Financial Crisis

[mccw]

A good interview covering many topics, including China and regional war based on the prediction that Israel will attack Syria once again (on the basis that Israel didn't destroy all the missiles last time) and this time Syria will be forced to retaliate against Israel, together with other neighbours

The most interesting thing on that video was the news on the US housing market and mortgage interest rates jumping a full % since June/ talk of tapering. Imagine the results if the fed actually went ahead and did done real action. The word Carnage springs to mind.

Syria won't attack Isreal; why would they open up another front with a much more powerful eminent than the rebel militias they're only just starting to turn the tide against inside their own country? If there was a point of likely attack it would have been at the start of protests before the war, to give a common enemy to unite the country. It didn't happen; its past.

Regards "backyards" - North Africa is the EUs backyard ; Syria is both EU and Russia's backyard and that is a big reason I doubt we'll see any western boots on the ground in Syria.

[mccw]

Neversure

You seem to be in to the US housing market. Can you tell me if the figures reported on that RT clip from Midas are largely correct or you don't see it? In particular that mortgage rates have risen from 3.5 to 4.5% while rents have dropped 44%?! The 44% sound astounding. In a market where there is not horrendous over supply then with all the more renters in the market then rents normally should rise a bit or at least stay flat (as happened in the UK).

Can you tell me; generally, do lower income people/ renters in the US generally have their own apartments or share rooms in houses? I wonder because it is little talked about; I mean, if not a high % of sharing now then that's a money saving option that can further reduce demand and for e prices down; where as UK has already saturated through this scenario.

[yoshiwara]

this thread used to be a toenail curling, nightmare generating, coldsweat down the backs, endless global horror story listing. now a fistful of chaps discuss the most boring and irrelevant topics such as property values in Downing Street, the movements of some insignificant exotic currencies like the British Pound, the consistency of Mr Osborne's breakfast eggs and the cash owned by parents of foreign students.

where are the interesting yewtoob clips or Dyler Turd's blockshpots, e.g.

-JPMorgan is the majority shareholder of the Chinese Central Bank,

-al-Qaeda uses Szechuan ghost cities as terrorist training grounds,

-Angela Merkel exposed as Hitler's granddaughter,

-Thaivisa George now an executive member of the Bilderbergs,

-growing rice in Thailand more profitable than owning works of art,

-worthless fiat money next week worthless².

you forgot Syria. Apparently now the epicentre of the financial crisis. Please keep up!

Yes well if you can't see the link between a regional war and the exacerbation of the financial crisis then you must be even dumber than I thought before

Says the man who sees infinite links from his tinfoil helmet and the usual suspects behind every lamppost. Probably explains the dumpster emptying of useless cut and pastes week after week as 'triggers' for the end of the world that never comes.

[midas]

Syria won't attack Isreal; why would they open up another front with a much more powerful eminent than the rebel militias they're only just starting to turn the tide against inside their own country?

I hope you are correct! But the residual feeling for me is “ hope for the best but prepare for the worst “.

Okay, what about this theory regarding Egypt ? Does it sound plausible?

Is Egypt On The Verge Of Engineered Civil War? When one examines the impending disaster in Egypt, it is important to avoid using a narrow lens and take into account the bigger picture. An Egyptian civil war will not ultimately be about Egypt. Rather, it will be about catalyzing the whole of the Middle East towards breakdown and drawing in larger nations in the process, including the United States. It will also be about triggering energy price increases designed to give cover to the collapse of the dollar's world reserve status. If globalists within our government and within central banks allow the dollar to die today, THEY will be blamed for the collapse that follows. THEY will be painted as the villains. But, if they can create a crisis large enough, that crisis becomes the scapegoat for all other tragedies, including dollar debasement. Egypt is just one of many regions in the world where such a crisis can be fabricated. Right now, it seems to be the most opportune choice for the elites.

http://www.alt-market.com/articles/1622-is-egypt-on-the-verge-of-engineered-civil-war

Edited August 4, 2013 by midas

[chiang mai]

A good interview covering many topics, including China and regional war based on the prediction that Israel will attack Syria once again (on the basis that Israel didn't destroy all the missiles last time) and this time Syria will be forced to retaliate against Israel, together with other neighbours

The most interesting thing on that video was the news on the US housing market and mortgage interest rates jumping a full % since June/ talk of tapering. Imagine the results if the fed actually went ahead and did done real action. The word Carnage springs to mind.

Syria won't attack Isreal; why would they open up another front with a much more powerful eminent than the rebel militias they're only just starting to turn the tide against inside their own country? If there was a point of likely attack it would have been at the start of protests before the war, to give a common enemy to unite the country. It didn't happen; its past.

Regards "backyards" - North Africa is the EUs backyard ; Syria is both EU and Russia's backyard and that is a big reason I doubt we'll see any western boots on the ground in Syria.

I see it slightly differently, and whilst N. Africa is in the EU's back yard, anything east of the balkans is pretty much Middle East not Africa and as such is of more interest to America and Russia, the EU doesn't care about Syria and the Middle East in the same way they didn't really care about the old Yugoslavia. Agreed there's unilkely to be EU boots on the ground there but I can easily imagine American boots.

[NeverSure]

Neversure

You seem to be in to the US housing market. Can you tell me if the figures reported on that RT clip from Midas are largely correct or you don't see it? In particular that mortgage rates have risen from 3.5 to 4.5% while rents have dropped 44%?! The 44% sound astounding. In a market where there is not horrendous over supply then with all the more renters in the market then rents normally should rise a bit or at least stay flat (as happened in the UK).

Can you tell me; generally, do lower income people/ renters in the US generally have their own apartments or share rooms in houses? I wonder because it is little talked about; I mean, if not a high % of sharing now then that's a money saving option that can further reduce demand and for e prices down; where as UK has already saturated through this scenario.

Yes, interest rates have gone up significantly in the past month or so. They hit a record low in June at about 3.5% fixed rate for 30 years. I think they are now about 4+% which is still an historically low rate.

