Has the United States ever experienced a time when a foreign nation has attempted to buy up so much of our land all at once? As Michael Snyder details below, it appears the Chinese are on a real estate buying spree all over America as they are now the dominat 'buyers' of investment green cards. This is occurring as private equity buyers and hedge funds exit the buy-to-rent business en masse and are, as Mike Krieger explains, are desperate to pitch American property to anyone willing to keep Housing Bubble 2.0 inflated... it seems Zillow is more than happy to enable that, "Zillow agreed to make its U.S. property listings available to Chinese consumers through a partnership with a Beijing-based website."
While many have pointed out that the Middle-East/Far-East are drifting to a more "Orwellian" world and the West is a more "Huxleyan" environ, the merger of the two dystopias is seemingly growing each day. As The Guardian previously noted, Huxley's dystopia is a totalitarian society, ruled by a supposedly benevolent dictatorship whose subjects have been programmed to enjoy their subjugation through conditioning and the use of a narcotic drug - the rulers of Brave New World have solved the problem of making people love their servitude. On the Orwellian front, we are doing rather well – as the revelations of Edward Snowden have recently underlined. We have constructed an architecture of state surveillance that would make Orwell gasp. The most striking parallel of course is that both men foresaw the future as totalitarian rather than democratic and free. Both Big Brother’s world and the Brave New World are ruled by authoritarian elites of a basically socialist/communist nature, whose only real purpose is the maintenance of their own power and privileges.
The idea of “under-shooting inflation from below” is just ritual incantation. It provides the monetary central planners an excuse to keep the printing presses running red hot, but the true aim is not hard to see. After a 30 year rolling national LBO that has taken credit market debt outstanding to $59 trillion and to an off-the-charts leverage ratio of 3.5X national income, the American economy is saddled with $30 trillion of incremental household, business, financial and public debt compared to its historically sound leverage ratio of 1.5X GDP. We are at peak debt. Household, business and government balance sheets are tapped-out. The problem is not too little CPI inflation, but the unavoidability of a pay-back era of sustained debt deflation.
When you ponder the implications of allowing a small group of powerful wealthy unaccountable men to control the currency of a nation over the last one hundred years, you understand why our public education system sucks. The average American has experienced a fourteen year recession caused by the monetary policies of the Federal Reserve. Our leaders could have learned the lesson of two Fed induced collapses in the space of eight years and voluntarily abandoned the policies of reckless credit expansion, instead embracing policies encouraging saving, capital investment and balanced budgets. They have chosen the same cure as the disease, which will lead to crisis, catastrophe and collapse.
Existing Home Sales Lowest In 19 Months, Cheapest Home Sales Tumble 18%; Weather, Student Loans BlamedSubmitted by Tyler Durden on 03/20/2014 10:26 -0400
Another month, another confirmation that the so-called housing recovery is sputtering on its last breath and is being held up entirely by the higher end segment, which however is also coming to an end now that wealthy Chinese have started liquidating their ultra luxury housing. In February, according to the NAR, some 4.6 million annualized existing homes were record, in line with expectations, and a 0.4% decline from the 4.62 million print in January. This was the 19th monthly drop in a row, and the lowest since July 2012, and a 7.1% drop year over year. But the worst news is that housing is increasingly unaffordable to the poorer Americans, with houses costing in the $0-$100 bucket down 18% from a year ago. Since nobody is applying for a mortgage any more this is hardly surprising. Finally, in addition to the usual weather excuse for weak housing sales, a new scapegoat has appeared: soaring student loans: "20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle." Oops.
Simple: just don't pay the mortgage. Because here is what happens next: shortly thereafter foreclosure proceedings will begin and at some point, far in the distant future, the bank will finally complete the foreclosure process, claiming the property and putting it on the block with intent to resell (or simply raze it). How far in the future? According to RealtyTrac, the average duration of the foreclosure process for zombie foreclosures is an average of a record 1,031 days. Or just shy of 3 years.
The latest foreclosure news out of RealtyTrac is out, and provides the latest proof that if there is a housing recovery somewhere, it sure isn't in the US, where the dislocations in the supply/demand for real estate are so profound that one in five homes in the foreclosure process has been vacated by the distressed homeowner. To wit: "As of the first quarter of 2014, a total of 152,033 U.S. properties in the foreclosure process (excluding bank-owned properties) had been vacated by the distressed homeowner, representing 21 percent of all properties in the foreclosure process." This means that neither the distressed homeowner or the foreclosing lender taking responsibility for maintenance and upkeep of the home, leading to a veritable army of Vacant Dead housing units that are spreading like zombies across the nation in the most improbable housing "recovery" of all time.
So you want to be a mortgage banker? then listen now to what i say Just get liability insurance... and get ready to pay and pay...
