Empiric Student Property Share Discussion Threads

[briarberry] 27/3/2010 10:51

March 27 (Bloomberg) -- China's banking regulator ordered lenders to take more care when making real-estate loans, widening efforts to prevent property speculators from causing asset bubbles and bad debt.

Banks should not lend to developers found by state agencies to have held land without building houses, the government said in a statement posted online yesterday evening. They should also stop approving new lines of credit to 78 government-controlled companies whose core business isn't property development if they use collateral other than construction projects already in progress, the statement said.

China's property prices rose 10.7 percent last month, the fastest pace in almost two years, fueling concern that record lending and inflows of capital from abroad are creating asset bubbles in the world's third-biggest economy. The government this month raised deposit requirements for buyers at land auctions to 20 percent of the minimum price to raise costs for developers. It also lifted banks' reserve requirements twice this year and re-imposed a tax on home sales.



China's local government...

March 13 (Bloomberg) -- China may be forced to bail out banks that made loans for local-government projects under the unprecedented stimulus program unleashed in 2008, according to Citigroup Inc. and Northwestern University's Victor Shih.


How to get a $295m loan from a Chinese bank:
1. Be a local government investment vehicle, or own one.

[briarberry] 26/3/2010 18:26

If China has a trade deficit then they will have no need to buy US Treasuries (A number of posters pointing this out)...


BEIJING - The country will probably see a "record trade deficit" in March thanks to surging imports, Minister of Commerce Chen Deming said on Sunday

A trade deficit in March - would be the first since May 2004.

[briarberry] 26/3/2010 17:34

Social Security to See Payout Exceed Pay-In This Year

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

[briarberry] 25/3/2010 23:45

UKs bailout/stimulus bubble projected to double by 2014-15...


Budget 2010: Labour is stealing from our children's future to buy votes

Yes, according to the Treasury's forecasts, the United Kingdom will nearly double its indebtedness from £776 billion (in 2009-10) to £1.4 trillion (in 2014-15). Even in Gordon Brown's devalued, debased and degraded system of accounting, that is still a poleaxing sum, equal to about one year's national output.

It gets worse, because this unprecedented and unimaginable debt projection is based on Alistair Darling's optimistic assumption that, from 2010-11, the UK's economic growth will bounce back to 3-3.5 per cent, well above long-term trend.

[briarberry] 25/3/2010 23:41

Ten ways to spot a bubble in China

[briarberry] 24/3/2010 19:32

Japanese bailout/stimulus bubble still growing...


Japan Passes $1 Trillion Budget to Boost Economy
By HIROKO TABUCHI

TOKYO - The Japanese government pushed a record ¥92.3 trillion budget through Parliament Wednesday aimed at stimulating growth in the long-stagnant economy - another round of spending that will add to Tokyo's already burgeoning public debt.

...
The record budget, worth $1 trillion, for the fiscal year starting in April will pay for Prime Minister Yukio Hatoyama's ambitious stimulus agenda, including cash handouts to households with young children, free tuition at public high schools and income support for farmers.

...
But some economists worry about runaway government spending in Japan, which is already saddled with a public debt twice the size of its economy - the worst ratio among industrialized countries. The government said it would issue a record ¥44 trillion in bonds to finance the budget for next year and cover for a sharp shortfall in tax revenue.

[briarberry] 24/3/2010 17:18

US rates - whats going on ??

+7%

Ben Banky will have to do something ???

...
NEW YORK -- The Treasury Department sold $42 billion in 5-year notes
Indirect bidders -- a class of investors that includes foreign central banks -- bought 39.6% of the offering, compared to an average of 49.6% of recent sales and the lowest since July.
...
PIMPCO's Bill Gross on CNBS saying health care bill will add 500 Bil to the deficit.

[briarberry] 24/3/2010 13:45

TNX - interesting candle, not sure if it means anything. Although it might be because the Treasury has been selling a lot of new debt



up 3%

(The Fed is ending MBS purchases soon too)

[briarberry] 17/3/2010 23:10

China's reserves - I thought this was interesting, althought I've not read it all yet (stolen from the gold fred)...


"History has not been kind to economies that have amassed such huge foreign currency reserves. According to Professor Pettis, author of China Financial Markets, there have been two prior periods in which a country has amassed such large foreign reserves; the United States in the 1920s and Japan in the 1980s.

The first time occurred in the late 1920s when, after a decade of record-beating trade and capital account surpluses, the United States had accumulated what John Maynard Keynes worriedly described as "all the bullion in the world". At the time, total reserves accumulated by the US were more than 5-6% of global GDP.

The second time occurred in the late 1980s, when it was Japan's turn to combine huge trade surpluses, along with more moderate surpluses on the capital account, to accumulate a stockpile of foreign reserves only a little less than the equivalent of 5-6% of global GDP."

