Spending Money Like They’re Printing It
It’s Friday desk clearing time for this blogger. “Earlier this year, Mr. and Mrs. Cai, a couple from Shanghai, decided to end their marriage. The rationale wasn’t irreconcilable differences or even mild disagreements; rather, it was a property market bubble in China’s financial hub. The pair, who operate a clothing shop, wanted to buy an apartment for 3.5 million yuan ($519,000), adding to a couple of places they already owned. But the local government had begun, among other bubble-fighting measures, to limit purchases by existing property holders. So, in February, the couple divorced. ‘Why would we worry about divorce? We’ve been married for so long,’ says Mr. Cai. (He requested that the couple’s full names be withheld to avoid potential legal difficulties.) ‘If we don’t buy this apartment, we’ll miss the chance to get rich.’”
“‘The only thing I know is that buying property won’t turn out to be a loss,’ says Mr. Cai. ‘Just take a look at the past two decades. … From several thousand yuan a square meter to more than a hundred thousand yuan. Did it ever fall? Nope.’”
“Finding tenants for her four investment properties never used to be much of an issue for Singapore investor Jenny Yang, but those days of easy money are long gone. Two of her units - a studio apartment in Novena and a two-bedroom unit near Lavender MRT station - remain vacant after the tenants, both foreigners, returned home in recent months. ‘In the past, before one tenant moved out, I would get another offer, especially for the Lavender unit… now it’s slower. The offers are too low as well,’ she told The Straits Times.”
“Landlords like accountant Eunice Lim have been more flexible in view of the weaker demand. Ms Lim recently rented out a one-bedder in Balestier for $1,700 a month. ‘That’s a 30 per cent drop in rent… I was prepared to offer a discount. High rents in this market will not materialise. We have to be realistic,’ she said.”
“From giving discounts of Rs 2 to Rs 5 lakh to sops such as gold coins, cars, scooties and even white goods, developers are going all out to woo customers this season, especially in areas where the unsold inventory is huge. In Delhi NCR, Prateek Group is giving away Hyundai Grand i10 cars, scooties and refrigerators. A real estate group active in Kundli, Sonepat region, is offering discounts of around 15% on the basic sales price for their project in TDI City, Kundli. ‘The current unsold inventory across India today stands at 10 lakh units. The unsold inventory in Mumbai is around 2.56 lakh units and Delhi NCR it is around 3 lakh units,’ says Pankaj Kapoor, managing director of Liases Foras, a consultancy firm.”
“A realtor is offering a free Mercedes with purchase of apartments on Auckland’s North Shore. James Law Realty, which is marketing Chelsea Bay Residences in Birkenhead, is including a Mercedes-Benz A-Class A180 - valued at around $51,000 on the road - to buyers of its ‘premium’ apartments.’ Premium residences at the 56-apartment development on Rawene Rd are priced upwards of $900,000. Massey University Chinese marketing specialist Henry Chung said the promotion was an ‘innovative and bold move’ by the agency, where seven out of 10 of its clients are Asian, mainly Chinese.”
“‘Mercedes is traditionally seen as the most luxurious car brand among the Chinese, and this brand is associated with prestige,’ Chung said.”
“The number of Australians falling behind on their mortgage repayments has hit the highest level in three years and is expected to rise, despite record low interest rates. Suburban areas such as Kingston, south of Brisbane, Moorina, north of that city, and Paralowie in northern Adelaide are high on the list of postcodes showing mortgage stress. But ratings agency Moody’s found Western Australia has the most home loans that are at least 30 days in arrears, blaming the end of the mining boom and a slowing state economy.”
“The levels of delinquencies in Western Australia, Tasmania and the Northern Territory are at the highest rates since Moody’s began collecting home-loan data in 2005. ‘The increase (in delinquencies) raises the risk of mortgage defaults,’ said Moody’s vice-president Alena Chen. ‘The regions and postcodes exposed to the resource and mining sectors dominates the list of areas with the highest mortgage delinquencies.’”
“Billionaires are shunning the London luxury property market, with sales of ’super prime’ £10m-plus homes in the capital collapsing by 86% over the past year. The average price paid also fell steeply, from £22m to £16.3m, said property group London Central Portfolio, which carried out the analysis. Newbuild sales have slumped in particular, said LCP. No super-prime newbuild units were sold over the three-month period, compared with last year where they made up 23% of sales.”
“Naomi Heaton of LCP said: ‘A price correction was inevitable and is widely reflected in reports of price discounting. Whilst the long term outlook remains compelling, the luxury market is likely to experience continued instability especially in the face of the forthcoming ‘look through’ non-dom inheritance tax … it may take some years before growth returns.’”
“British investors may have disappeared from the New York City real estate market, but Chinese buyers are stepping in to fill the gap, according to real estate heavyweight Barbara Corcoran. Corcoran said there is huge interest from Chinese buyers across the United States. ‘We’ve totally lost all of our buyers from England,’ Corcoran told Bloomberg Radio. ‘We don’t see any more buyers at all. It was a real black eye for us in the New York City market.’”