Housing prices are improving some, and one telling sign is that there are fewer homes on the market. Where there was about a 1 year supply on the market based on the rate of sales, it's now down to under 6 months.

As you suspect, the rental market is strong. A lot of people are afraid to buy, so they rent. The 44% figure is silly.

"Lower income people" in the US aren't all that poor. There are safety nets like cash welfare payments, housing support, "food stamps," Medicaid which is full health insurance for the poor and all of those have been around since the 60's. While statistics might show that some countries have a higher average per capita income than the US, it's important to remember that it's cheap to live in the US, both prices and taxes.

The most expensive place to live in the US, New York City, isn't even on the list of the top ten most expensive places in the world to live. Two of those places are in Australia, and London and Tokyo are on that list. So you can't just look at incomes to see how people are doing.

You asked if people have their own digs or if they share. The poorest might share, especially a couple of young people might go together and rent a 2 br 2 bath apartment. That would cost about $700 a month plus utilities in the average town in the US. It would be nice but not fancy.

[midas]

Neversure

You seem to be in to the US housing market. Can you tell me if the figures reported on that RT clip from Midas are largely correct or you don't see it? In particular that mortgage rates have risen from 3.5 to 4.5% while rents have dropped 44%?! The 44% sound astounding. In a market where there is not horrendous over supply then with all the more renters in the market then rents normally should rise a bit or at least stay flat (as happened in the UK).

Can you tell me; generally, do lower income people/ renters in the US generally have their own apartments or share rooms in houses? I wonder because it is little talked about; I mean, if not a high % of sharing now then that's a money saving option that can further reduce demand and for e prices down; where as UK has already saturated through this scenario.

Yes, interest rates have gone up significantly in the past month or so. They hit a record low in June at about 3.5% fixed rate for 30 years. I think they are now about 4+% which is still an historically low rate.

Housing prices are improving some, and one telling sign is that there are fewer homes on the market. Where there was about a 1 year supply on the market based on the rate of sales, it's now down to under 6 months.

As you suspect, the rental market is strong. A lot of people are afraid to buy, so they rent. The 44% figure is silly.

"Lower income people" in the US aren't all that poor. There are safety nets like cash welfare payments, housing support, "food stamps," Medicaid which is full health insurance for the poor and all of those have been around since the 60's. While statistics might show that some countries have a higher average per capita income than the US, it's important to remember that it's cheap to live in the US, both prices and taxes.

The most expensive place to live in the US, New York City, isn't even on the list of the top ten most expensive places in the world to live. Two of those places are in Australia, and London and Tokyo are on that list. So you can't just look at incomes to see how people are doing.

You asked if people have their own digs or if they share. The poorest might share, especially a couple of young people might go together and rent a 2 br 2 bath apartment. That would cost about $700 a month plus utilities in the average town in the US. It would be nice but not fancy.

Neversure I just can't see how any recent improvement in the US housing market is anything other than temporary and unsustainable? Not only because of the trend in increasing interest rates (and even if it is a slow-moving trend up ), but also after the jobs report came out last week you probably saw how the media lambasted the Obama administration because most of the jobs new jobs were part-time and/or temporary.

Surely you can't qualify for a mortgage if you don't have a well paid and permanent job?

It was quoted last week there are about 6 million less full-time jobs in America today than there was back in 2007. And it seems pretty evident a lot of young adults won't be forming new households soon. Pew Research say a record 21 million young adults in America are now living at home with their parents.( http://www.pewsocialtrends.org/files/2013/07/SDT-millennials-living-with-parents-07-2013.pdf )

Then there is the question of all the homes that continue to be plagued by negative equity. How many homes are being withheld from the market because the current owners are in this predicament? In other words, what is the size of the shadow inventory and how long is it going to take to be absorbed?

This must be having a hugely distorting affect on the market and would make it very difficult to assess the real health or otherwise of the housing market.

But what could surely set the cat among the pigeons is if this little antic by the city of Richmond catches on and notice the sentence in the article “ other cities have also explored the idea “

Richmond Threatens Eminent Domain To Address Foreclosure Crisis

http://sanfrancisco.cbslocal.com/2013/07/30/richmond-threatens-eminent-domain-to-address-foreclosure-crisis/

Edited August 4, 2013 by midas

[chiang mai]

This araticle seems to suggest that home ownership in the US is going into reverse, I'm not sure how reliable it is, but...! Higher rates, softer demand and crucially, first time ownership is down, perhaps NS can comment on its accuracy?

http://www.counterpunch.org/2013/08/02/housing-shifts-into-reverse/

[chiang mai]

An interesting take on Asia's holdings of USD, having more is not necessarily a good thing, in fact it's quite bad.

Bloomberg 5/8/13
'Asia sits on almost $7 trillion in currency reserves, much of it in dollars. Asia’s central banks engaged in a kind of financial arms race after a 1997 crisis, stockpiling dollars as a defense against turmoil. That altered the financial landscape in two ways: One, Asia now has more weapons against market unrest than it knows what to do with. Two, Asia is essentially America’s banker, with China and Japan having the most at stake.

In a perfect world, Washington’s bankers would threaten to call in their loans. Asian nations would sit White House and congressional leaders down and tell them to get their act together. But Connally’s 1971 observation is infinitely truer today than at any time in Asia’s history. We need to stop considering huge reserve holdings as a financial strength. They are a trap that is complicating economic policy making. It’s time Asia devised an escape.
Fiscal Matters

China isn’t without leverage. It’s no coincidence that new Treasury Secretary Jacob Lew’s first overseas visit in March was to his banker-in-chief, Xi Jinping, in Beijing. Nor did it go unnoticed that Lew was the new Chinese president’s first foreign-official meeting. Lew may have been sending Xi a signal this week by calling on Congress to act “in a way that doesn’t create a crisis” on fiscal matters.

But that leverage is limited. Xi and Premier Li Keqiang are engaged in a risky rebalancing act, trying to wean the Chinese economy off exports without fanning social unrest. Another debt-limit tussle would fuel market volatility, strengthen the yuan as the dollar plunges, and result in the loss of tens of billions of dollars in China’s portfolio of U.S. Treasuries.