It was about a year ago when we noted a core component of the US housing non-recovery: the time to sell foreclosed homes had just hit a record of 400 days across the nation. Fast forward to today when even the last traces of the lie that sustained the housing recovery myth are being swept away, and we get the following article from Bloomberg titled "Foreclosures Surging in New York-New Jersey Market." The good news (according to some): thousands of people could live mortgage free for years until the bank delays obtaining the keys to the foreclosed property. This was money which instead of going to the mortgage owner, would instead go to buy Made in China trinkets and gizmos and otherwise keep the US retail party humming. Which brings us to the bad news: the party - retail and otherwise - is ending, as courts and banks finally catch up with inventory levels on both sides of the foreclosure pipeline, and those who lived for years without spending a dollar for the roof above their head are suddenly forced to move out and allocated the major portion of their disposable income toward rent.
Ocwen Financial, dubbed by Moody's as poised to become the "next generation" of subprime lenders, has come under considerably pressure this morning amid news that NY State regulators are investigating the firm for "conflicts of interest"...
- *NY DEPT FINL SERVICES FINDS POTENTIAL CONFLICTS OF INTEREST
- *NY CITES REVIEW OF OCWEN'S MORTGAGE SERVICING PRACTICES
- *NY SEEKS INFO ON FINL INTEREST OF OCWEN EXECS IN AFFILIATED COS
It is the Mortgage Servicing Rights (MSRs) that has Moody's the most-concerned as the volumes required may force Ocwen (and others) to shift their business model to ever lower quality loans.
Existing home sales plunged 5.1% (considerably worse than the 4.1% drop expected) to its lowest level in 18 months. This extends the string of missed expectations to 5 months as even the ever-credible NAR chief economist said it was not the weather but "we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates." First-time homebuyers plunged to a mere 26% of the total - the lowest share on record as all-cash (and spec) investors rose to a record 53% share of sales.
Even as the primary housing market was slowly circling the drain, the one silver lining was that the US rental market, largely dominated by several Wall Street investment firms, most notably Blackstone, was doing relatively well. It was doing so well that equity sponsors such as Blue Mountain couldn't wait to offload their prized REIT property to the public, culminating with last August's IPO of American Homes 4 Rent, the second-largest US homes-for-rent operator after Blackstone. And since the stock price of all these corporations was performing admirably or at all time highs, supported by the record fungible liquidity sloshing among the world's interconnected markets, nobody was very concerned.
It is time to get concerned.
The mirage of prosperity created by massive levels of debt has begun to show it foundational cracks. Without increased levels of personal savings, production and investment there is little ability to achieve stronger economic growth. While we can certainly "hope" for something different, there are some basic laws which are insurmountable. The physics of debt is one of them.
After learning that it snowed in China this winter following the release of the abysmal February Flash HSBC PMI numbers, we found out that there had also been snow in Europe, following misses across virtually all key French, German and composite PMIs with the exception of the German Services PMI which was the sole "beater" out of 6. To wit:
- Eurozone PMI Manufacturing (Feb A) M/M 53.0 vs Exp. 54.0 (Prev. 54.0); Eurozone PMI Services (Feb A) M/M 51.7 vs Exp. 51.9 (Prev. 51.6)
- German Manufacturing PMI (Feb A) M/M 54.7 vs. Exp. 56.3 (Prev. 56.5); German PMI Services (Feb A) M/M 55.4 vs Exp. 53.4 (Prev. 53.1)
- French PMI Manufacturing (Feb P) M/M 48.5 vs. Exp. 49.6 (Prev. 49.3); French PMI Services (Feb P) M/M 46.9 vs. Exp. 49.4 (Prev. 48.9)
Of course, economic data is the last thing that matters in a manipulated market. Instead, all that does matter is what the USDJPY does overnight, and as we forecast yesterday, the USDJPY 102 tractor beam is alive and well and managed to pull equity futures from a -10 drop overnight to nearly unchanged, despite the now traditional pattern of USDJPY selling during the overnight session and buying during the US session.
As we initially exposed over five years ago, with luminary frat brothers and sister such as Jimmy Cayne, Richard Fuld, Stan O'Neil, Martin Gruss, Michael Bloomberg, Jon Corzine, Mary Shapiro, Alan Schwartz, Larry Fink, Larry Fink, Wilbur Ross, James McDonald, this "secret" organization puts the Masons, Bilderbergs, Skull and Bones, Templars, Fight Club and all other secret societies to shame. Now, as New York Magazine infiltrates the inner workings of the "Kappa Beta Phi" society, Liberty Blitzkrieg's Mike Krieger notes the following will confirm what everyone already thought - that a great many of these oligarch financiers are complete and total sociopaths and a menace to society.