“Corcoran said Chinese buyers are ‘coming in droves,’ and are ’spending money like they’re printing it.’”
“As the luxury market struggles, condo projects are dropping like flies. Argentine developer Alan Faena confirmed Tuesday he was ‘pausing’ a planned two-tower condo complex in Miami Beach. Developers across South Florida have pumped the brakes on condo high-rises as a strong dollar and weak economies abroad cripple the buying power of foreign investors. ‘In all of my business dealings, from Buenos Aires to Miami, I have always trusted my sense of the market and successfully read its cycles,’ Faena said in a statement. ‘The best business decision at this time is to pause Faena Mar as we evaluate various options.’”
“Unless central bankers stop sowing discord by inflating a bubble with make-believe money, the world’s top central banks will find their independence challenged, former Conservative Party leader William Hague was quoted as saying. ‘Central banks collectively have now indeed lost the plot,’ Hague, a former foreign minister, said in an article in the Daily Telegraph newspaper. ‘They are blowing up a bubble of make-believe money to avoid immediate pain, except for penalising the poor and the prudent.’”
“‘Like doctors keeping their patients on a drip many years after an operation, they are losing credibility and producing very dangerous side effects,’ Hague said in an article titled ‘Central bankers have collectively lost the plot. They must raise interest rates or face their doom.’”
“Hague said the impact of current central bank policies was that savers found it hard to earn any return on their money, asset prices inflated the wealth of the rich, pension funds had poor returns and ‘zombie companies’ stayed in business because they could borrow cheaply. Unless central bankers - including at the Bank of England - stopped, then their independence will be challenged, Hague said.”
I have so many bookmarked articles backing up I decided to bring the desk clearing post forward a few hours.
Interesting first article!
“….Just take a look at the past two decades. … From several thousand yuan a square meter to more than a hundred thousand yuan. Did it ever fall? Nope.’”
100,000 yuan/square meter = $1,500/square foot.
HA, Shanghai is calling. They need you to build apartments for $55/square foot. That would be 3% of the market value! Whew! HA!
Wouldn’t it be even cheaper to build there, with the low cost of labor?
That was my thought, along with fact the average annual salary is something like $6,000/year, so how many can afford such lofty pricing?
Hey, Thursday Night Football Packers/Bears on CBS free TV!
How many sports fans don’t have cable, that they feel they need to put football on network TV? And it’s not “free.” We pay a hefty price in commercials and embedded advertising to get those games.
“We” don’t pay.
I don’t have cable. I cut the cord about 3 years ago when my bill went to $175/month. Now I have an HD antenna and a Simple TV DVR. $0/Mon. No ESPN, so I miss some football.
The Usual Suspects calling for trillions in “helicopter money” to be dumped on Wall Street, er, “the economy.”
http://www.zerohedge.com/news/2016-10-20/david-rosenberg-calls-multi-trillion-helicopter-money-stimulus-package#comments
Rosenberg’s problem with monetary policy, now in its 7th year of unorthodox experimentation, is that it has become a weak antidote to structural problems in the economy (even if it is still quite potent at boosting financial asets).
That statement is PRECISELY backwards! Rather than being a “weak antidote”, monetary policy is a strong sustainer of structural problems in the economy. The economy is unable to make the structural changes required because ZIRP/NIRP prop up companies that should be failing, preventing the creative destruction that is the cure for structural problems.
Smith’s “invisible hand” is currently tied behind the economy’s back by the ZIRP/NIRP straight-jacket.
Repost from a few days ago:
http://www.denverpost.com/2016/10/18/denver-apartment-rent-down-for-first-time-since-2013/
And yeah, I’m building more apartments in Denver now for all the peeps who want to pay $2,000 a month in rent to live in the “hippest” and “hottest” neighborhood.
Denver is flyover, cowtown, back-office, nowhereville, in case you forgot.
I’ve never lived in an overpriced dump of a city before this in my life.
But keep paying me those overtime hours, and you can keep this toilet.
It’s a narrative that isn’t there. Nobody wants to live here…
In the bubble but not of it?
You have to ask what any city’s reason for being is. If it is mania, then try not to embed yourself too deeply.
Bank what you can while you can.
I made some money off a bubble, doing honest work for people doing honest work, for people bat-sh1t crazy.
doing honest work for people doing honest work, for people bat-sh1t crazy.
LOL—awesome turn of phrase, Blue!
+1. Most cities were built on geography and natural resources. Later, cities were built on industry, either because some magnate happened to grow up there (Ford in Detroit, Microsoft in Washington), or because they wanted to dump crap in the lakes. Some cities were built on low taxes or loose regulations (banking in Delaware and South Dakata, gambling in Vegas).