In Tokyo, Shinzo Abe faces a similar dilemma. An important pillar of the prime minister’s plan to end deflation and restore healthy growth is a weak yen. The currency’s 17 percent drop since mid-November has helped even down-and-out Sony Corp. eke out some profits. Yet the yen would surge anew on another U.S. downgrade: In 2011, a giant flight-to-quality trade drove huge amounts of capital Japan’s way.

The more Asia adds to its holdings of U.S. debt, the harder they become to unload. If traders got even the slightest whiff that China was selling large blocks of its $1.3 trillion in dollar holdings, markets would quake. The same goes for Japan’s $1.1 trillion stockpile. So central banks just keep adding to them. Pyramid scheme, anyone?

Never before has the world seen a greater misallocation of vast resources. Loading up on dollars helps Asia’s exporters by holding down local currencies, but it causes economic control problems. When central banks buy dollars, they need to sell local currency, increasing its availability and boosting the money supply and inflation. So they sell bonds to mop up excess money. It’s an imprecise science made even more complicated by the Federal Reserve’s quantitative-easing policies.
Stealth Selling

At the very least, Asia should stop adding to its dollar holdings and consider ways to bring more of those funds home. They could be used for infrastructure, education, research and development on cleaner energy, or any other vital investments in the future. The question, of course, is how?

There is a clear first-mover advantage for smaller economies. South Korea (with $53 billion in Treasuries), the Philippines ($40 billion) or Malaysia ($18 billion) could try to dump dollars on the sly. Bigger ones couldn’t pull that off in this hyperconnected, 24/7-news-cycle world; news of sizable central-banker sell orders would inspire copycats.

Washington can help, and not just by avoiding another suicidal debt-limit fight. The Treasury should engage with its Asian counterparts in a cooperative, transparent brainstorming process to draw down their reserves without devastating markets. It’s in the U.S.’s best interest to keep more of its debt onshore, Japan-style, by attracting greater purchases from cash-rich U.S. companies. That would make the U.S. less vulnerable to capital flights in the future.

If ever there were a time for a currency summit, it’s now. Perhaps the International Monetary Fund or the Group of 20 can host the debate. Such high-level discussions would help Asia set goals and consider the mechanics and timing of reclaiming more of its savings. Only then will all those dollars start being the solution to Asia’s challenges, not the problem. '

[Naam]

Bloomberg = nothing but yada yada except "The question, of course, is how?"

[mccw]

A good interview covering many topics, including China and regional war based on the prediction that Israel will attack Syria once again (on the basis that Israel didn't destroy all the missiles last time) and this time Syria will be forced to retaliate against Israel, together with other neighbours

The most interesting thing on that video was the news on the US housing market and mortgage interest rates jumping a full % since June/ talk of tapering. Imagine the results if the fed actually went ahead and did done real action. The word Carnage springs to mind.

Syria won't attack Isreal; why would they open up another front with a much more powerful eminent than the rebel militias they're only just starting to turn the tide against inside their own country? If there was a point of likely attack it would have been at the start of protests before the war, to give a common enemy to unite the country. It didn't happen; its past.

Regards "backyards" - North Africa is the EUs backyard ; Syria is both EU and Russia's backyard and that is a big reason I doubt we'll see any western boots on the ground in Syria.

I see it slightly differently, and whilst N. Africa is in the EU's back yard, anything east of the balkans is pretty much Middle East not Africa and as such is of more interest to America and Russia, the EU doesn't care about Syria and the Middle East in the same way they didn't really care about the old Yugoslavia. Agreed there's unilkely to be EU boots on the ground there but I can easily imagine American boots.

Syria is just next door to Turkey, which is an EU applicant I believe (I pray that never comes through). So I would say definitely a boarding country is back yard territory; also Syria has port on the med which is EUs domain. Until recently the Russian's had a naval base in one of them but they have moved out as the civil war intensified I think (their only naval base in the med)

Yugoslavia- eeer there was a bombing campaign against Serbia, Britian and some EU took part under the NATO banner. Most former Yugoslav republics are either EU member states or in advanced membership process.

So I think EU does care very much about both.

The EU has basically been out to take over all or as many of the ex soviet states as possible. Ukraine no because it actually borders Russia but EU did still make noises to invite them begin process to apply; we had the Poland Ukraine Euros football tournament, quite a sing of where they are/ heading/ allegiances. There are simmering tensions up the apparently; a good sized native Russian speaking population- so this is another area EU is intruding deep in to Russia's back yard. EU has been a handy tool to cement western power over the entire region- it can be argued this reckless political / expansionist policy was in the face of economic warnings, but pressed on with despite the evidence, indeed a reason for the current crises. As if ordered by a higher power, or dogma? I think so. They are even still admitting new members now when they are struggling with the ones they already have. The assumption must be that its set in stone countries will NOT leave and perhaps an EU/ NATO force will be deployed to put down any local army revolution. It could even be part of design, to create crises and then use the mayhem as an excuse to further strip individual rights and members sovereignty; it would be the perfect catalyst to reform the institutions to a fully federal system which currently is needed but not politically tenable. Maybe, maybe not, but it would be very convenient.

(Enjoy my little finishing conspiracy take this sunny Monday morning ;-)

[NeverSure]

This araticle seems to suggest that home ownership in the US is going into reverse, I'm not sure how reliable it is, but...! Higher rates, softer demand and crucially, first time ownership is down, perhaps NS can comment on its accuracy?

http://www.counterpunch.org/2013/08/02/housing-shifts-into-reverse/

Yes, Ralph Nader of course, quoted by the hysterical. Please read some people who know what they are talking about.

[NeverSure]

An interesting take on Asia's holdings of USD, having more is not necessarily a good thing, in fact it's quite bad.

