Implode-Explode Heavy Industries news feed

Liquidity evaporates in China as 'fiscal cliff' nears

Thu, 05 Mar 2015 15:24:46 GMT

A budget squeeze is already emerging as the property slump drags on. Zhiwei Zhang says land revenues fell 21pc in the fourth quarter of last year. "The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown," he said.
...
New regulations came into force in January that prohibit local governments from raising money off-books. If enforced fully, this will tighten fiscal policy by 5.5pc of GDP this year, roughly five times the dose in austerity in the UK each year since the Lehman crisis. That is the sort of fiscal contraction imposed on Greece.
...
China cannot easily crank up monetary stimulus to cushion the fiscal shock because the "efficiency" of credit has collapsed. The economy is saturated. Extra growth generated by each extra yuan of loans has dropped from a ratio of 0.8 to 0.2 since 2008.
...
Global markets greeted the recent cuts in lending rates and the Reserve Requirement Ratio (RRR) as evidence that China is turning on the spigot once again. This is a misunderstanding. The RRR cut adds no net stimulus. It offsets monetary tightening that occurs automatically as the central bank dips into the country's €3.8 trillion foreign reserves to shore up the currency.
China is no longer buying US Treasuries and global bonds. It has become a net seller, stepping in to offset accelerating outflows of capital. The capital deficit reached a record $91bn in the fourth quarter.
...
Asia is "tapering" at a pace of $25bn a month. You could argue that this neutralises half the quantitative easing soon to come from the European Central Bank.... A country in China's predicament normally needs a devaluation, yet China has fixed the yuan - through a "dirty float" - to a soaring US dollar. The yuan has risen 60pc against the Japanese yen and 90pc against Brazil's real since mid-2012.

China's Real Estate Bust Worse Than It Seems

Fri, 27 Feb 2015 16:18:47 GMT

A record decline in new-home prices in January has, as my Bloomberg News colleagues reported this week, prompted Chinese officials to contemplate additional stimulus measures, including reducing the required down payments on second homes and eliminating sales tax after only two years of ownership instead of five.
...
"This is a supply-side correction in property," Yao writes in a new report. "While housing sales will likely improve this year, construction and all the industrial activity that depends on it will not. Therefore an upturn in housing sales will not deliver as much of a boost to growth."

Morgan Stanley to pay $2.6 billion to settle mortgage-bond claims

Thu, 26 Feb 2015 02:26:09 GMT

``Morgan Stanley said it will pay $2.6 billion to the U.S. government to resolve potential claims stemming from the sale of mortgage bonds before the financial crisis, reducing its 2014 profit by more than half.''

Sales of U.S. existing homes decrease to nine-month low

Mon, 23 Feb 2015 20:36:44 GMT

Purchases slowed 4.9 percent to a 4.82 million annualized rate, the least since April, after a 5.07 million pace that was higher than previously estimated, figures from the National Association of Realtors showed Monday in Washington. The median forecast of 74 economists in a Bloomberg survey called for a fall to 4.95 million.
The number of houses on the market dropped in January for a second straight month compared with last year and price increases were broad-based, making it difficult for first-time and younger buyers to get into the market. Gains in employment and historically low mortgage rates will probably sustain demand, while rising household formation and a shortage in rental supply should also provide a boost this year over last.

The People Want Tiny Houses. Zoning Boards, Not So Much

Mon, 23 Feb 2015 15:56:19 GMT

``Urban developer Eve Picker has cast her eye towards Pittsburgh as a home for the next, great tiny house villa, and so far, the zoning board has been less than welcoming. Via CBS Pittsburgh... ''

As Goes California's Housing Market, So Will Go the Nation's | Mandelman Matters

Fri, 20 Feb 2015 18:55:58 GMT

``Regardless of what the mainstream media sycophants would have you believe, home sales volume and home prices in Southern California are falling... precipitously. As in... both volume and prices are going down. There are two things I would add to this fact: 1. It's not just happening here. 2. It should come as absolutely no surprise to anyone.''

China new home prices drop at record pace

Wed, 18 Feb 2015 19:32:27 GMT

``New home prices fell in 69 of 70 cities by an average of 5.1 percent from the year-ago period, according to Reuters calculations based on fresh data from the National Bureau of Statistics (NBS) on Tuesday... After skyrocketing in recent years, China's property prices have been cooling amid a glut of supply and as economic growth moderated.''

Renters Are Majority in Big U.S. Cities

Tue, 10 Feb 2015 14:12:02 GMT

``Renters made up the majority of the population in cities at the core of nine of the nation's 11 largest metro areas in 2013, a sharp change from 2006, when renters were the majority in just five of those cities, according to a new report... the report, scheduled to be released Monday by New York University's Furman Center and Capital One Financial Corp. , found a significant shift in the proportion of renters in all major cities--even in lower-density, relatively inexpensive places such as Houston and Dallas.''