Denver has… what. A tourism trading post for the mountains, and legal weed, and people who are going there because other people are going there. Yeah, don’t get too attached.
After you hit a certain critical mass, does it matter what the initial impetus was for a city’s birth?
“Denver has… what.”
Well there’s military facilities in the region to the north and south, and it was the eastern terminus of the Rocky Mountain Interstate Freeway passage back in the fifties. Seems like big Ag has been struggling with drought issues and urban expansion.
Oil/Gas?
And yeah, I’m building more apartments in Denver now
Can you be more specific on the gig, goon? Are you actually swinging a hammer?
He did say something about “reporting to the crew boss at 6:30 am.” Sounds like manual labor, or something very close to the actual construction.
Yes, building this:
http://imgur.com/a/p6adw
Largest building I’ve ever worked on doing electrical. All I’ve done before that is single family new construction or building or expanding weed grows.
Ah! I finally get it—lots of electrical requirements on the weed front…
I had just assumed you were selling it, not pulling wire for it.
Thanks for the info; hope the new gig treats you well!
Nothing against the goon, but that looks like 80% of the apartments being built around here. Boxy structures with fake stucco on the front — like having IKEA on the outside and on the inside. Fugly.
“Boxy structures with fake stucco…”
Faux yes, but great for seismic activity. Around the planet people are crushed by heavy building materials when they crumble.
I agree completely with you. I am only in Denver because of my job. Overpriced sh!t shacks built on bentonite with severe foundation issues. I can’t believe the morons paying top dollar for fun houses with severely sloping floors. There is nothing special here, no ocean, 3.2 beer. Oops, I forgot, legal MJ, but other states have marijuana legalization on their ballots this year. When this crashes, it is going to be bad. Denver crashed big time after the tech bubble in the early 2000s, and it will happen again. Denverites are so delusional because most of them have never been outside of Denver. They think this bubble is specific to Denver because they read nothing but the Denver Post, if they even do that. “Oh, everyone wants to move to Denver,” they say. Completely clueless.
Can anyone tell me how the Central Park Tower über-highrise in NYC is doing these days? On schedule?
Million dollar listing LA”
Even Josh admits the market is down
“Corcoran said Chinese buyers are ‘coming in droves,’ and are ’spending money like they’re printing it.’”
Hahah…no…WE printed it and gave it to them.
+20 Trillion
I thought it was only 4Trillion? Oh, you mean including other central banks as well…
The Yuan plunged last night - how much of Chinese dollar reserves are its central bankers willing to burn through to defend this grossly overpriced currency?
http://www.marketwatch.com/investing/currency/usdcny?mod=MW_story_quote
Sooner or later all that money-printing is going to catch up to all the central bankers, and the hapless citizens who are going to suffer the debauchery of their currency.
http://www.zerohedge.com/news/2016-10-20/dear-janet-china-devalues-most-august-yuan-tumbles-lowest-sept-2010
Hahah…no…WE printed it and gave it to them.
The beauty of it is that not only is the money coming back, but they’re using it to purchase woefully overpriced assets. If I lived in the Bay Area or in NYC and owned a shack or an airbox, I would sell it to one of those ChiCom suckers, rent and wait for the crash, then buy a much nicer place for about half the price, most likely for cash with the net proceeds from the original shack.
Timing this is challenging, though. That’s the plan I thought I was executing when I sold…. back in… 2003.
The market can remain irrational much longer than you may expect.
Agreed, especially the Bay Area.
Sum Fing Wong
Ocean Carriers
October 12th, 2016 | Written by Peter Buxbaum
Dry Bulk Shipping: Poor Freight Rates Persist
Strong Demand Growth From China Hasn’t Changed Things for Shipowners
Dry bulk rates have plumettted despite more shipments of export cargo and import cargo in international trade.
Growth in dry bulk commodity imports into and exports out of China in the first half of 2016 are “nothing short of extraordinary,” according to a recent report from the Baltic and International Maritime Council (BIMCO). But “the devastating freight rate levels” in the same period “highlights that something is very wrong in the dry bulk shipping market. The market is nowhere near balanced,” concluded the report from the shipowners group.
…
When I buy something from China on eBay it is shipped overnight it seems to San Francisco before proceeding through the USPS pipeline. And the shipping rates are cheap too… likely subsidized. I doubt anyone can compete and still show a profit.
And perhaps you’re wondering how that comes about. Well, that’s something I’m somewhat familiar with. Google “USPS E-packet”. That’s right, USPS. Let me repeat that: USPS. UNITED STATES POSTAL SERVICE. You know, one of those “quasi-governmental” agencies subsidized by the, wait for it, US taxpayer! So the next time you hear a USPS employee whining about their pensions, tell them what they’re participating in and to tell it to China.
So here’s how it should have worked, in the interest of “free” trade: Small business owner who sells widgets made in China on line, theoretically buys wholesale from China and sells in the US and makes a profit. US citizen prospers. Chinese wholesaler profits.