Bloomberg 5/8/13

'Asia sits on almost $7 trillion in currency reserves, much of it in dollars. Asia’s central banks engaged in a kind of financial arms race after a 1997 crisis, stockpiling dollars as a defense against turmoil. That altered the financial landscape in two ways: One, Asia now has more weapons against market unrest than it knows what to do with. Two, Asia is essentially America’s banker, with China and Japan having the most at stake.

In a perfect world, Washington’s bankers would threaten to call in their loans. Asian nations would sit White House and congressional leaders down and tell them to get their act together. But Connally’s 1971 observation is infinitely truer today than at any time in Asia’s history. We need to stop considering huge reserve holdings as a financial strength. They are a trap that is complicating economic policy making. It’s time Asia devised an escape.

Fiscal Matters

China isn’t without leverage. It’s no coincidence that new Treasury Secretary Jacob Lew’s first overseas visit in March was to his banker-in-chief, Xi Jinping, in Beijing. Nor did it go unnoticed that Lew was the new Chinese president’s first foreign-official meeting. Lew may have been sending Xi a signal this week by calling on Congress to act “in a way that doesn’t create a crisis” on fiscal matters.

But that leverage is limited. Xi and Premier Li Keqiang are engaged in a risky rebalancing act, trying to wean the Chinese economy off exports without fanning social unrest. Another debt-limit tussle would fuel market volatility, strengthen the yuan as the dollar plunges, and result in the loss of tens of billions of dollars in China’s portfolio of U.S. Treasuries.

In Tokyo, Shinzo Abe faces a similar dilemma. An important pillar of the prime minister’s plan to end deflation and restore healthy growth is a weak yen. The currency’s 17 percent drop since mid-November has helped even down-and-out Sony Corp. eke out some profits. Yet the yen would surge anew on another U.S. downgrade: In 2011, a giant flight-to-quality trade drove huge amounts of capital Japan’s way.

The more Asia adds to its holdings of U.S. debt, the harder they become to unload. If traders got even the slightest whiff that China was selling large blocks of its $1.3 trillion in dollar holdings, markets would quake. The same goes for Japan’s $1.1 trillion stockpile. So central banks just keep adding to them. Pyramid scheme, anyone?

Never before has the world seen a greater misallocation of vast resources. Loading up on dollars helps Asia’s exporters by holding down local currencies, but it causes economic control problems. When central banks buy dollars, they need to sell local currency, increasing its availability and boosting the money supply and inflation. So they sell bonds to mop up excess money. It’s an imprecise science made even more complicated by the Federal Reserve’s quantitative-easing policies.

Stealth Selling

At the very least, Asia should stop adding to its dollar holdings and consider ways to bring more of those funds home. They could be used for infrastructure, education, research and development on cleaner energy, or any other vital investments in the future. The question, of course, is how?

There is a clear first-mover advantage for smaller economies. South Korea (with $53 billion in Treasuries), the Philippines ($40 billion) or Malaysia ($18 billion) could try to dump dollars on the sly. Bigger ones couldn’t pull that off in this hyperconnected, 24/7-news-cycle world; news of sizable central-banker sell orders would inspire copycats.

Washington can help, and not just by avoiding another suicidal debt-limit fight. The Treasury should engage with its Asian counterparts in a cooperative, transparent brainstorming process to draw down their reserves without devastating markets. It’s in the U.S.’s best interest to keep more of its debt onshore, Japan-style, by attracting greater purchases from cash-rich U.S. companies. That would make the U.S. less vulnerable to capital flights in the future.

If ever there were a time for a currency summit, it’s now. Perhaps the International Monetary Fund or the Group of 20 can host the debate. Such high-level discussions would help Asia set goals and consider the mechanics and timing of reclaiming more of its savings. Only then will all those dollars start being the solution to Asia’s challenges, not the problem. '

As little faith as I have in Bloomberg, this is even worse because it is an guest editorial written by a .......

The reason that countries hold US dollars as reserves is that the dollar is the international unit of trade. If they didn't have dollars they would be out of business, just like you would be out of business in Thailand if you didn't have baht.

The guy has no clue what international currency reserves are or what they are for. The US Fed is sitting on two trillion dollars in Euros because the countries the use the Euro needed dollars and they traded.

Edited August 5, 2013 by NeverSure

[Naam]

The guy has no clue what international currency reserves are or what they are for.

[NeverSure]

Neversure

You seem to be in to the US housing market. Can you tell me if the figures reported on that RT clip from Midas are largely correct or you don't see it? In particular that mortgage rates have risen from 3.5 to 4.5% while rents have dropped 44%?! The 44% sound astounding. In a market where there is not horrendous over supply then with all the more renters in the market then rents normally should rise a bit or at least stay flat (as happened in the UK).

Can you tell me; generally, do lower income people/ renters in the US generally have their own apartments or share rooms in houses? I wonder because it is little talked about; I mean, if not a high % of sharing now then that's a money saving option that can further reduce demand and for e prices down; where as UK has already saturated through this scenario.

Yes, interest rates have gone up significantly in the past month or so. They hit a record low in June at about 3.5% fixed rate for 30 years. I think they are now about 4+% which is still an historically low rate.

Housing prices are improving some, and one telling sign is that there are fewer homes on the market. Where there was about a 1 year supply on the market based on the rate of sales, it's now down to under 6 months.

As you suspect, the rental market is strong. A lot of people are afraid to buy, so they rent. The 44% figure is silly.

"Lower income people" in the US aren't all that poor. There are safety nets like cash welfare payments, housing support, "food stamps," Medicaid which is full health insurance for the poor and all of those have been around since the 60's. While statistics might show that some countries have a higher average per capita income than the US, it's important to remember that it's cheap to live in the US, both prices and taxes.

The most expensive place to live in the US, New York City, isn't even on the list of the top ten most expensive places in the world to live. Two of those places are in Australia, and London and Tokyo are on that list. So you can't just look at incomes to see how people are doing.

You asked if people have their own digs or if they share. The poorest might share, especially a couple of young people might go together and rent a 2 br 2 bath apartment. That would cost about $700 a month plus utilities in the average town in the US. It would be nice but not fancy.