(China's reserves are approaching 4% of World GDP)

[briarberry] 16/3/2010 13:02

Junk Bond Avalanche Looms for Credit Markets (2012)

"An avalanche is brewing in 2012 and beyond if companies don't get out in front of this," said Kevin Cassidy, a senior credit officer at Moody's.

Private equity firms and many nonfinancial companies were able to borrow on easy terms until the credit crisis hit in 2007, but not until 2012 does the long-delayed reckoning begin for a series of leveraged buyouts and other deals that preceded the crisis.

That is because the record number of bonds and loans that were issued to finance those transactions typically come due in five to seven years, said Diane Vazza, head of global fixed-income research at Standard & Poor's.

In addition, she said, many companies whose debt matured in 2009 and 2010 have been able to extend their loans, but the extra breathing room is only adding to the bill for 2012 and after.

The result is a potential financial doomsday, or what bond analysts call a maturity wall. From $21 billion due this year, junk bonds are set to mature at a rate of $155 billion in 2012, $212 billion in 2013 and $338 billion in 2014.

The credit markets have gradually returned to normal since the financial crisis, particularly in recent months, making more loans available to companies and signaling confidence in the pace of economic recovery. But the issue is whether they can absorb the coming surge in demand for credit.
.
.
The US Gov will still need lots of money too...

Chief among those is the best-rated borrower of all: the United States government. The Treasury Department estimates that the federal budget deficit in 2012 will total $974 billion, down from this year's $1.8 trillion, but still huge by historical standards.

Most critics of deficit spending have focused on the budget gap alone, but Washington will actually have to borrow $1.8 trillion in 2012, because $859 billion in old bonds will come due and have to be refinanced in addition to the deficit. By 2013 and 2014, $1.4 trillion will have to be raised annually.

[briarberry] 25/2/2010 16:32

US durable goods orders boosted by aircraft

Excluding transportation, orders for big-ticket manufactured goods unexpectedly fell, dropping by 0.6%.

[briarberry] 24/2/2010 18:49

Freddie Mac loses $7.8B in 4Q
By ALAN ZIBEL

WASHINGTON -- Freddie Mac lost almost $26 billion last year, ominous news for taxpayers who are footing the bill to rescue the mortgage finance company and its sibling Fannie Mae.

Freddie Mac which has lost a total of almost $80 billion since the housing crisis started in 2007, is bracing for more pain. The McLean, Va.-based company said a record 4 percent of its borrowers are at least three months behind on their payments and facing foreclosure. Its chief executive, Charles Haldeman, warned Wednesday of a "potential large wave of foreclosures" still to come.

This is a major problem for the federal government, which seized control Freddie and Fannie in September 2008. The two companies have already siphoned $111 billion from the government to stay afloat. That number is expected to hit $188 billion by fall 2011.

And while Freddie Mac didn't ask for any more bailout money last quarter, the company said it will likely need more financial aid and might never repay it.

"We now have unlimited taxpayer exposure to the bailout of Fannie and Freddie, a bailout nation where the big get bigger, the small get smaller and the taxpayer gets poorer," Rep. Jeb Hensarling, R-Texas, said at a House hearing Wednesday.

Fannie and Freddie dominate the mortgage market, backing about 70 percent of the loans made last year. Freddie Mac and Fannie Mae purchase mortgages from lenders and package them into a securities. Investors are willing to buy the securities because they are effectively guaranteed by U.S. government. That puts American taxpayers at risk

The Obama administration has pledged to cover unlimited losses.

[briarberry] 24/2/2010 13:56

Consumer confidence index

[briarberry] 23/2/2010 00:16

I keep watching the longterm trend in longterm rates and nothing ever seems to happen, maybe it will this year ??? Lots of peeps watching it...

[briarberry] 19/2/2010 13:32

not much in the CPI, although 2.6% is high considering rates are at 0%...


U.S. CPI up 2.6% in past year, core up 1.6%
U.S. Jan. CPI up 0.2% vs. 0.3% expected

[briarberry] 18/2/2010 21:55

CPI tomorrow, maybe it's going to be high ? who knows ? maybe import prices worried them...


Import Prices - Y/Y change +11.5 %
PPI - Y/Y change +5.0% (seasonally adjusted)

Treasury International Capital
A clear negative in the report is a major step backward in Chinese demand for U.S. Treasuries. Total Treasury holdings in mainland China fell $34.2 billion in the month to $755.4 billion, now behind holdings in Japan which rose $11.5 billion to $768.8 billion. China is a central customer of the U.S. Treasury and a decline here will raise talk of a buyer protest. Holdings in Japan and China together make up 42.2 percent of all foreign-owned Treasuries.

[briarberry] 18/2/2010 21:35

!!! Fed raises discount rate to 0.75% from .5% !!!