However, that CANNOT be allowed! Taxpayer money is used to level the playing field, in other words, your own money is used against you. And Ebay, Amazon, and others participate in this scheme with great alacrity. As small sellers have pointed out in various online forums, a Chinese seller can ship more cheaply to the house across thr street from the US seller than that seller can.
That, my friends, is globalism. Subsidized by the US taxpayer.
Yo Palmy, noticed your question yesterday regarding Hillareeees mention of nuclear response time and whether its classified. I would guess it likely is, based on the fact that capability measurements tend to be. For example, the top speed of ships, planes, subs, missiles, etc. are guarded. Still dont think we know what an SR-71 can top out at, and thats a very old program.
Bigger question is that those with clearances require annual refresher training, to include testing - did H-bomb consider herself above that? A good third of that training explicitly forbids what H-bomb did at State - use of phones in a restricted area, storage of material, transmission of material, using private email AND export regulations - which can be simply discussion of information with foreigners. Loss of clearance, job, and jail time are guaranteed for a multiple offender.
You have to have severe brain damage to currently hold or have held a clearance and still vote for H-bomb but I know of several who will likely do so - you can guess the gender. Muh feelz for prez!
Oh, and just to twist the knife a little more, Amazon, ebay and other sites that host third party sellers take a commission not only on sales, but on shipping as well. So every time USPS (and other shipping services) raise rates, these etailers make more money on fees that the US seller pays out, but doesn’t take in.
Oh, and by the way, when US sellers sell something internationally, they don’t get an epacket.
This world shit show has to end soon. It can’t possibly go on much longer.
Could you be more specific?
“This sucker could go down” — George W. Bush
China’s housing bubble is still inflating.
http://www.businessinsider.com/china-home-prices-september-2016-2016-10
Even the comrades of proven worth privately acknowledge the truth while publicly advertising their lies:
http://www.zerohedge.com/news/2016-10-21/head-democratic-party-makes-stunning-admission-people-are-despair-about-how-things-a
“HOUSING is a huge issue. Most people pay half of what they make to rent. . .”
From Feb. 2016. Everythings fine, citizens. Move along, nothing to see here. Look over there, a russian squirrel!
‘Stagflation is often viewed as a concept that only exists in newspaper headlines. It is difficult to find a definition for stagflation in a mainstream academic textbook. Nevertheless, it exists and any web search provides hundreds of thousands of references. So there is no shortage of a popular, layman’s definition of stagflaton. The most fitting case study is the Namibian economy in its current throes.’
‘Namibia is snared in a counter-productive spiral where the cost of living continues to rise while incomes and revenues stagnate or shrink. That applies to both companies and individuals. It also applies painfully to the government. This condition is also the most popular, widely accepted view of what exactly stagflation is – stagnant or receding income in the face of rising expenditure.’
‘But it is fairly useless to identify stagflation and then not entertain where it came from, and what can be done to escape it.
A sensible answer can be found if one considers the origin and impact of inflation first. Inflation in itself is a sticky issue, both for the ordinary man in the street who sees his purchasing power diminishing and for the central bank economist who has to advise on counter inflationary measures.’
‘The problem is, in formal economics or political science, there is not one single answer to what causes inflation.’
‘Tacking onto the earlier, broad definition, one can take it a step further and say inflation arises where credit is extended beyond the existing productive capacity of the economy. In very simple terms, it means excessive mortgage credit lead to the housing bubble, which in turn, locked new home owners in so that they can do basically nothing to relieve them of their over-indebtedness. So, the exorbitant housing prices forced new home-owners to take up loans which they would not be able to afford under conventional considerations. This puts pressure on their disposable income. The result is they demand an annual increment from their employer to make up the shortfall.’
‘Now we are into the secondary round of ripple effects created first by the housing bubble and the commensurate extions of credit by the commercial banks…Suddenly there is more pressure for payrises, and this time, each and every commercial entity becomes a victim.’
‘The central bank’s feathers are ruffled and it looks at the household debt figures and decides something must be done. What do they do? They raise the repo rate. Now we enter the fourth level of the multiplier effect that started with something as simple as paying too much for a property.’
‘This raises the profitability of commercial banks very nicely, but it does nothing to alleviate the underlying inflationary pressures. In fact, it reduces disposable income even further in the hope that companies and households will spend less and start saving. But in an economy where the typical household spends nearly 90% of its disposable income on debt, what is there left to save. Now everybody has to borrow more money or extend their facilities. Again the banks smile, but inflation is not addressed, not nearly.’
‘Then at some point, something gets stuck in the fan, the gravy dries up, and the painful adjustment process starts. That is when incomes for individuals and revenue for companies take a dive, or grow slower.
No we have completed the full circle, the immediate resources are all depleted, inflation continues but revenue not. That is stagflation and that is where we are.’