Neversure I just can't see how any recent improvement in the US housing market is anything other than temporary and unsustainable? Not only because of the trend in increasing interest rates (and even if it is a slow-moving trend up ), but also after the jobs report came out last week you probably saw how the media lambasted the Obama administration because most of the jobs new jobs were part-time and/or temporary.

Surely you can't qualify for a mortgage if you don't have a well paid and permanent job?

It was quoted last week there are about 6 million less full-time jobs in America today than there was back in 2007. And it seems pretty evident a lot of young adults won't be forming new households soon. Pew Research say a record 21 million young adults in America are now living at home with their parents.( http://www.pewsocialtrends.org/files/2013/07/SDT-millennials-living-with-parents-07-2013.pdf )

Then there is the question of all the homes that continue to be plagued by negative equity. How many homes are being withheld from the market because the current owners are in this predicament? In other words, what is the size of the shadow inventory and how long is it going to take to be absorbed?

This must be having a hugely distorting affect on the market and would make it very difficult to assess the real health or otherwise of the housing market.

But what could surely set the cat among the pigeons is if this little antic by the city of Richmond catches on and notice the sentence in the article “ other cities have also explored the idea “

Richmond Threatens Eminent Domain To Address Foreclosure Crisis

http://sanfrancisco.cbslocal.com/2013/07/30/richmond-threatens-eminent-domain-to-address-foreclosure-crisis/

You are looking at the wrong numbers. There has been little construction of new homes in the US for several years, yet the population has grown and many homes have be torn down to make way for things like shopping centers or they have accidentally burned down. So while the supply of homes shrinks, the population grows.

I'm looking at some of the worst hit markets like Las Vegas or Phoenix Arizona and seeing shrinking inventories, shorter times on the market, rising prices, and lower inventories. Those are the numbers to watch.

Average home prices in the US have increased by 10% in the past year, and the time it takes to sell a home has shrunk by about 1/2.

Yes there is still excess inventory to flush out and yes some who bought at the top of the market are upside down in their homes but that doesn't mean they'll default on their promise to pay. If they do it destroys their credit and maybe their lives. Many occupations demand a good credit rating. You can't get bonded for instance if you have bad credit and many jobs from banking to building homes demand that you be bonded.

Those who feed us the news like to report the bad news, but there's no money in reporting good news. I can look around me and see homes beginning to sell again, including two rather expensive ones on my road alone in the past 90 days.

[mccw]

Never sure; just out of interest what's this "bonded" work your talking about? Like you pay a deposit that you will not break your employment contract?

Are these fixed 30year mortgages available to foreigners? 30 year fix is very nice; UK most its a Yare or two before switching to variable rate; longest fix is 5years I think, and you'll pay a premium for it.

Given the cheapness of fixed credit and what I think is likely inflationary episode / dollar devaluation, I think US high demand rental areas might not be such a bad idea. Can homes really be picked up at half build cost. That does sound attractive if in a decent area. When I enquired with a couple of broker friends of mine they showed me properties in Florida and Detroit ROIs around 6-8%; this was last year and I wasn't really interested. But its still a thought wiggling around in the back of my brain. I really don't know anywhere near enough to even consider it properly though. Like how is the tax system, differing from state to state or town to city? How about growth areas or those places with high demand rentals but with some kind of natural limit on new supply, like a lack of physical space to expand or something? What's ROIs you've come across?

Cheers

[midas]

An interesting take on Asia's holdings of USD, having more is not necessarily a good thing, in fact it's quite bad.

Bloomberg 5/8/13

'Asia sits on almost $7 trillion in currency reserves, much of it in dollars. Asia’s central banks engaged in a kind of financial arms race after a 1997 crisis, stockpiling dollars as a defense against turmoil. That altered the financial landscape in two ways: One, Asia now has more weapons against market unrest than it knows what to do with. Two, Asia is essentially America’s banker, with China and Japan having the most at stake.

In a perfect world, Washington’s bankers would threaten to call in their loans. Asian nations would sit White House and congressional leaders down and tell them to get their act together. But Connally’s 1971 observation is infinitely truer today than at any time in Asia’s history. We need to stop considering huge reserve holdings as a financial strength. They are a trap that is complicating economic policy making. It’s time Asia devised an escape.

Fiscal Matters

China isn’t without leverage. It’s no coincidence that new Treasury Secretary Jacob Lew’s first overseas visit in March was to his banker-in-chief, Xi Jinping, in Beijing. Nor did it go unnoticed that Lew was the new Chinese president’s first foreign-official meeting. Lew may have been sending Xi a signal this week by calling on Congress to act “in a way that doesn’t create a crisis” on fiscal matters.

But that leverage is limited. Xi and Premier Li Keqiang are engaged in a risky rebalancing act, trying to wean the Chinese economy off exports without fanning social unrest. Another debt-limit tussle would fuel market volatility, strengthen the yuan as the dollar plunges, and result in the loss of tens of billions of dollars in China’s portfolio of U.S. Treasuries.

In Tokyo, Shinzo Abe faces a similar dilemma. An important pillar of the prime minister’s plan to end deflation and restore healthy growth is a weak yen. The currency’s 17 percent drop since mid-November has helped even down-and-out Sony Corp. eke out some profits. Yet the yen would surge anew on another U.S. downgrade: In 2011, a giant flight-to-quality trade drove huge amounts of capital Japan’s way.

The more Asia adds to its holdings of U.S. debt, the harder they become to unload. If traders got even the slightest whiff that China was selling large blocks of its $1.3 trillion in dollar holdings, markets would quake. The same goes for Japan’s $1.1 trillion stockpile. So central banks just keep adding to them. Pyramid scheme, anyone?

Never before has the world seen a greater misallocation of vast resources. Loading up on dollars helps Asia’s exporters by holding down local currencies, but it causes economic control problems. When central banks buy dollars, they need to sell local currency, increasing its availability and boosting the money supply and inflation. So they sell bonds to mop up excess money. It’s an imprecise science made even more complicated by the Federal Reserve’s quantitative-easing policies.

