March 6, 2016

A Zero-Interest Rate Liquidity Trap With No Easy Exit

A weekend topic on three opinion articles. ABC News in Australia. “When it comes to bubbles, Australian property ticks pretty much all the boxes. If there is a sharp correction in the eastern states it will have a devastating impact on our banks and economy, writes Ian Verrender.”

“As of December, mortgage debt over property issued by Australian banks and other authorised institutions has grown to just shy of an eye-watering $1.4 trillion. In 2008, when APRA first began compiling the statistics, it stood at just $638 billion. In the intervening years, not only has the number of mortgages ballooned, but the average size has grown as the property market has kicked into overdrive.”

“That doubling in Australian housing debt is remarkable and concerning, not just because of the short time frame and the fact it partly has occurred during a period of the lowest wages growth in history, but because a great slab of it has been struck at record low interest rates.”

“Throughout 2014, governor Glenn Stevens repeatedly brushed aside calls to impose controls to curb housing prices. But last year, in a sudden about face, he described Sydney housing as ‘crazy’ and within months, the banks were forced to restrict investment housing loans. The result? Investors, who accounted for 39 per cent of all new mortgages in June last year, now make up 36 per cent.”

“That measure was combined with a crackdown on the rorts surrounding foreign property purchases, where a flood of money out of China appeared to be pouring into established Australian housing. Foreign investment rules were not enforced, nor was any real data collected. So suddenly, the heat is ebbing from Sydney and Melbourne property prices.”

The Hong Kong Standard. “What’s happening in the mainland property market defies common sense. On the one hand, stockpiles of unsold new homes across the country are huge. On the other hand, home prices in first- tier cities like Shanghai and Shenzhen continue to soar to unprecedented levels. The phenomenon is strange, yet not difficult to understand if we look at what’s been occurring elsewhere around the mainland.”

“In less privileged cities, prices remain soft, with few signs of recovery. Ghost cities - new developments without residents - remain everywhere. These contrasting fates are inevitable, for smart money knows where to go. If political will can dictate where money flows, policymakers would have already solved the problems, so that the A-share bull market would still be alive, and the ghost cities would be vibrant with activity. The sad reality is things don’t always go according to plan.”

“It’s clear that the property bubble is continuing to build in major cities. To buy a flat, residents braved the winter cold to queue overnight in Shanghai. In Shenzhen, gangsters took up front positions in the queues, only to sell their positions later to buyers at, well, gangster rip-off rates. Such sights were common in Hong Kong prior to the bursting of the bubble in 1997.”

“However, central banker Zhou Xiaochuan has insisted mortgages are within safe levels despite the quantum price leaps. That may be the case officially - which can be deceptive - for it’s common for mainlanders to obtain secondary or even higher mortgages via a P2P platform, real-estate agents or finance firms. In some cases, a loan can be higher than a property’s price.”

“The bubble won’t burst as long as prices keep rising. The problem is that these activities aren’t supervised. After Beijing made it an objective to clear housing inventories, new lending hit a record high of 2.51 trillion yuan in January. It wouldn’t surprise me if a significant portion of that finds its way into places like Shenzhen to feed the bubble. By the way, congratulations if you own properties in Shenzhen, for it may be the time to lock in profits. But make sure you do so before the bubble bursts.”

Stephen Roach at the Asian Sentinel. “Seven years after the Great Recession, the world economy continues to struggle. After a wrenching financial crisis morphed quickly into a severe downturn in the global business cycle, the subsequent recovery has been unusually weak, lacking the vigor that normally insulates the world from subsequent shocks. With a multitude of shocks continuing to batter today’s troubled world, the probability of a relapse remains high. To a large extent, the world is mired in a Japanese-like secular stagnation.”

“The stage was set with a fractional increase of just 0.028 percent in world output, or GDP in 2009 – the weakest year in the global economy since the end of World War II. Students of global business cycles have long maintained that the world usually lapses into recession when global GDP growth pierces the 2 to 2.5 percent threshold. Relative to that standard, it’s not too hard to figure out why the 0.028 percent increase in 2009 is now known as the Great Recession.”