Bob Creamer is a talented guy, bank fraud and voter fraud.
‘Smoking Gun’ Email Confirms DNC Involvement In Inciting Violence At Trump Rallies
by Tyler Durden
Oct 21, 2016 1:41 AM
Just a few days ago, Project Veritas released a bombshell video exposing coordinated efforts between the Hillary Clinton campaign, the Democratic National Committee, Democracy Partners (run by Robert Creamer) and The Foval Group (run by Scott Foval) to incite violence at Trump rallies across the country. The Clinton campaign and the DNC have vehemently denied the validity of the Project Veritas video but new emails discovered from WikiLeaks’ previous “DNC Leaks” seem to confirm the DNC’s involvement.
Recall in the first Project Veritas video, that the following people made the following claims (video below):
“Aaron Black” (real name: Aaron Minter) (appears at 9 mins 10 secs): “So, I’m basically deputy rapid response director for the DNC for all thing Trump on the ground. Nobody is really supposed to know about me. So the Chicago protest when they shut all that, that was us. It was more him (Bob Creamer) than me, but non of this is supposed to come back to us, because we want it coming from people, we don’t want it to come from the party.”
Bob Creamer (appears at 10 mins 50 secs): “We have a call with the campaign every day to go over the focuses that need to be undertaken.”
Unfortunately, the embarrassing video caused Creamer to subsequently resign from consulting the Hillary campaign as he issued a statement saying that he was “stepping back from my responsibilities working the [Hillary] campaign” over fears that his continued assistance would be a distraction for the campaign.
But voter fraud isn’t Creamer’s only criminal specialty. A quick look at Wikipedia reveals that Creamer spent 5 months in federal prison back in 2006 for a “$2.3 million bank fraud in relation to his operation of public interest groups in the 1990s.”
So, with that kind of history, you can imagine our surprise when we discovered that a Mr. Robert Creamer showed up on the White House visitor logs 340 times beginning in 2009 when Obama took office and culminating with his latest visit in June 2016. Moreover, in 45 of those instances, Creamer was scheduled to meet with POTUS himself. Perhaps this is just two old Chicago “community organizers” hanging out?
http://www.zerohedge.com/news/2016-10-20/dnc-leaks-bob-creamer
Is Donna Brazile a poster on this blog?
http://www.lifezette.com/polizette/wikileaks-donna-brazile-shreds-obama-economy/
‘A string of recent sales shows $1 million does not go far. This month, buyers paid $1,015,000 for a one-bedroom apartment in East Melbourne, more than $1.2 million for an unliveable dump in Fitzroy North and $1.3 million for 64 square metre vacant block in Albert Park.’
‘And it is not just the inner ring pushing into multi-millions: two large knock-downs sold for $2 million in Coburg this year and two homes in Blackburn sold for that price this month. “$2 million is fast becoming the new $1 million in Blackburn,” said Fletchers director Ben Williams.’
“We have a way to go yet, but I can remember when the Sydney median was where the Melbourne median is now [at $740,000] and that was only two-and-a-half years ago,” Dr Wilson said.
Take a look at the photos.
Good lord, those first two pics! I’m appalled, but not surprised.
Wow…Nice post Ben…Those prices mirror Palo Alto…I wonder what the driver is there…Does this area have really high paying jobs or just a concentration of wealth…
‘what the driver is there’
Chinese investors. They are walking away from Melbourne air-boxes in droves.
Which begs this question: what is the intrinsic value of a Melbourne air-box (i.e., condominium)?
At what price does it make sense for a financial vulture to come in?
Something like 20% don’t use any water. These were built to sell to Chinese pre-construction. Some don’t have external windows, have crappy layouts etc. They just need something to sell to the speculators, it didn’t matter how functional they turned out to be. And they didn’t care about the precentage of speculators; some are said to be close to 100%. The lending to foreigners got cut and they are bailing as they are completed. Brisbane too. There are rumors of vultures looking to pay pennies on the dollar and turn them into rentals.
Difficult to imagine that bond holders would be dull enough, so who is providing the money for this sh!t?
‘Success breeds success. That adage, more than any other, defines the Dallas-Fort Worth economy and its strong multifamily market.’
‘Not surprisingly, the strong, growing economy has energized the multifamily industry. There are 25,900 new apartments scheduled for delivery to the market this year — more than in New York City.’
‘The sustained high level of investor interest demonstrates that Dallas-Fort Worth is not overbuilt. Institutional funds and REITs, historically focused on upscale properties in premier markets, have joined the pursuit of value-add projects, an investment realm previously dominated by private investors.’
See, the market isn’t overbuilt because money is chasing yield. No supply or demand involved.
‘The latest figures raise the likelihood that homebuilding, which accounts for about 3 percent of the economy, dragged down gross domestic product growth in the third quarter for a second straight period in the U.S. While hiring is solid and mortgage costs are near historical lows, faster wage gains and broader access to credit would boost sales and encourage developers to break ground on more residences.’