The Canadian Housing Market In 6 Simple Charts

Tue, 10 Feb 2015 13:21:52 GMT

``Home prices in Vancouver are more expensive than they are in Sydney, London, and New York...''

The Sad Chart of U.S. Home-Ownership

Wed, 04 Feb 2015 22:38:33 GMT

``... if the economy really has been getting better, why does the homeownership rate keep going down? Yes, the ultra-wealthy have received a temporary financial windfall thanks to the reckless money printing the Federal Reserve has been doing, but for most Americans economic conditions have not been improving. ''

Seven Consecutive Downward Revisions To New Home Sales Data Place Serious Doubts On Report Accuracy

Wed, 28 Jan 2015 15:54:25 GMT

``Putting today's "highest in 7 years" new home sales print in context: consider that in May 2014 the same data series was originally reported at 504K... only to be revised to 458K!''

Gary Shilling: Nothing Is Going to Save the Housing Market

Tue, 27 Jan 2015 15:16:17 GMT

``... robust foreign purchases can't overcome what ails the U.S. housing market. Activity is weak even now that banks are no longer tightening mortgage-lending standards, according to a Fed survey. ''

‘Twas the Night Before Christmas -- 2014 (A Political & Social Year-in-Review) | Mandelman Matters

Tue, 20 Jan 2015 13:51:30 GMT

``So... I'm back to Mandelman Matters, I hope you see that as good news... and below is my annual ‘Twas the Night Before Christmas -- A Political & Social Year-in-Review... and I hope you're happy about that as well.''

Homebuilders undergo Wall Street deconstruction

Wed, 14 Jan 2015 15:56:53 GMT

``Wall Street took the claw and hammer to home builders Tuesday after KB Home KBH reported lower-than-expected fourth-quarter earnings and said profit margins would lag in 2015... Although KB had a backlog of more than 2,900 orders at the end of the quarter, CEO Jeff Mezger told analysts in a conference call that sales were soft in Texas and California markets and overall profit margins could drop significantly.''

Chinese Real-Estate Default Rocks Junk Bonds

Sat, 10 Jan 2015 03:25:51 GMT

``The Chinese real-estate developer Kaisa Group Holdings had a healthy balance sheet, according to investors and observers alike. It was the top-rated residential-property-sales firm in the city of Shenzhen, in the first half of 2014. It was known for fast, reliable work. But on Thursday, Kaisa appeared to become the first Chinese development firm to default on offshore debt, missing a $128 million interest payment on $500 million of debt to foreign investors. ''

Bill Black: Mortgage Appraisal Fraud is Baaack... Because Bank Execs Profit From It

Thu, 08 Jan 2015 18:39:07 GMT

``The WSJ... tries to make it appear that the ever-so-honest managers are paragons of virtue who first create compensation systems that create overwhelming incentives that produce endemic loan origination fraud by loan officers -- and then strive mightily to limit the resultant endemic fraud that they caused.''

Obama Said to Announce Cut in FHA Mortgage Insurance Premiums

Wed, 07 Jan 2015 16:23:19 GMT

``The annual fees the agency charges to guarantee mortgages will be cut by 0.5 percentage points, said two of the people, who asked not to be identified because the White House hasn't yet made the announcement. The FHA has been increasing premiums since 2011 to offset losses caused by defaults on mortgages it backed after the housing bubble burst. Housing industry participants have said the increases in annual fees, which are now at 1.35 percent of the loan balance, are squeezing first-time homebuyers out of the market. The annual fees were just 0.55 percent in 2011, before the increases.'' -- It's too bad FHA was so irresponsible for so long, necessitating the fee rises on innocent new borrowers in recent years...

Apartment glut may tame rising rents

Wed, 07 Jan 2015 16:21:41 GMT

``While there will likely be "robust demand" in 2015 from renters -- and young adults, in particular -- builders have already started and plan to start enough new apartment projects that the days of excess demand may soon be over, said Ryan Severino, senior economist at Reis, a New York-based research firm focused on commercial real estate.''

US Home Price Growth Slows for 11th Consecutive Month

Wed, 31 Dec 2014 17:34:36 GMT

``The slowdown in price growth comes after surging double-digit increases for much of 2013. Home values climbed as the market recovered from bottoming out in 2011 in the aftermath of the housing bust and the Great Recession. But home prices have outpaced lackluster wage growth, leaving many potential buyers unable to afford homes and causing both sales and price growth to stall this year.''

The Housing Recovery Remains Cancelled Due To 6 Months Of Downward Revisions

Wed, 24 Dec 2014 16:03:24 GMT

``Revisions, simply put, slash 22% off the previously released home sales data!!!''