“Yet the economic situation is even worse when compared with the normal cruising speed for the global economy. Prior to the Great Recession, over the 1980 to 2008 period, world GDP growth averaged 3.5 percent. Relative to that trend, the shortfall in 2009 and its subsequent anemic rebound is all the more distressing. Looking at the six-year global recovery in its entirety, by 2015, the world had recouped only about half the 3.5 percentage point shortfall from the trend that opened in 2009 – marking the deepest and most protracted shortfall on record for the modern global economy.”

“Japan’s stagnation –now known as its lost decades – emerged in the early 1990s. Over the 1992 to 2015 period, Japanese real GDP growth has averaged just 0.8 percent – a stunning collapse when compared with the 7.25 percent growth trajectory of the preceding 45 years. At work have been the protracted aftershocks of a wrenching balance sheet recession following the bursting of two massive asset bubbles – equities and property – that led to the implosion of a highly leveraged keiretsu system of banks and corporations.”

“As Japan Inc. unraveled, Japanese policymakers resisted the restructuring and structural changes that might have spurred recovery. And the economy slid down the slippery slope of a ‘liquidity trap’ with zero interest rates and a massive overhang of debt. The purportedly Herculean efforts of Abenomics have not made a difference; real GDP growth has averaged just 0.7 percent over the 2013-2015 period since the ‘three arrows’ of Shinzō Abe were first fired, fractionally slower than the 0.8 percent trend in the preceding 21 years of Japan’s first two lost decades.”

“While no two economies are alike, telltale signs of the Japanese disease are evident in the United States and Europe. The American consumer felt the full force of a wrenching balance sheet recession during the Great Crisis of 2008-2009. Consumer spending had been artificially inflated by the confluence of massive property and credit bubbles. When they burst, the overly indebted, savings-short household sector plunged into an unprecedented balance sheet recession followed by an anemic recovery. Over the eight-year period, 2008-2015, growth in inflation-adjusted consumer expenditures has averaged just 1.5 percent – less than half the 3.6 percent pace of the preceding 12 years – as consumers opted for the balance sheet repair of deleveraging and saving over discretionary consumption. Like Japan, the United States now finds itself in a zero-interest rate liquidity trap with no easy exit.”

“And so it is for Europe, after its bubble-prone peripheral economies of Portugal, Ireland, Italy, Spain and Greece all imploded in the aftermath of the Great Crisis. Europe’s subsequent policy response – zero interest rates, quantitative easing and now negative policy rates – is a script right out of Japan’s playbook. And with worse results – average real GDP growth of just 0.1 percent in the euro area over 2008-15. Moreover, a lagging restructuring of the European banking sector is reminiscent of a similar phenomenon that afflicted the zombie banks of Japan.”

“With the major engines of the developed world sputtering, the rest of an interdependent world has been turned inside out. That’s especially true of the resource economies, both in the developed world like Australia and Canada, but also in the developing world – Russia, Venezuela and Brazil – and, of course, in the oil producers of the Middle East. Steeped in denial, resource economies were counting on the commodity super-cycle to persist indefinitely – the opposite of what has since transpired.”

“At the same time, other export-led developing economies are also struggling to stay afloat. China has felt the full force of the malaise in the developed world with a stunning downturn in its once omnipotent export sector. After exports peaked at 36 percent of GDP in 2006 – a seven-fold increase from the 5 percent portion of 1978 – its export share plunged to 23 percent in 2014 and even lower last year. With China’s contribution to global economic growth more than twice that of the combined contribution of the so-called advanced economies over the past decade, China’s export-led slowdown has played a key role in the downshift of world economic growth.”

“There is no quick fix for the globalization of secular stagnation. Japan is the template, and it’s well into its third lost decade. Yet there is still great denial elsewhere in the world over the main lessons of Japan. Policymakers and politicians – to say nothing of workers and their families – are paying a steep price for reckless economic management.”

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Comment by Professor Bear
2016-03-05 03:25:29

Is pushing on a string any different now than it was in the 1930s?

Comment by Professor Bear
2016-03-05 04:17:34

“The bubble won’t burst as long as prices keep rising.”

