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| 4/3 |
| 2010/8/12-9/7 [Finance/Investment] UID:53923 Activity:nil |
8/12 Holy crap. Feds will monitize the debt. Say goodbye to the dollar.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajcLVDMwN5To
\_ http://en.wikipedia.org/wiki/Amero
\_ Would Canada and Mexico want to devalue their currency by
being associated with us?
\_ "This has all happened before, and it will happen again."
http://en.wikipedia.org/wiki/Wörgl#The_W.C3.B6rgl_Experiment
(Adoption of local currency with penalties to hoarders
stimulated job growth in a Depression)
\_ I for one welcome our new Chinese overlords!
\_ China has its own problems with its housing ponzi collapsing:
http://csua.org/u/rcz
\_ source is biased towards bad news. (not saying wrong,
just biased). Not sure how good of an indicator
Earnings to Sales price is for China since income there
is likely to be dramatically understated. Quickly
scanning, I didn't notice if there were rental to price
ratios. (Did you see any?). -crebbs
\_ Yawn, old news. Literally.
\_ I <3 how nobody comments on the documented solution to the
problem (the borgl experiment). |
| 4/3 |
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| www.bloomberg.com/apps/news?pid=newsarchive&sid=ajcLVDMwN5To Ben S Bernanke said he has "obviously limited" room to lower interest rates further and may use less conventional policies, such as buying Treasury securities, to revive the economy. The US economy "will probably remain weak for a time," even if the credit crisis eases, Bernanke said today in a speech in Austin, Texas. While the Fed can't push interest rates below zero, "the second arrow in the Federal Reserve's quiver -- the provision of liquidity -- remains effective," he said. Bernanke's comments pushed Treasury yields to record lows. "Although further reductions from the current federal funds rate target of 1 percent are certainly feasible, at this point the scope for using conventional interest-rate policies to support the economy is obviously limited," Bernanke said in remarks to the Austin Chamber of Commerce. One option is for the Fed to buy "longer-term Treasury or agency securities on the open market in substantial quantities," Bernanke said. "This approach might influence the yields on these securities, thus helping to spur aggregate demand." Treasury prices rose on Bernanke's remarks, with yields on 10-year Treasuries tumbling 25 basis points to a record low of 267 percent at 2:31 pm in New York, according to BGCantor Market Data. The yield was the lowest since daily Fed records started in 1962 and the least since 1955 as measured on a monthly basis. New Credit Programs Last week, the Fed announced two new programs aimed at unfreezing credit for homebuyers, consumers and small businesses. Those include a commitment to buy as much as $600 billion of debt issued or backed by government-chartered housing-finance companies and a $200 billion initiative to support consumer and small-business loans. "It is encouraging that the announcement of that action was met by a fall in mortgage interest rates," Bernanke said of the Fed's decision to buy housing debt. Brian Sack, Washington-based senior economist at Macroeconomic Advisers LLC. He predicts the Fed will lower its main interest rate to zero next month. Pretty Aggressive' While Bernanke was "pretty aggressive on the possibility of the Fed using its balance sheet aggressively through Treasury purchases," he wasn't specific about the policy path because he probably didn't want to preempt the discussion at the FOMC meeting in two weeks, said Sack, a former Fed economist. The Fed will "continue to explore ways" to keep the market federal funds rate closer to policy makers' target, after paying 1 percent interest on banks' reserves failed to stabilize the rate, Bernanke said. The average daily rate has been below the central bank's target every day since Oct. Freddie Mac, which are "large suppliers of funds," aren't eligible to get interest from the Fed and thus lend below the Fed's target, Bernanke said. Distressed Assets The Fed also aided the rescue of Citigroup Inc. last week by agreeing to backstop a $306 billion pool of distressed assets after the company, the Treasury and the Federal Deposit Insurance Corp. Since then, authorities have gained the tools to "address any similar situation that might arise in the future." Bernanke noted that the funds to aid Citigroup came from the $700 billion financial rescue passed by Congress in October. recession in December 2007, the panel that dates American business cycles declared today. The National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts, said the economy was last in a recession from March through November 2001. "Our nation's economic policy must vigorously address the substantial risks to financial stability and economic growth that we face," Bernanke said. Sustainable Level' The Fed's balance sheet "will eventually have to be brought back to a more sustainable level," Bernanke said. for now, the goal of policy must be to support financial markets and the economy." Even so, Bernanke, a scholar of the Great Depression, said in a response to an audience question that there is "no comparison" between today's situation and the 1930s. Back then, the Fed kept monetary policy too tight and failed to keep banks from collapsing, Bernanke said. A private report earlier today showed manufacturing in the US contracted in November at the fastest pace in 26 years, putting American factories at the forefront of the global industrial slump resulting from the lack of credit. A reading of 50 is the dividing line between expansion and contraction. Similar measures from China, the UK, euro area, and Russia all dropped to record lows. That would be the worst month since October 2001, during the last recession. |