‘Residential construction may have been a drag on growth in the third quarter, claimed by; an economist at HSBC Securities USA Inc. in New York named Ryan Wang. Multifamily construction is starting to level off, though single-family still seems to be on a gradual growth trend. Work on multifamily homes, such as townhouses and apartment buildings, slid 38 percent to an annual rate of 264,000.’
‘On the supply front, builders have announced that construction is being constrained by the limited availability of lots that are ready for building, and a shortage of skilled workers. This is without a doubt a downfall for the housing market.’
‘In regards to multi-family housing, in the past this wasn’t the case, as the BDC Network represents some interesting trends. An expected 351,000 multifamily units began in 2014, up about 14% more than 2013 and more than twofold the 6.6% development rate for aggregate lodging begins a year ago, as indicated by the National Association of Home Builders.’
‘In Nashville, multifamily fulfillments hopped around 70%, as per business land financier Marcus and Millichap. Fulfillments in Seattle were at their largest amount since 2000. Dallas’ 19,000 culminations drove the country, with Austin, Texas, and New York City, each with 14,000, hot on Big D’s heels. Phoenix’s 4,900 units may at long last make a mark in an opportunity rate that in 2014 was as low as it had been in seven years.’
‘more than twofold the 6.6% development rate for aggregate lodging begins a year ago’
The latest figures raise the likelihood that homebuilding, which accounts for about 3 percent of the economy, dragged down gross domestic product growth in the third quarter for a second straight period in the U.S.
I often wonder what percentage of people in my little burg have their livelihoods directly or indirectly tied to the housing biz. I wouldn’t be surprised if it was 20-30%. I remember the previous bubble. Before the crash crummy chain restaurants (like Applebees, Chili’s or Mimi’s) had long waiting lists. Then, suddenly, you could just walk in at 6PM on a Friday night and not even half the tables were occupied. I remember construction workers, still in their work garb, having dinner with their families. Those were the days, when they were building 1000+ houses a year in our little burg. And you couldn’t throw a taco in WalMart without hitting an illegal
I miss those spinner wheels… sniff.
https://www.youtube.com/watch?v=P29docmIig4
‘Miami-based homebuilder Lennar will open its Eagles Summit community in Oro Valley, AZ, on Saturday. It is located within the 7,600-acre master-planned Rancho Vistoso development.’
‘Arizona is one of 13 U.S. states in which the company offers its NextGen floorplan for multigenerational households. The single-family detached houses range from 2,594 square feet to 3,173 square feet, and they are priced from the $379,990s.’
Yes, and here’s how stoopit the buyers are:
http://www.fox13news.com/news/fox-13-investigates/156041508-story
Lennar Homes is the Hillary Clinton of real estate. People keep buying, they keep building. And everyone whines after the fact when their home is discovered to have problems. Year after year after year.
I’ve lived in Florida since the 1980s and watched Lennar’s rise. Despite the various complaints and reports that have popped up over the years, they’re still selling. There’s a wealth of information on line for any buyer who cares to research. Anyone who buys a Lennar home deserves what they get, imo. What a joke.
More on the NextGen and Superhome for multigenerational households:
https://blog.houseplans.com/article/lennars-new-superhome
Because multi-family houesholds are just dying to live together in a 5000 sq ft $500K house.
Your snark aside, this is exactly what is happening in my neighborhood.
DINK H1B techie couples buy those large homes and then have their anchor babies. Within a very short time later, the in-laws move over from their home country. So three generations living under the same roof.
Snark is entirely appropriate - based on personal knowledge, I can say that in many cases, Chinese families view parents and in-laws as free labor (cooking, nanny, baby sitter, tutor, etc), and the wives are incredibly spoiled. I think the 1-child policy causes a lot of these spoiled empresses (for whatever reason, the men don’t tend to be as spoiled).
Of course, sometimes the spoiled darlings go slumming - search for Tiffany Li Hillsborough, and sometimes American wives are just as bad - search for Dan Markel Wendi Adelson
That’s sexist,reporting to houma now
‘If we don’t buy this apartment, we’ll miss the chance to get rich.’
How do you say “Joshua Tree” in Mandarin?
What’s really scary is how the bubble is way frothier overseas than here. How shacks I wouldn’t keep my dog in go for a million bucks in one of the most lightly populated and least dense countries in the world (Australia) or in a country where wages are low, especially for the non elite workforce (China). How houses in 3rd world African and Latin American sh!tholes, where the average wage is just a one or two hundred dollars a month, cost more than in US flyover. Where flats in unremarkable places like Bratislava, where the average wage is $400 Euros a month, cost $200K or more.
Forget the proverbial asteroid hitting the Earth and experiencing the end of the world as we know it, when this global bubble pops and the global economy crashes many will wish that it had been the asteroid hit instead.
How do you say “Joshua Tree” in Mandarin?