Famous last words for true believers in a bubble.

“By the way, congratulations if you own properties in Shenzhen, for it may be the time to lock in profits. But make sure you do so before the bubble bursts.”

Hurry up and run out of the burning theater before you get toasted!

Comment by Combotechie
2016-03-05 06:44:12

“The bubble won’t burst as long as prices keep rising.”

I won’t die as long as I am still living. I will have money until I am broke.
I will be able to see for as long as I have vision.

Comment by Ben Jones
2016-03-05 11:42:46

From yesterday:

‘Home prices jumped 52.7 percent in January from a year ago in the southern boomtown of Shenzhen. One agency provides credit up to 20 percent of their deposit without any collateral. The money was raised through peer-to-peer lending investments that promise 8 to 12 percent annualized return.’

‘This has enabled many to purchase homes that they otherwise could not afford. The results, many in the industry say, would be the return of more speculative demand, pushing home prices to frothier levels. ‘There are signs that speculative demands are back again, pushing up home prices with easy credit,’ said Wang Feng, a real estate analyst based in Shenzhen.’

The Chinese have taken bubbles to a new level. Remember how the government purposefully created the stock bubble to get money into the state owned enterprises? They had a media campaign and everything. Sure enough, it exploded. Their public no longer views this stuff as unusual. It’s like a lottery where most will lose but they hope to win. Of course, now the media has been ordered not to criticize this and individuals who speak out are silenced.

Comment by Ben Jones
2016-03-06 05:48:11

‘A Shanghai representative to the National People’s Congress (NPC) on Sunday lambasted China’s market regulators for igniting a stock crisis that is “destroying the Chinese middle class”, a rare rebuke for authorities during their biggest annual event.’

“The ten years of stock market development since 2007 is a decade of tears for Chinese investors,” Fan Yun, a Shanghai businesswoman said during an open session at NPC in Beijing.’

‘Fan, who has a reputation for being outspoken, laid into Chinese brokerages for failing to educate investors while also blaming regulators for failing to properly control the margin lending and alternative credit channels that helped inflate a stock bubble that is still deflating.’

‘Despite concerns about over-valued shares, the central government ordered financial regulators into action and also formed a “national team” of institutional investors to take extreme measures to head off a further rout.’

‘That culminated in a failed attempt to implement a “circuit breaker” mechanism which lasted only a week and was seen as contributing to the head stock regulator, Xiao Gang, losing his job. Fan described the circuit breaker, which froze trading when indexes moved 7 percent in either direction, as a “crackpot idea”.

‘At the time, Chinese officials said they were simply doing what any government would do, holding off a panic. But stock indexes have given up all the brief gains they made, leaving both the national team and the retail investors who followed them under water.’

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Comment by Professor Bear
2016-03-05 04:23:50

“There is no quick fix for the globalization of secular stagnation. Japan is the template, and it’s well into its third lost decade. Yet there is still great denial elsewhere in the world over the main lessons of Japan. Policymakers and politicians – to say nothing of workers and their families – are paying a steep price for reckless economic management.”

It’s fine for Roach to accuse economic policy makers of denial, but are there any obvious remedies for the status quo economic stagnation that don’t initially make the situation far worse?

Comment by Combotechie
2016-03-05 06:54:41

“Policymakers and politicians – to say nothing of workers and their families – are paying a steep price for reckless economic management.”

Say, what? What “steep price” are these policymakers and politicians paying for reckless economic management?

This “reckless economic management” is, at root, a profit center for these policymakers and politicians.

The thinking (a term I use reluctantly) is: If these geniuses can’t save us, then who can?

Comment by Combotechie
2016-03-05 06:56:46

Obviously what we need in this well-managed global economy is more management.

Comment by CalifoH20
2016-03-06 16:45:57

What is, Too Big To Fail?

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Comment by taxpayers
2016-03-05 07:19:15

the free market- see 1922 for results

Comment by Neuromance
2016-03-05 09:15:51

Combotechie: What “steep price” are these policymakers and politicians paying for reckless economic management?

I’ve always held that as long as politicians keep getting re-elected at historically normal levels, and the big donors keep making money, very little will change.