Stealth Selling

At the very least, Asia should stop adding to its dollar holdings and consider ways to bring more of those funds home. They could be used for infrastructure, education, research and development on cleaner energy, or any other vital investments in the future. The question, of course, is how?

There is a clear first-mover advantage for smaller economies. South Korea (with $53 billion in Treasuries), the Philippines ($40 billion) or Malaysia ($18 billion) could try to dump dollars on the sly. Bigger ones couldn’t pull that off in this hyperconnected, 24/7-news-cycle world; news of sizable central-banker sell orders would inspire copycats.

Washington can help, and not just by avoiding another suicidal debt-limit fight. The Treasury should engage with its Asian counterparts in a cooperative, transparent brainstorming process to draw down their reserves without devastating markets. It’s in the U.S.’s best interest to keep more of its debt onshore, Japan-style, by attracting greater purchases from cash-rich U.S. companies. That would make the U.S. less vulnerable to capital flights in the future.

If ever there were a time for a currency summit, it’s now. Perhaps the International Monetary Fund or the Group of 20 can host the debate. Such high-level discussions would help Asia set goals and consider the mechanics and timing of reclaiming more of its savings. Only then will all those dollars start being the solution to Asia’s challenges, not the problem. '

As little faith as I have in Bloomberg, this is even worse because it is an guest editorial written by a .......

The reason that countries hold US dollars as reserves is that the dollar is the international unit of trade. If they didn't have dollars they would be out of business, just like you would be out of business in Thailand if you didn't have baht.

The guy has no clue what international currency reserves are or what they are for. The US Fed is sitting on two trillion dollars in Euros because the countries the use the Euro needed dollars and they traded.

no 'world reserve currency' lasts forever.

and now…………………………… People’s Bank of China official Yao Yudong has an article in the China Securities Journal calling for a new “Bretton Woods”.

http://www.forexlive.com/blog/2013/08/05/china-securities-journal-article-pbics-yudong-calls-for-new-bretton-woods/comment-page-1/

[chiang mai]

This araticle seems to suggest that home ownership in the US is going into reverse, I'm not sure how reliable it is, but...! Higher rates, softer demand and crucially, first time ownership is down, perhaps NS can comment on its accuracy?

http://www.counterpunch.org/2013/08/02/housing-shifts-into-reverse/

Yes, Ralph Nader of course, quoted by the hysterical. Please read some people who know what they are talking about.

You may not like the author or the source their comments do have some basis in fact, rates are up, demand in softer and first time buyers are down significantly, can you dispute that with fact rather than emotion about the source?

Why I think this is important is because the UK typically mirrors the US on a lagged basis and the current UK governement spin doesn't altogther stack up.

[midas]

This araticle seems to suggest that home ownership in the US is going into reverse, I'm not sure how reliable it is, but...! Higher rates, softer demand and crucially, first time ownership is down, perhaps NS can comment on its accuracy?

http://www.counterpunch.org/2013/08/02/housing-shifts-into-reverse/

Yes, Ralph Nader of course, quoted by the hysterical. Please read some people who know what they are talking about.

" You can’t buy a house with paycheck from Burger King "

[chiang mai]

This araticle seems to suggest that home ownership in the US is going into reverse, I'm not sure how reliable it is, but...! Higher rates, softer demand and crucially, first time ownership is down, perhaps NS can comment on its accuracy?

http://www.counterpunch.org/2013/08/02/housing-shifts-into-reverse/

Yes, Ralph Nader of course, quoted by the hysterical. Please read some people who know what they are talking about.

" You can’t buy a house with paycheck from Burger King "

In Detroit you can.

[Naam]

Never sure; just out of interest what's this "bonded" work your talking about? Like you pay a deposit that you will not break your employment contract?

Are these fixed 30year mortgages available to foreigners? 30 year fix is very nice; UK most its a Yare or two before switching to variable rate; longest fix is 5years I think, and you'll pay a premium for it.

Given the cheapness of fixed credit and what I think is likely inflationary episode / dollar devaluation, I think US high demand rental areas might not be such a bad idea. Can homes really be picked up at half build cost. That does sound attractive if in a decent area. When I enquired with a couple of broker friends of mine they showed me properties in Florida and Detroit ROIs around 6-8%; this was last year and I wasn't really interested. But its still a thought wiggling around in the back of my brain. I really don't know anywhere near enough to even consider it properly though. Like how is the tax system, differing from state to state or town to city? How about growth areas or those places with high demand rentals but with some kind of natural limit on new supply, like a lack of physical space to expand or something? What's ROIs you've come across?

Cheers

yes 30Y mortgages are available for foreigners.

but forget all ROI what some broker friends suggest. for starters... anybody mentioning "Detroit" as a possible investment is a crook! and as far as Florida is concerned do a little maths. why should anybody with an average credit score pay rent when he can get a mortgage, buy and pay not a single penny more than rent but building up equity.

p.s. Florida has no state taxes, a (rather low) federal income tax applies. but you have to factor in property taxes which differ from county to county.

[chiang mai]

Oi, I like Detroit and I reckon it's a solid long term investment, smart money is going long on Detroit real estate.

[Cambodger]

There was a good report on Topgear last night about UK car manufacturing, Its was the usual chest thumping bravado from Clarkson but impressive none the less and worth checking out if you have access to iplayer.

This article is a brief summary of the piece, but doesn't really do it justice.

http://realbusiness.co.uk/article/22618-top-gear-is-right-uk-manufacturing-isnt-dead

It just confirms what i've always thought, that there's much more going on in uk than people realise or give it credit for with lots of high end innovation/ research and development.

Manufacturing might only be 10% as a apposed to Thailand 50% but the economy is 5 times bigger and really shows how diverse the economy is.

The Uk is still one of the biggest strongest and most stable economies in the world, it would be foolish to write it off as a lost cause.

[yoshiwara]

There was a good report on Topgear last night about UK car manufacturing, Its was the usual chest thumping bravado from Clarkson but impressive none the less and worth checking out if you have access to iplayer.