| en.wikipedia.org/wiki/Amero The same authors also stated that Canada's GDP could rise by up to 33 percent in a 20-year period given the adoption of a single currency. The idea of a common currency has historically been unpopular in English-speaking Canada, in comparison to the French-speaking province of Quebec where it has received more support. Ecuador officially adopted the US dollar as its sole currency. In a few areas of Canada, the US dollar can be accepted as currency alongside the Canadian Dollar, particularly in areas near border crossings. Jim Flaherty, finance officials concluded: "A North American common currency would undoubtedly mean for Canada the adoption of the US dollar and US monetary policy. edit Trade-offs From the point of view of the Canadian and Mexican governments, a major obstacle to the creation of a unified currency is the sheer dominance of the United States in any such union, unlike any single country in the EU. Therefore, even if the amero were used just as much as the US dollar, the advantages would be shared among two or more countries, and not exclusively earned by the United States. This is a clear advantage for Canadians and it would not be reflected if the currencies were to merge. The importance of commodities also factors into this equation. A concern with any unified North American currency is the differing economic situations between each country. public spending (compared to the United States), high taxes and wealth being created by the sale of goods and services. North America on the other hand has three distinct economies; Concerning his amero designs, he mentions on his website: My goal with these coins is not to endorse a Union of North America or a common Amero currency. United States Constitution, and I would not welcome (in any form) a diminishment of its provisions. I expect that these coins will help make more people aware of the issue and the possible ramifications. I leave it up to others to decide if they are in favor of, or against a North American Union. Unauthorized postings of images taken from his website have been reposted widely across the Internet, often being used as supposed "proof" of the amero coinage. In October 2008, Hal Turner released a video showing an apparent 20 amero coin, with claims that shipments of the currency had been sent to China. Yet the coin in Hal Turner's video is identical to a medallion on Daniel Carr's "dc-coin" website, listed as "UNA 2007 20 Ameros, Copper, Satin Finish". edit Amero bills On December 3, 2008, Hal Turner's blog featured what he claimed were genuine "amero bills". He displayed photographs of purported 20, 50, and 100 amero notes. Turner did not identify how he obtained the images, saying only that "once again, my sources have come through". "No Small Change: The Awkward Economics and Politics of North American Monetary Integration". CD Howe Institute Commentary: The Border Papers, Toronto, Ontario (CD Howe Institute) 29. |
| en.wikipedia.org/wiki/Wörgl#The_W.C3.B6rgl_Experiment employment and meant that local government projects such as new houses, a reservoir, a ski jump and a bridge could all be completed, seeming to defy the depression in the rest of the country. milestones were placed, beginning from the railroad station through the downtown, to show this history, on top of questioning the authenticity of never-ending exponential growth triggered by the compound interest. |
| csua.org/u/rcz -> globaleconomicanalysis.blogspot.com/2010/07/ponzi-shark-loans-fuel-chinas-housing.html Bubble Busts in Tianjin China's property bubble is now on the verge of collapse. Transaction volumes are significantly down and declining volume is how property bubbles always burst. In simple terms, the pool of greater fools eventually runs out. In China's case, the pool of fools is heavily involved in "loan shark" schemes where speculators hope property values rise fast enough to cover the interest. The Secret Engine Behind China's Housing Bubble- The Ponzi Shark Loan Finance In this article we will show how the ponzi shark loan scheme works and why we think the regime in China will fall. the government to produce double digit GDP growth numbers, give real estate developers permits to build housing projects in return for bribes. They also get bribes in return for allowing the shark loan companies to operate under their jurisdiction. Some of them are active partners in shark loan businesses. Every scheme has a ring leader whose job is to collect money from all the participants in the Ponzi scheme. When some of these Ponzi schemes blow up, the party leaders always get bailed out first. Most of the funds that are collected in this classic Ponzi finance go to local land purchases and real estate development. Part of the funds are used in order to pay back the rolling loan. The short term interest rate in this black market is very high and ranges between 20%-150% annual rate. The sources of the Ponzi funds are diverse, as ordinary citizens, banks with corrupted bank officials, and state enterprises play the game. A reader wrote to us this email two weeks ago, which triggered our in depth research: "My hometown is Zhejiang, now I live in shanghai, my sister pledged her home to bank, she lived in Hangzhou, she bought her home around 500,0000rmb five years ago, now her home worth 2 million RMB, so she can get huge loan from bank, she gave this loan to a shark loan company with 30% return every year, she has been doing and living on this for 4 years, she is a middle school teacher, she earned 4000rmb per month, but with this lending arrangement, she has been able to buy a car, the interest income is 6 times of her salary, One of my cousin's father lost all his principle of 4 million since one scheme blow up in 2008. Fractional Reserve Lending On Steroids I got that story and link from