A black swan economic event could force change too. But even then, the playbook says to screw the rest of the population harder to save the power structure.

Comment by taxpayers
2016-03-05 06:17:06

read the let it all go speech from Andrew Mellon circa 1921
search under hate speech before it’s gone

here’s a house HA can afford

Comment by rms
2016-03-06 00:43:20

Another disability blimp…

Comment by Senior Housing Analyst
2016-03-05 07:10:41

Chapel Hill Housing Market Imploding; Prices Crater 12% YoY As Declines Deepen Statewide

Comment by MW
2016-03-05 08:44:27

I was at ameeting with one of the big mortgage data collections companies last May. Verdict on Raleigh at the time. Selling houses at 99% of list very quickly (I am paraphasing obviously)

New Raligh housing study (Feb. 2016) (I Have not sen the Power point only heard 2nd hand) states some concern, based on all the current activity, that there maybe too much new housing coming to market in the fall. Again, this comment was heard 2nd hand not directly from the source.

Comment by Mafia Blocks
2016-03-05 09:43:20

That’s what happens when a price slashing party starts up. Sales increase.

Comment by Combotechie
2016-03-05 07:31:25

“Steeped in denial, resource economies were counting on the commodity super-cycle to persist indefinitely – the opposite of what has since transpired.”

The lenders too, the lenders of trillions of dollars of debt that was backed by hefty commodity VALUES that at root were actually hefty commodity PRICES were also counting on the commodity super-cycle to persist indefinitely.

And when the prices took a dive this meant the values that backed the debt took a dive and this left the debt stranded - stranded and relegated to the status of junk, junk as reflected in the debt’s values, values as determined by - by what? - by prices.

Values are determined by prices, and these prices are powered by debt, and the values that back debt that power the prices are measured by … are measured by prices.

So if you can keep the prices up then you can keep the values up, and if you can keep the values up they you can keep the backing for the debt up, and the way to keep the prices up that supports the values that supports the debt is to keep generating more debt.

And here we are.

Comment by Neuromance
2016-03-05 09:35:36

It appears to me that debt can, for a time, juice economic growth. But once debt saturation occurs (i.e. all potential debtors are maxed out on debt), it seems to become deflationary as debt service takes up more and more money.

People who advocate a government high debt model (as opposed to consumer debt) always say, “Look at World War II - we grew our way out of that debt and we’ll do so again.” Unfortunately the economic situation today, globally, is quite different than it was in 1945.

1) Consumer credit:

2) NY Fed report on household debt:

Comment by rms
2016-03-05 08:04:51

From Ian Verrender’s piece: “When it comes to bubbles, Australian property ticks pretty much all the boxes. Valuations that stretch into far reaching galaxies, fuelled by a debt binge that long ago unshackled itself from any kind of relationship with household incomes, all encouraged by monetary authorities and an accommodating tax regime.”

Are there enough upside-down “mates” for: ?

Comment by Ben Jones
2016-03-05 09:50:41


‘Think about this: those mortgages are variable rate loans, issued over 25- and 30-year terms. At some stage during the next two decades, either interest rates will rise or a recession will occur. Under either scenario, you can only imagine the impact of rising defaults on our banking system.’

‘Even my old chum Maurice Newman agrees. Last week, in spirited defence of his former boss’s economic credentials, he had this to say: “With Australia’s total debt to GDP ratio third only to Japan and the EU, it would seem a ratings downgrade is on the cards.”

‘While he’s absolutely correct, the fundamental difference between sovereign and private debt appears to have eluded him. Where Japan and the European Union have stratospheric levels of government debt, Australia’s problem is private debt. And that debt is all about mortgages.’

While it’s considered old fashioned to talk about interest rates ever going up, can we find some micro-phish or something when interest rates actually did go up? Maybe some old scrolls at an ancient library in Cairo? Because I can’t help but think this whole zero interest rate thing feels kinda unnatural. Artificial. Unsustainable. It could even be causing harm right now. For instance, how are pensions supposed to work? Or life insurance companies? When I was a baby, I seem to remember talk about fixed-income investing and what older people did with their life savings so they wouldn’t get caught flat broke.