I should figure that out. Problem is, it’s true that they have NEVER seen it go down. So it’s very difficult to convince anyone there that’s it’s even possible. I still think of them as the USA in the 1920s. Booming in the cities, lots of people still on the farm. Manufacturer to the world. Massive bubble but they don’t know it yet.
If it weren’t for modern central bank policy I would expect them to have a massive deflationary event.
“they have NEVER seen it go down”
I believe there may still be alive some who saw the “value” of their private property in China go to zero.
Heh, good point Blue. I would have thought that such an event would leave a much deeper impression on the collective cultural psyche; that they could revert to gambling via property in a culture that had no private property only a few generations back is shocking to me.
I believe there may still be alive some who saw the “value” of their private property in China go to zero.
No doubt. But the younger generation thinks it can’t happen again and the older generation doesn’t want to talk about it.
I can remember a couple years ago or so they were ransacking sales offices and carrying banners demanding to be let out of purchases.
Amazingly short memories they seem to have; of course, most American memories seem to be equally short.
Maybe the answer lies with Evolutionary Biology?
Otherwise how is it possible on a worldwide scale for so many rational individuals to engage in mass hysteria, self delusion and greed?
One thing for sure, when this baby blows, an asteroid hit is going to look like nothing more than a large beach bonfire.
“Never Underestimate the Power of Stupid People in Large Groups”
— Machavelli updated by Napoleon Bonaparte.
约书亚树
‘The apparent lack of interest in Twitter Inc by potential suitors may force the social media company to consider a route anathema to aspiring tech startups: a major restructuring and cutting some its nearly 4,000 employees.’
‘The popular but money-losing micro-blogging service spent aggressively on product development and marketing in recent years, betting that it could afford to post losses as long as it attracted new users. But that growth stalled this year.’
‘According to SunTrust analyst Robert Peck, Twitter could cut 10 percent of its workforce and save about $100 million a year. “Twitter’s cost structure was originally built to grow into a much larger user base,” said Peck. “But with user growth stagnating, the company likely needs to reduce excess costs.”
‘Twitter could also reduce expenses by cutting products and moving some engineering positions to lower-cost overseas locations, analysts said. It may also need to reform its stock-based compensation plans when it hires new employees. Twitter doled out $682 million in stock-based compensation last year, a large portion of its roughly $2 billion in annual revenue, which weighs on its profitability.’
‘Private equity firms that examined a buyout of Twitter last year were turned off by the amount of equity-based compensation that would have to be paid out to employees in a deal, according to sources at the time.’
Job cuts and reduced stock options. Not good for the air box market.
A company that has 4000 surplus employees is way past the “start up” phase, and if it isn’t turning a profit and has to pay it’s employees partially in stock and stock options, then it has a BIG problem.
Of course, that’s what happens when you make a “product” that you have to give away for free, because no one will actually pay for it. If you can’t generate sufficient advertising revenue then you’d better be an open source shop where everyone works for free.
The fragility of the system is showing today. Check your paypal, Ben. We can’t access it at this time, maybe you can.
http://www.zerohedge.com/news/2016-10-21/enormous-cyber-attack-takes-down-hundreds-websites-how-track-global-cyber-war
Of course, I wouldn’t put it past TPTB if the US govt originated this attack, and then blames it on Russia.
And let that be a warning to anyone who lets large sums of money sit in a Paypal account. Always transfer it out ASAP.
“Check your paypal, Ben. We can’t access it…”
I donated this morning. It went through… on my end anyway.
‘what the driver is there’
“taking down” a site usually refers to a DDOS attack; in a nutshell, they are overwhelmed by the sheer volume of traffic, to the extent that they are unable to respond to legitimate traffic. It’s a very different beast from an attack that actually penetrates a site and puts what is in accounts held there at risk.
Twitter has 4,000 employees.
10% of 4,000 = 400
“According to SunTrust analyst Robert Peck, Twitter could cut 10 percent of its workforce and save about $100 million a year.”
They are paying these 400 people an awful lot of money.
A quarter-million a year each, assuming that estimate is accurate…
Consider that overhead is at least half the “cost” of an employee.
May not be 50% of $250k, but it’s a lot and can add up quickly.
Healthcare benefits ($10k+)
Payroll taxes ($10k+)
401k matching (if available) ($5k+)
Office space ($10k+)
cell plan (peanuts)
Technology and IT infrastructure maintenance ($5k+)
You get to eliminate a lot of management positions if you get rid of a lot of folks too…take out stock grant and option costs as well…
+1 Nice catch, Karen!
Probably a little less than $250K each. Some of the money would go to health insurance and benefits. And 400 people is the equivalent of a medium-sized office building. They would save rent/overhead on that too.
I hope those Twits go tits-up
You and me both. What goes around, comes around.
Censor your content, and that’s what you get.
The only ones making money off of Twitter are the employees of Correct The Record who get paid for each retweet of the Narrative, LOLZ.