This article is a brief summary of the piece, but doesn't really do it justice.

http://realbusiness.co.uk/article/22618-top-gear-is-right-uk-manufacturing-isnt-dead

It just confirms what i've always thought, that there's much more going on in uk than people realise or give it credit for with lots of high end innovation/ research and development.

Manufacturing might only be 10% as a apposed to Thailand 50% but the economy is 5 times bigger and really shows how diverse the economy is.

The Uk is still one of the biggest strongest and most stable economies in the world, it would be foolish to write it off as a lost cause.

Clarkson can be a bit of an oaf as per his attempt to discredit the Tesla car. Elon Musk was not amused at all at the attempted demolition job.

[farang000999]

Why would you go long Detroit? Detroit is a right-to-work state now which is Spanish for No-More-New-Unions.

The population is 85% black and many areas 99% black. Good luck with the gentrification! Many of the streets have units that have been burned down and/or just left to decay. If you call the police, they come next week!

The highlight of Detroit is the beautiful weather and pretending that you are in an episode of The Walking Dead.

What jobs or industry is coming to Detroit? You might as well invest in Fukoshima farm land.

Edited August 5, 2013 by farang000999

[chiang mai]

Why would you go long Detroit? Detroit is a right-to-work state now which is Spanish for No-More-New-Unions.

The population is 85% black and many areas 99% black. Good luck with the gentrification! Many of the streets have units that have been burned down and/or just left to decay. If you call the police, they come next week!

The highlight of Detroit is the beautiful weather and pretending that you are in an episode of The Walking Dead.

What jobs or industry is coming to Detroit? You might as well invest in Fukoshima farm land.

Many of the same reasons that made Detroit what it was exist today, seabound access via the Great Lakes, close proximity to and good access to Windsor, Canada, good infrastructure (roads/rail/air) and proximity to the steel manufacturing centres of Toledo and Pittsburgh - there is also an imediatley available work force and the city infrastucture remains intact, albeit unused, an added advantage today is that it's all available especially cheap.

It's not well understood that Detroit is a doughnot city that is hollow in the centre, but it's been that way increasingly since the mid 1970's. But the important part is that surrounding Detroit on three sides are some very propserous, predominently white suburbs and the professional workers who live there would love nothing more than to return to a viabrant city to work once again.

I read a report recently that said the big money speculators had moved into the centre and were buying up the business buildings very cheaply, that I think is very smart investment money and in the next ten to twenty years as Detroit reinvents itself, those investments will pay off handsomely.

[mccw]

A great story:)

""""

A Russian man who decided to write his own small print in a credit card contract has had his changes upheld in court. He's now suing the country's leading online bank for more than 24 million rubles ($727,000) in compensation.

42-year old Dmitry Alekseev from the city of Voronezh received an unsolicited offer for a credit card from Tinkoff Credit Systems in 2008. Unlike thousands of people around the world every day, Dmitry didn't throw it in the rubbish, but altered the terms and conditions in his favour and signed the agreement.

"He received the documents, but didnt like the conditions: neither interest, nor hidden fees, nor penalties. He just changed what he didnt agree with, business daily Kommersant quotes Alekseevs lawyer Dmitry Mikhalevich.

Alekseev opted for 0% interest rate and no fees, adding that the customer "is not obliged to pay any fees and charges imposed by bank tariffs."

He also changed the URL of the site where the terms and conditions were published from www.tcsbank.ru to tcsbank .at.ua. He also hedged against the banks breaking the agreement. For each unilateral change in the terms provided in the agreement, the bank would be asked to pay the customer (Alekseev) 3 million rubles ($91,000), or a cancellation fee of 6 million rubles ($182,000).

Alekseev then sent his updated agreement to Tinkoff bank, and shortly thereafter received the bank's signed and certified copy, as well as a credit card. Under the agreement, the bank agreed to lend the customer any desired sum, according to Mikhalevich.

"The opened credit line was unlimited. He could afford to buy an island somewhere in Malaysia, and the bank would have to pay for it by law," Mikhalevich added.

However, after two years of active use, the bank decided to terminate Mr. Alexeev's credit card in 2010 because of overdue payments. In 2012, the bank sued Alekseev for 45,000 roubles ($1,363) - an amount that included the remaining balance, fees, and late payment charges, which violated the actual agreement. The court decided that the agreement Alekseev crafted was valid, and required him to settle only his balance of 19,000 rubles ($575).

The bankers had to admit the mistake, says Alekseevs representative Dmitry Mikhalevich.

"They signed the documents without looking. They said what usually their borrowers say in court:" We have not read it, says Mikhalevich.

Despite the victory, Alexeev decided to sue Tinkoff Credit Systems for fines of 24 million rubles ($727,000) for not honoring the terms of the agreement, and the decision to terminate the contract without paying 6 million rubles ($182,000) fee.

The next hearing will be held in September

""

-RT app

[farang000999]

Why would you go long Detroit? Detroit is a right-to-work state now which is Spanish for No-More-New-Unions.

The population is 85% black and many areas 99% black. Good luck with the gentrification! Many of the streets have units that have been burned down and/or just left to decay. If you call the police, they come next week!

The highlight of Detroit is the beautiful weather and pretending that you are in an episode of The Walking Dead.

What jobs or industry is coming to Detroit? You might as well invest in Fukoshima farm land.

Many of the same reasons that made Detroit what it was exist today, seabound access via the Great Lakes, close proximity to and good access to Windsor, Canada, good infrastructure (roads/rail/air) and proximity to the steel manufacturing centres of Toledo and Pittsburgh - there is also an imediatley available work force and the city infrastucture remains intact, albeit unused, an added advantage today is that it's all available especially cheap.

It's not well understood that Detroit is a doughnot city that is hollow in the centre, but it's been that way increasingly since the mid 1970's. But the important part is that surrounding Detroit on three sides are some very propserous, predominently white suburbs and the professional workers who live there would love nothing more than to return to a viabrant city to work once again.