All the debt talk these days seems to be, “well we’re third on a list of 20.”

Anyway, if somebody finds a dusty scroll on how interest rates work let me know.

Comment by Blue Skye
2016-03-05 10:31:49

It could even be causing harm right now…

I don’t have any old scrolls but I do have a spreadsheet. It’s got little annuity calculations built in next to my various “savings” instruments. This is to guide me on prudent spending levels in retirement. Entering Zero in the growth rate cell is brutal. In the magic of spreadsheet manipulation, all I have to do to have a survivable budget is reduce my life expectancy!

Food/fuel columns shrinking is a saving grace.

Comment by Combotechie
2016-03-06 05:46:32

Here’s an annuity payout calculator …

It is simple and easy to use, just plug into the expected rate of return and the expected inflation rate and the calculator will present to you the exact amount of inflation-adjusted income you should expect to receive over any period of time you decide to choose.

The only drawbacks: Nobody on this planet knows what the expected rate of return and expected inflation rate will be thus any figures plugged in are nothing more than WAGs.

But if I were employed as a marketer of annuities then this calculator (hey, it’s a computer and computers don’t lie) may end up being my favorite marketing tool.

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Comment by Blue Skye
2016-03-06 16:55:06

The calculation is pretty easy. It can be done without a computer.

Like you said, it is the insanity of the Fed that is impossible to calculate.

Comment by taxpayers
2016-03-05 09:11:56

How many years will the Fed take to sell off the 4 trillion
“Balance sheet”

Comment by scdave
2016-03-05 09:23:13

Nice data mining Ben….Thanks for all your effort in posting the information…

Comment by Ben Jones
2016-03-05 10:17:18

‘US authorities have decided not to pursue criminal charges against any Citigroup Inc executives or employees involved in packaging and selling mortgage-backed securities at the heart of the 2008 financial crisis, a government report shows.’

‘The decision, which followed Citigroup’s $7-billion settlement in 2014 resolving federal and state civil claims related to mortgage bonds, was described in a November report obtained by Reuters in response to a Freedom of Information Act request.’

‘The report, by the Federal Housing Finance Agency’s Office of Inspector General, one of the agencies in the Citigroup probe, said following the settlement, prosecutors reviewed the evidence to see if any individuals could be charged and determined “there was not enough compelling evidence.” The investigation focused on the bank’s practices related to its sale and issuance of mortgage bonds from 2006 to 2007.’

‘The two-page report, which summarized the investigation and called the probe closed, does not name any individuals that were investigated, nor does it elaborate on why individuals could not be successfully prosecuted.’

‘The Justice Department has faced years of criticism for failing to prosecute banking executives over conduct leading up to the financial crisis, even while it secured billions of dollars in settlements with big banks.’

‘The government cases came out of a task force formed by President Barack Obama in 2012 to probe misconduct that contributed to the financial crisis. Mr Obama said he was creating the group to “hold accountable those who broke the law” and “help turn the page on an era of recklessness.” In February 2015, then-Attorney General Eric Holder said he had given federal prosecutors a 90-day deadline to try to develop cases against individuals related to mortgage bonds and report back if they could be successful.’

‘Despite that push, no such cases have emerged to date. During the probe, authorities gathered 25 million documents related to mortgage securities, obtained internal bank emails and documents, and interviewed current and former employees and executives, the inspector general report said.’

“The totality of the evidence and testimony obtained showed that Citigroup knowingly and purposefully purchased and securitized loans that did not meet representation and warranties or in many cases were outright fraudulent loans,” the report said.’

Comment by Ben Jones
2016-03-05 10:22:32

‘he had given federal prosecutors a 90-day deadline…authorities gathered 25 million documents…“The totality of the evidence and testimony obtained showed that Citigroup knowingly and purposefully purchased and securitized loans that did not meet representation and warranties or in many cases were outright fraudulent loans,”

‘Despite that push, no such cases have emerged to date.’

90 days to review 25 million documents. Did they get some over time? Or did they go home on weekends?

And I seem to recall that Holder told congress he wasn’t going to prosecute anybody.