someone in China who has been attempting to get me to post it. Inside China: A Sculptor's View) and asked him what he knows about "loan sharking". Bill is married to a Chinese and lives in China part-time. It's not "loan shark" as in "I will break your legs if you don't repay". However, there are circles in neighborhoods, or churches, community groups that are kind of like informal credit unions. People pool money into a large sum and then bid for its use month by month. If you get sick, you must have cash or you die if you cannot pay immediately for care, for hospital, for medicine. You are literally wheeled out into the corridor to die if you don't have money for oxygen. There are no credit cards in peasant culture, but there is credit. Families lend, friends lend, and they all rely on each other for cash reserves. The ties of honor and reputation are all that enforce repayment. Many simply repay by "rolling the debt" borrowing more to pay the vig. The accumulated interest was greater than the principal she originally borrowed. Parents of lend to their children to buy their condo with the understanding it will be repaid or they will come to live in their old age under that roof. The down payment is typically borrowed at terrible interest or comes from a "marriage gift" which had its origin in borrowed funds, not from savings. Everyone works their ass off to pay the loan, pay the vig, and save their face so they can borrow more if needed. A collapse of the bubble could cost lots of folks their life savings. This makes the financial aspect of Chinese society much more fragile than it appears on the surface. There is a lot of interconnected personal debt below radar. Also I don't know how one would track "the money supply" in this setup. Beijing home prices rise to '22 times income levels' A typical Beijing flat costs about 22 times average incomes in the city, state media said Monday, highlighting the challenge China faces providing affordable housing amid a property boom. A 90-square-metre (968-square-foot) apartment in Beijing cost 16 million yuan (236,000 dollars) last year, the China Daily said, citing an independent report. That compared to an average household disposable income of around 71,000 yuan in 2009, according to city figures. Cooling Property Market Tests Beijing's Nerve It feels like the calm before the storm at the Heavenly Famous Garden housing complex in Tongzhou, a booming commuter town on the outskirts of Beijing. The showroom is empty and for the past two months not a single flat has been sold, yet prices have not budged. It is situations such as this that are testing the nerve of Chinese authorities as they try gradually to cool an economy that was at risk of overheating earlier in the year. Tongzhou is one of the more extreme examples of the recent property boom. The town, about 20 miles from Beijing, has become a popular option for middle-class families priced out of the capital. The local government has big ambitions - two years ago, it announced plans for a 500-metre tower, which would be 50 per cent bigger than the tallest building in Beijing. The Heavenly Famous Garden complex shows how quickly the market has run into a wall. Flats next to a new light railway to central Beijing were put on sale last summer and by this April prices had doubled to Rmb24,000 ($3,500, EUR2,700, 2,300) per square metre. Yet even though a third of the apartments were still unsold, there have been no buyers since the government announced its April clampdown. One of the country's biggest estate agents, 21st Century, opened an office in Tonghu Avenue in Tongzhou in early May Since then, it has sold a grand total of one flat, although the list prices on some buildings have slipped 15 per cent. Here is a second article highlighting demand falling off a cliff. In June the sales were 331,000 square meters, dropping 28% compared to May The sales of commercial residential housing in the first half of this year was 1257 million square meters. The sales in June was 115,000 square meters, a drop of 8% compared to May In June, the sales of residential housing in Xiamen's 4 mainland districts accounted for 72% of the total. Like hundreds of other local Chinese projects, Tianjin's construction is financed in part by land sales that are dropping as China's real-estate slump takes hold. Property sales slid at an annual 8 percent rate in June. Selling land produced 41 percent of Tianjin's income last year, according to China Index Academy, a Beijing real-estate research firm. Banks could "easily" be saddled with bad loans of more than $400 billion over the next two years, he said. "These local-government vehicles probably hope their projects will be able to service their debts," Walker said. "If they don't I doubt they'll worry about repaying the loans; they will just assume that somewhere else in government will have to take on the bad debt." After their success in propelling growth, local authorities are now faced with the consequences of Premier Wen Jiabao's crackdown on the real-estate bubble. Falling property sales risk an erosion of revenue accounting for as much as 30 percent of local budgets, according to Standard Chartered Bank. The China Se Shang Property Index has tumbled 42 percent in the past year, underperforming the 23 percent drop in the benchmark Shanghai Composite Index. Stephen Roach says China's Housing Boom is Not a Bubble; I say "Nonsense" The property boom in China isn't a bubble because it's supported by "solid" demand for residential housing, according to Stephen Roach, chairman of Morgan Stanley Asia Ltd. Ridiculously strong demand is a necessary requirement to produce a bubble. The second requirement is a price increase that exceed the ability of buyers to repay the loans or sell to the next "Greater Fool". In the US, home prices rose several st... |