That’s exactly what I was thinking. Who really needs Twatter anyway? There’s plenty of other communication platforms.
“Finding tenants for her four investment properties never used to be much of an issue for Singapore investor Jenny Yang, but those days of easy money are long gone. Two of her units - a studio apartment in Novena and a two-bedroom unit near Lavender MRT station - remain vacant after the tenants, both foreigners, returned home in recent months.
Joshua Trees everywhere. And a global shortage of rich foreigners to pay the bills.
Does anyone have insight into why Singapore is leading the rest of the world this time around?
Maybe there is no rhyme or reason to it—I still don’t know why San Diego led the charge here in the last go-around. But if there is, I’d be interested to hear.
Their government and central bank got serious about deflating the bubble in 2009 and stuck to it:
http://www.listener.co.nz/current-affairs/singapore-housing-bubble/
Thanks, Ben! I vaguely remember that now—very wise of them to avoid the worst of the excesses before reining things in…
From that article:
in 2013, it tightened loan-to-value ratios to 50% for people with one housing loan and 40% for those with two or more loans.
Wow, 50% LTV? I couldn’t quite figure out whether they meant that that would apply on the very first loan, or to subsequent loans for someone who already holds one housing loan. If the former, that is quite the down-payment requirement.
Looks like the 50% LTV is on the very first loan, and they tightened seconds to 30% in 2013, according to this page:
http://www.housingloansingapore.com/mortgage/loan-to-value-singapore-limit-and-ratio-ltv-mortgage-explained
sing has no unemployment insurance scheme
no 99′rs
during the 1998 meltdown in asia their unemployment skyrocketed to 3%
chop chop ,get back to work
They also have mandatory military service for all young men. That helps keep unemployment down. And a big chunk of their workforce are foreigners, who pack it in and leave when jobs are scarce. So “chop, chop, get back to work” is really: “I can’t find a job, I guess it’s time to go home”.
Curiously, Singapore does support other forms of socialism. From wikipedia:
However, due to scarcity of land, 80.4% of resident households live in subsidised, high-rise, public housing apartments known as “HDB flats” because of the government board (Housing and Development Board) responsible for public housing in the country
For USA Bubble 1.0, San Diego was the first to go up (before SF, LA, AZ, FL, etc) so it’s not surprising it was the first to go down.
First to boom, first to bust—that makes sense.
I would argue that Singapore isn’t really “busting” per se, as the adjustment is orderly, and a result of intentional policy changes. A bubble bust is typically based on a change in sentiment—e.g. not based on policy, but rather psychological in nature.
We should start a pool: which country will be the first to bust big?
The current areas of decline seem mostly clustered in resource economies, and thus are also based more on the change of a fundamental—aggregate income in the region—rather than psychology. The psychology then does change but is a secondary factor, and the declines seem to be primarily within to the geographic regions of the resource economy.
Or is there a place where the change in psychology is actually well entrenched already, across the housing spectrum (e.g. not just in a single sector like luxury apartments)? If so, I’ve missed it.
When looking at particular regions, I tend to see the last to boom be the first to bust.
The last to boom are usually the least attractive, and so their values are most tenuous.
The first to boom are usually the most attractive places.
The most attractive parts of the SF Bay Area only fell approximately 30-35% post crash, and is now well over peak values.
Inland northern CA fell 50-60% from peak, and is still below peak values.
The thing about mania ending, is that there is always some trigger that can be identified by the participants for the psychological crash. It is very rare that the end of a mania is blamed on the mania itself. That requires an epiphany.
Last to boom / first to bust would only apply to a given metro area, not between metro areas.
And I think you’re half wrong - I think the “core” area has to pop first, but, yes, it won’t go down as hard. e.g. SFBA, core area goes up first, then outlaying areas (e.g. Brentwood, Tracy, Central Valley), but those areas won’t pop until the core does — BUT when the downturn hits, core core won’t fall as much (but more than many people believe).
‘the first to bust big?’
Nigeria. Pretty much already happened. Lagos was the most expensive housing in the world, summer of 2014.
I searched for abandoned housing images:
When looking at particular regions, I tend to see the last to boom be the first to bust.
RW, how would you explain San Diego leading the charge in Dec 2005, then? It certainly wasn’t the last to boom, and isn’t generally considered a “less desirable” place to live…
Nigeria. Pretty much already happened.
Thanks, Ben! I hadn’t realized that… Googling for it…
ot
anyone buying tips?
I know inflation will never happen again etc….
My dad got into TIPS in the early 2000s, before interest rates were nailed into the floor by the global central banking cartel. He suffers from an old-age illness which compromises his formerly-astute financial judgment. Consequently, he asks me on a fairly regular basis if he should offload those TIPS, which have inflation protection plus pay interest above today’s yield-suppressed levels on unprotected bonds. I have to talk him down from the idea every time it comes up…