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How Wall Street’s Bankers Stayed Out of Jail - The Atlantic…wall-streets…/399368/
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Lynch and her predecessor, Eric Holder, appear to have turned the page on a more … How we arrived at a place where Wall Street misdeeds go virtually … of the crash, the Justice Department did not refrain from prosecutions altogether.
Eric Holder Backtracks Remarks on “Too Big To Jail” | The ……/eric-holder-backtracks-remarks-on-too-big-to-jail/
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Taibbi: Wall Street Has ‘No Fear Of Individual Punishment’. The Huffington … As the Rot Spreads: Holder, Don’t Hold Back. Mike Lux … We are left with one thing we could do now to go straight at the heart of darkness: prosecute these bankers.
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Comment by sfraz
2016-03-05 13:49:42

And it continues…
Larry Fink and His BlackRock Team Poised to Take Over Hillary Clinton’s Treasury Department

“Goldman Sachs paid Hillary Clinton $675,000 for three speeches, but an even bigger Wall Street player stands ready to mold and enact her economic and financial policy if she becomes president.

BlackRock is far from a household name, but it is the largest asset management firm in the world, controlling $4.6 trillion in investor funds — about a trillion dollars more than the annual federal budget, and five times the assets of Goldman Sachs. And Larry Fink, BlackRock’s CEO, has assembled a veritable shadow government full of former Treasury Department officials at his company.”

Comment by Raymond K Hessel
2016-03-06 08:00:22

If you like your crony capitalism, you can keep your crony capitalism. Vote for Hillary!

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Comment by rms
2016-03-06 01:04:15

“The two-page report, which summarized the investigation and called the probe closed, does not name any individuals that were investigated, nor does it elaborate on why individuals could not be successfully prosecuted.”

And they probably paid themselves bonuses for a job well done.

Comment by taxpayers
2016-03-05 10:29:03

The Asian currency crisis of 1998 was UESGE but several countries did little to manipulate their economies and started growing quickly within 2 years
More gov =less growth

Comment by Ben Jones
2016-03-05 11:49:40

‘While no two economies are alike, telltale signs of the Japanese disease are evident in the United States and Europe’

And the global economy isn’t like Japan. If you read what Roach was saying about the global GDP, it’s clear what we are in hasn’t happened in modern times. We can’t say, “what happened to Japan is happening to many developed countries” because it only happened in Japan at the time. Not Europe, the US and all the related emerging market chaos, at the same time.

The other day when the news about a 10 year high in US flipping came out, a poster asked, “is this 2004 or 2006?” The answer I thought is, it’s 2016.

Comment by Patrick
2016-03-05 18:04:16

First the Japanese, then the Chinese, India, Mexico copied OUR production and sold it to OUR markets and we helped them.

Now the next shoe.

“Find and assemble” will soon replace “Pick and place” automation. Fantastic new vision systems and dramatic improvements in machinery will make human production so slow and inefficient by comparison.

But which area of the world will realize on this potential first ?

We had all better realize that there is an all new world about us right now being caused by very advanced technological changes in the production of goods.

We have to have leaders that give us policies and protection to ensure our fair share of this new world.

This is the moment for Yankee Ingenuity to shine and for we Canadians to be helping.

Whatever we do this time around, at least have the authorities protect our patents from foreign interlopers. If our technologies are pirated and the interloper wants to sell cheap products back to us then we have to say NO.

Comment by Ben Jones
2016-03-06 04:29:14

Now see Patrick, I knew you Canadians were good eggs and it was a plus to have you on our side. But don’t rely too much on these damn yankees, I’m not so sure about them.

Comment by Ben Jones
2016-03-05 21:07:45

‘The world’s leading auction houses are experiencing massive slumps in profits, with works by renowned artists such as Picasso and Ernst even falling prey to relatively cheap sales. Auctions held by Sotheby’s and Christie’s last month sold a collective $210million worth of art, representing a huge 45 per cent drop from the $381million sold at similar events the year before.’

‘Among those to be hit by the slump has been Christie’s International, which reported a five per cent decline in annual sales after five years of growth. Works by the world’s greatest names haven’t been immune to the drop in prices either, with Picasso’s Tete de Femme oil painting selling for £18.9million at Sotheby’s in January, nearly £10million less than the £28million paid by the seller for the same painting in 2013.’

