- Ukraine Rebels Outfox Army to Dent Poroshenko Troop Goal (BBG)
- Russia Withdraws Most of Forces From Ukraine Border: U.S. (BBG)
- Super-Size Me! China’s ’Mini’ Stimulus Starts Expanding (BBG)
- Option B: The blueprint for Thailand's coup (Reuters)
- Big investors replace banks in $4.2tn repo market (FT)
- Draghi Shields Catalan Independence Bid From Market (BBG)
- U.S. companies seek cyber experts for top jobs, board seats (Reuters)
- Parsley CEO Emerges as One of Youngest U.S. Billionaires (BBG)
Having gone from the sublime (zero-money-down mortgages for Chinese homes) to the ridiculous (when China's largst property developer says "the period in which everybody makes money out of property is gone,") the latest desperate act of a dying Chinese property bubble is stunning. As WSJ reports, Season Joy City (a remote suburb of Beijing) offers not only a party bag of bonuses to lure potential buyers; but the development's big selling point is "buy one floor, get one free." The government's reluctance to bail the nation out may soon be tested as Barclays notes "this downturn is more serious than in 2008."
China may be bad, but there are far worse places to be.
The housing "recovery" since 2010 can be summarized in four phrases: diminishing returns, unprecedented central state/bank intervention, unintended consequences, end-game. The unintended consequences of the Fed's unprecedented interventions will rip the heart and lungs out of the housing market
If you said San Francisco, you are very wrong (as recently shown in "Bizarro Housing Bubble Spills Over Into "Overbid Madness"). No, according to the latest Case Shiller data, the one city (out of 20) where home prices dropped in March, somewhat inexplicably considering the ridiculous flipping of houses taking place in the ultra-luxury segment, was New York.
After the crisis, many expected that the blameworthy would be punished or at the least be required to return their ill-gotten gains—but they weren’t, and they didn’t. Many thought that those who were injured would be made whole, but most weren’t. And many hoped that there would be a restoration of the financial safety rules to ensure that industry leaders could no longer gamble the equity of their firms to the point of ruin. This didn’t happen, but it’s not too late. It is useful, then, to identify the persistent myths about the causes of the financial crisis and the resulting Dodd-Frank reform legislation and related implementation...."Plenty of people saw it coming, and said so. The problem wasn’t seeing, it was listening."
I have the good fortune to live in Palo Alto, and - mercifully - I bought my house way back in 1991, which was three bubbles ago. Over that time, the house in which I live is worth nine times what I paid for it. Those outside the Silicon Valley might find perverse comfort in the relative bargains of their own neighborhood.
While US central bankers shudder at the idea of admitting their could be a bubble in real estate or stocks (unless its obvious in hindsight); and England's Bank of England explains 'if there is a bubble, it's not their fault, but there isn't so there'; it appears the Chinese are more comfortable with the truth. As Bloomberg BusinessWeek reports, China's central bank Governor Zhou Xiaochuan said, China may have a housing bubble only in “some cities,” - an issue that’s difficult to resolve with a single nationwide policy. As concerns mount of dramatic over-supply on the back of extrapolated urbanization dreams, Zhou notes, “The economy has slowed down a bit, but not very much," adding that "we should keep vigilance on whether it continues to slow down." Which is odd because US talking heads have made up their minds that China is fixed...
- The Fed can't print trade? World Trade Flows Fall in First Quarter (WSJ)
- PBOC’s Zhou Says China May Have Housing Bubble in ‘Some Cities’ (BBG)
- ECB's Weidmann - Reviving ABS market not task for central bank (Reuters)
- LOL: Fitch upgrades Greece by a notch to 'B'; outlook stable (Reuters)
- LOL x2: Spain Sovereign Debt Rating Upgraded by S&P (BBG)
- China Will Vet Tech Firms After Threatening U.S. Retaliation (BBG)
- US to claim victory over China in WTO car dispute (BBG)
- Obama urges Democrats to vote in midterms, attacks Republicans (Reuters)
- U.S. Military Pushes for More Disclosure on Drone Strikes (WSJ)
Another right of perfectly round number supports: while the Shanghai Composite once again dipped below 2000 overnight to as low as 1991 only to close modestly higher, and the Nikkei followed suit, also sliding below the psychological support level of 14,000 to an intraday low of 13,964 only to close just above 14,000 if in the red, it was the USDJPY that has suffered the most technical pain when shortly after 2:30 am eastern time, the USDJPY dropped by nearly 40 pips, hours after the BOJ indicated that not only is it happy with where in the QE process it stands, but hinted there may well be no more QE, and certainly nothing imminent . In the process, the USDJPY fully smashed the 200 DMA, with the next key parallel support being the 200DMA in the EURJPY at 138.08 (which was at 138.34 last). When that too gives way, it is a straight line to double digits in the USDJPY, and the countdown to the end of the Abe regime begins in earnest.
The Greenspan Housing Bubble Lives On: 20 Million Homeowners Can’t Trade-Up Because They Are Still UnderwaterSubmitted by Tyler Durden on 05/20/2014 21:16 -0400
One of the most deplorable aspects of Greenspan’s monetary central planning was the lame proposition that financial bubbles can’t be detected, and that the job of central banks is to wait until they crash and then flood the market with liquidity to contain the damage. In short, China didn’t “save ” America into a housing crisis; the Greenspan Fed printed America into a cheap debt binge that ended up impairing the residential housing market for years to come. In any event, for those Millennials who do manage to accumulate a down payment by the time they are in their early 30s there is precious little starter home inventory available. The Greenspan mortgage debt serfs from the previous generation are blocking the way. Monetary central banking is an economy wrecker. Here is just one more smoking gun of proof.
China's or the UK's?
Confirming yet again that the global "recovery" benefits some (very few) more than others (the non-very few), is the latest news out of the UK where the Sunday Times reports that the 1000 richest Britons now hold a cumulative £519 billion in wealth: a number which increased by 15% in the past year as the real disposable incomes of the non-richest declined. Putting this number in context, the "most well-off Britons now own the equivalent of a third of the country's gross domestic product (GDP)." Another way of looking at it: the wealth of 1000 Britons is 3.5x greater than the GDP of Greece.
Forget all the talk about "dots", "6 months", or any other prognostication from the Fed's new leadership about what will happen in the near and not so near future. For the real answer prepare to shelve out the usual fee of $250,000 for an hour with the Chairsatan, or read Reuters' account of what others who have done so, have learned. The answer is a stunner. "At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime. "Shocking when he said this," the guest scribbled in his notes. "Is that really true?" he scribbled at another point, according to the notes reviewed by Reuters."
Momentum stocks, the money transfer machine the city relies on, are crashing. Fallout hits record home prices. This is so 2007.