I read a report recently that said the big money speculators had moved into the centre and were buying up the business buildings very cheaply, that I think is very smart investment money and in the next ten to twenty years as Detroit reinvents itself, those investments will pay off handsomely.

It is a right-to-work state. Those old white people living in the suburbs and working at Walmart can hope all they want to return to work again but it is never going to happen and if it does it would be a for a fraction of the salary/benefits. The old union days are over. This is the new America. The growth industries are technology and energy. Robots are doing the heavy lifting in manufacturing now. All sorts of things can happen in ten to twenty years. Personally, I would rather buy in Florida if I had to buy somewhere. It is cheap as hell. Baby boomers are retiring. And when immigration gets more liberalized, Latin America will pour into Florida as it is so close to Central/South America. Detroit population just keeps shrinking and I see no reason why it would stop. That infrastructure can't be so hot the city has 1/3rd of the people it did 50 years ago... Yeah "unused" is putting it lightly.

Edited August 8, 2013 by farang000999

[chiang mai]

Why would you go long Detroit? Detroit is a right-to-work state now which is Spanish for No-More-New-Unions.

The population is 85% black and many areas 99% black. Good luck with the gentrification! Many of the streets have units that have been burned down and/or just left to decay. If you call the police, they come next week!

The highlight of Detroit is the beautiful weather and pretending that you are in an episode of The Walking Dead.

What jobs or industry is coming to Detroit? You might as well invest in Fukoshima farm land.

Many of the same reasons that made Detroit what it was exist today, seabound access via the Great Lakes, close proximity to and good access to Windsor, Canada, good infrastructure (roads/rail/air) and proximity to the steel manufacturing centres of Toledo and Pittsburgh - there is also an imediatley available work force and the city infrastucture remains intact, albeit unused, an added advantage today is that it's all available especially cheap.

It's not well understood that Detroit is a doughnot city that is hollow in the centre, but it's been that way increasingly since the mid 1970's. But the important part is that surrounding Detroit on three sides are some very propserous, predominently white suburbs and the professional workers who live there would love nothing more than to return to a viabrant city to work once again.

I read a report recently that said the big money speculators had moved into the centre and were buying up the business buildings very cheaply, that I think is very smart investment money and in the next ten to twenty years as Detroit reinvents itself, those investments will pay off handsomely.

It is a right-to-work state. Those old white people living in the suburbs and working at Walmart can hope all they want to return to work again but it is never going to happen and if it does it would be a for a fraction of the salary/benefits. The old union days are over. This is the new America. The growth industries are technology and energy. All sorts of things can happen in ten to twenty years.

Personally, I would rather buy in Florida. It is cheap as hell. Baby boomers are retiring. And when immigration gets more liberalized, Latin America will pour into Florida as it is so close to Central/South America.

Detroit population just keeps shrinking and I see no reason why it would stop.

That infrastructure can't be so hot the city has 1/3rd of the people it did 50 years ago... Yeah "unused" is putting it lightly.

We were talking at cross purposes, I was not looking at Detroit as somewhere I would personally make an investment, in that context I agree that Florida presents better opportunities. But I still believe that Detroit has a future and for big money speculators/business I think it's sound.

[mccw]

Why would you go long Detroit? Detroit is a right-to-work state now which is Spanish for No-More-New-Unions.

The population is 85% black and many areas 99% black. Good luck with the gentrification! Many of the streets have units that have been burned down and/or just left to decay. If you call the police, they come next week!

The highlight of Detroit is the beautiful weather and pretending that you are in an episode of The Walking Dead.

What jobs or industry is coming to Detroit? You might as well invest in Fukoshima farm land.

Many of the same reasons that made Detroit what it was exist today, seabound access via the Great Lakes, close proximity to and good access to Windsor, Canada, good infrastructure (roads/rail/air) and proximity to the steel manufacturing centres of Toledo and Pittsburgh - there is also an imediatley available work force and the city infrastucture remains intact, albeit unused, an added advantage today is that it's all available especially cheap.

It's not well understood that Detroit is a doughnot city that is hollow in the centre, but it's been that way increasingly since the mid 1970's. But the important part is that surrounding Detroit on three sides are some very propserous, predominently white suburbs and the professional workers who live there would love nothing more than to return to a viabrant city to work once again.

I read a report recently that said the big money speculators had moved into the centre and were buying up the business buildings very cheaply, that I think is very smart investment money and in the next ten to twenty years as Detroit reinvents itself, those investments will pay off handsomely.

It is a right-to-work state. Those old white people living in the suburbs and working at Walmart can hope all they want to return to work again but it is never going to happen and if it does it would be a for a fraction of the salary/benefits. The old union days are over. This is the new America. The growth industries are technology and energy. All sorts of things can happen in ten to twenty years.

Personally, I would rather buy in Florida. It is cheap as hell. Baby boomers are retiring. And when immigration gets more liberalized, Latin America will pour into Florida as it is so close to Central/South America.

Detroit population just keeps shrinking and I see no reason why it would stop.

That infrastructure can't be so hot the city has 1/3rd of the people it did 50 years ago... Yeah "unused" is putting it lightly.

We were talking at cross purposes, I was not looking at Detroit as somewhere I would personally make an investment, in that context I agree that Florida presents better opportunities. But I still believe that Detroit has a future and for big money speculators/business I think it's sound.

How about LA?

I see seen several multi family / apartment buildings going for around $800,000 to 1,200,000 at a around 7-8% net yield/ after running costs but before taxes. Not bad if can fix a 30year loan at 4or 5%?. 20% money down?

Second biggest economic zone in the country after NY I read. One of the biggest in the world. Plenty of jobs and renters. I've never been though.

Direct flight from bkk I think.

How does one get to Florida if one needs to?

Something like this can be trusting agents / managers to take care of properly and as investor/ owner just see the money come in? Or you think safer to buy just a couple nice apartments do you think? My feeling generally where ever the country its nice to actually own land and building on it rather than just a piece of sky + then liable for others charges fees and nieghbours out of control/ I like to be able to deal with any problem rather than be reliant on petitioning others to do something.