‘Elsewhere, Henri Matisse’s The Piano Lesson was estimated at between £12million and £18million, but ended up selling for just £10.8million at a Sotheby’s Impressionist and Modern Art show. The drop in prices has been blamed macho ‘willy waving’ by auction house bosses, obsessed with selling the most art for the most amount of money and not looking at margins.’

‘It comes less than a year after Pablo Picasso’s Women of Algiers set the new world record for most expensive artwork sold at auction, going for $179m (£115m) in New York. British art historian Bendor Grosvenor told The Independent: ‘There’s a stupid race between the auction houses over who can sell the most art for the greatest money, instead of focusing on the profit margins. It’s bitten them on the bum.’

‘The top level executives at the auction houses make these big bold moves to guarantee a $500m sale. They are willy waving instead of fixing their problems.’ He added: ‘We have to get away from the idea of buying art as an investment. It’s an illiquid asset and difficult to make money from. Always buy what you like and hope it goes up in value.’

Comment by Ben Jones
2016-03-06 04:44:52

‘Somebody please tell Donald Trump: A trade deficit isn’t a loss. You could even argue it’s a gain. It’s true that incomes have stagnated and part of the middle class is falling behind. But that’s happening everywhere—including China and Mexico—and there’s no reason to think trade is to blame.’

‘Trade occurs when one party buys something from another, and trade between countries has the same mutual benefit as trade between an individual consumer and a merchant: each side gets something they want. “They’re sending us goods and we’re sending them green pieces of paper,” says Patrick Newport, U.S. economist for forecasting firm IHS Global Insight. “I don’t see how that’s a loss.”

Green pieces of paper. And this guy is a forecaster. Hey let’s put him in charge of something really important.

Who wrote this garbage?

‘Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom.’

Let’s put Mr Manifesto in charge of something important too, like sharpening pencils.

‘But that’s happening everywhere—including China and Mexico—and there’s no reason to think trade is to blame’

No reason at-all Rick. And it’s just green pieces of paper. What’s a standard of living anyway. The Chinese are suffering too. What are you complaining about people? If you zero in on this:

‘no reason to think trade is to blame’

Isn’t this typical. What are our relationships with these countries other than trade? What makes these green pieces of paper go round? Well Yahoo Finance, you’ve managed to put a big turd on the table again and just when the adults are having a serious discussion.

Comment by Ben Jones
2016-03-06 05:15:50

‘While financial markets have regained some composure since the start of the year, mounting global debt levels, sticky growth and the prospect of long-term negative rates are issues that are not going away anytime soon, the Bank for International Settlements has warned.’

‘ The Swiss watchdog warned of “great” uncertainty about the behavior of individuals and institutions if rates were to decline further into negative territory or remain negative for a prolonged period.’

“Market participants have taken notice. And their confidence in central banks’ healing powers has – probably for the first time – been faltering. Policymakers too would do well to take notice,” Borio added.’

Here’s the headline:

Faith in ‘healing’ central banks has faded: BIS

Faith healing?

Comment by Blue Skye
2016-03-06 16:59:46

Sometimes it looks like life would be easier if you just drank the koolaid. It wouldn’t be though.

Comment by Senior Housing Analyst
2016-03-06 12:48:32

Palm Beach, FL Housing Market Implodes; Prices Tailspin 26% YoY As Speculators Exit

Comment by Mafia Blocks
2016-03-06 20:10:49

“Jefferies Trolls Lightweight Zero Hedge For Being Negative, Unveils Major Restructuring Hours Later”

Worthy of reading.

Zerohedge, HBB, Donald Trump are among a few outlets than state the truth. The more frequent the attacks on the truth, the more truth will be stated. Over and over and over again.

Comment by rms
2016-03-07 01:17:40

I seem to remember Jefferies accused of stealing TARP money, and them “being truthful about lying, so it wasn’t really lying,” or something like that. These guys feed on each other until there’s nothing left, and then the taxpayers are set upon.

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