by Ben Jones
2015-11-10 07:55:56

‘the total amount of debt on balance sheets to more than double pre-crisis levels’

‘central bank balance sheets have doubled since the crisis’

Huh, they mention this crisis like it is a period we all know about or have clearly defined in our collective consciousness. This occurred to me; just how did these central banks double their balance sheets? You got assets on one side and liabilities and equity on the other. What were they selling that made it balloon like that since this ill-defined time period? They were selling something right? I mean, if you have a balance sheet at all you must be selling or operating in some manner. Maybe this is their product:

‘the total amount of debt on balance sheets to more than double pre-crisis levels’

Now that’s a sweet business, selling debt! Which brings me back to this from 2013:

‘The Abuja Times compared the cost of a home here in Abuja and a home in California…The pictures tells the story themselves. You don’t have to be a rocket scientist to figure it out. It’s all a scam in Abuja and something must be done.’

Something was done alright. Bernanke the Courageous had the pedal to the metal baybee.

Comment by Mr. Banker
2015-11-10 08:08:49

“Now that’s a sweet business, selling debt!”

Hey, the customer is always right!

If the customer comes to me wanting to buy debt then debt is what I will sell to him.

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Comment by Ben Jones
2015-11-10 08:15:42

If I had a screen name I would change it to this:

It’s all a scam in Abuja and something must be done

 
Comment by Mr. Banker
2015-11-10 08:28:00

“It’s all a scam in Abuja and something must be done”

I’m doing my best to do my part.

 
Comment by Mr. Banker
2015-11-10 08:29:48

“If God did not want them sheared then He would not have made them sheep.” - Calveras

 
Comment by Ben Jones
2015-11-10 08:30:31

What’s funny about it is he seems to think that a million bucks in California is some kind of rational standard.

 
Comment by Ben Jones
2015-11-10 08:32:22

Calveras

Walkin’ with my baby she’s got great big feet
She’s long, lean, and lanky and ain’t had nothing to eat
She’s my baby and I love her just the same
Crazy ’bout that woman cause Caldonia is her name

Caldonia, Caldonia
What makes your big head so hard?

‘Americans are borrowing big again. The Federal Reserve’s credit numbers showed American consumers borrowed at an all-time record of $28.9 billion in September, besting the previous high-water mark set in November 2001. In fact, this is the biggest monthly leap in consumer borrowing going all the way back to 1943, when the Fed first started keeping records.’

 
 
 
 
 
Comment by Ben Jones
2015-11-10 09:24:56

‘This has been a very sharp decline, we are not seeing an orderly correction phase. But we still have around 6000 auctions to come in Sydney before the end of the year.’

A thousand in a week is about as high as it goes there. I wonder if bidding tails off around the holidays?

 
Comment by Senior Housing Analyst
2015-11-10 09:48:36

Eagle Point, OR Housing Craters; Prices Nosedive 23% YoY

http://www.zillow.com/eagle-point-or/home-values/

Comment by redmondjp
2015-11-10 11:49:04

Eagle Point? You’re really reaching there, HA . . . while you’re at it, give us the cratering prices in other podunk towns like John Day and Condon, OR.

Comment by Mafia Blocks
2015-11-10 13:52:44

Falling prices my friend. Falling prices.

Paying 2x construction costs and 3x higher than long term price trend for what is always a depreciating asset always results in losses. Always.

Normandy Park-Seattle, WA Housing Prices Crater 5% YoY

http://www.zillow.com/normandy-park-wa-98166/home-values/

Comment by redmondjp
2015-11-10 15:31:00

Nobody wants to live in Normandy Park. So no real surprise that houses have “cratered” by a single-digit percentage!

(Comments wont nest below this level)
Comment by Mafia Blocks
2015-11-10 16:23:35

Falling housing prices my friend. Falling housing prices.

Rocklin, CA Housing Prices Crater 5% YoY

http://www.zillow.com/rocklin-ca/home-values/

 
 
 
 
 
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