Treasury yields gain after Fed hikes discount rate

[briarberry] 08/2/2010 12:59

John Mauldin - Outside the Box

talks about

The Coming BioTech Bubble - By Patrick Cox

I think there is a potential for another bubble over the next decade. There will probably be several, but there is one I am particularly interested in and that is biotech, with an emphasis on stem cell and gene therapy and their allied kin. For reasons outlined by my friend Patrick Cox, writer of the newsletter Breakthrough Technology Alert, in today's Outside the Box, I think we are on the cusp of a decade of remarkable breakthroughs which will change the way we do medicine.

While some of these breakthroughs will come via large firms, others will be in smaller companies. Imagine cures for certain types of cancer. Rejuvenation of failing hearts? Livers? Genetic therapies for all types of diseases? The list of potential blockbuster therapies from current research is enormous and growing.

There are going to be some companies which will simply see their stocks explode. Of course, for everyone that has a large run, there will be failures which will go to zero. Or companies that seemingly have "the cure" only to have another company come along with something faster and cheaper, wrecking their share values. (Think of the dawn of the computer age and how many once high flying stocks went to zero. Biotech stocks are not bonds.)

But I think (personal belief here) that what will capture the imagination will be the large winners. Everyone will want to be in at the beginning of a new home run. As the decade goes along, we will see companies go public before they are really ready, just because they have a great story and people will want to fund that story.

It has the classic potential to become a bubble, because there is a deep reality - some substance to the stories of the winners - that will make people look for the next big winner. So far, we as humans have not proven ourselves able to resist bubbles. Maybe this will be the time we all become adults and there will be no bubble. Maybe. But my thought is that it will not be.
...


(lacks real details, no companies mentioned, just a big advert for a biotech newsletter)

[briarberry] 04/2/2010 21:21

The House sends $1.9 trillion debt-limit increase to Obama, which boosts the overall debt limit to $14.3 trillion.

[briarberry] 02/2/2010 23:38

GDP growth - over 60% (3.7%) of the growth came from inventory rebuilding...


The Statistical Recovery Has Arrived
Before we get into the main discussion point, let me briefly comment on today's GDP numbers, which came in at an amazingly strong 5.7% growth rate. While that is stronger than I thought it would be (I said 4-5%), there are reasons to be cautious before we sound the "all clear" bell.

First, over 60% (3.7%) of the growth came from inventory rebuilding, as opposed to just 0.7% in the third quarter. If you examine the numbers, you find that inventories had dropped below sales, so a buildup was needed. Increasing inventories add to GDP, while, counterintuitively, sales from inventory decrease GDP. Businesses are just adjusting to the New Normal level of sales. I expect further inventory build-up in the next two quarters, although not at this level, and then we level off the latter half of the year.

While rebuilding inventories is a very good thing, that growth will only continue if sales grow. Otherwise inventories will find the level of the New Normal and stop growing. And if you look at consumer spending in the data, you find that it actually declined in the 4th quarter, both annually and from the previous quarter. "Domestic demand" declined from 2.3% in the third quarter to only 1.7% in the fourth quarter. Part of that is clearly the absence of "Cash for Clunkers," but even so that is not a sign of economic strength.

Second, as my friend David Rosenberg pointed out, imports fell over the 4th quarter. Usually in a heavy inventory-rebuilding cycle, imports rise because a portion of the materials businesses need to build their own products comes from foreign sources. Thus the drop in imports is most unusual. Falling imports, which is a sign of economic retrenching, also increases the statistical GDP number.

Third, I have seen no analysis (yet) on the impact of the stimulus spending, but it was 90% of the growth in the third quarter, or a little less than 2%.

Fourth (and quoting David): "... if you believe the GDP data - remember, there are more revisions to come - then you de facto must be of the view that productivity growth is soaring at over a 6% annual rate. No doubt productivity is rising - just look at the never-ending slate of layoff announcements. But we came off a cycle with no technological advance and no capital deepening, so it is hard to believe that productivity at this time is growing at a pace that is four times the historical norm. Sorry, but we're not buyers of that view. In the fourth quarter, aggregate private hours worked contracted at a 0.5% annual rate and what we can tell you is that such a decline in labor input has never before, scanning over 50 years of data, coincided with a GDP headline this good.

"Normally, GDP growth is 1.7% when hours worked is this weak, and that is exactly the trend that was depicted this week in the release of the Chicago Fed's National Activity Index, which was widely ignored. On the flip side, when we have in the past seen GDP growth come in at or near a 5.7% annual rate, what is typical is that hours worked grows at a 3.7% rate. No matter how you slice it, the GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker - a few grains won't do."

Finally, remember that third-quarter GDP was revised downward by over 30%, from 3.5% to just 2.2% only 60 days later. (There is the first release, to be followed by revisions over the next two months.) The first release is based on a lot of estimates, otherwise known as guesswork. The fourth-quarter number is likely to be revised down as well.

Unemployment rose by several hundred thousand jobs in the fourth quarter, and if you look at some surveys, it approached 500,000. That is hardly consistent with a 5.7% growth rate. Further, sales taxes and income-tax receipts are still falling. As I said last year that it would be, this is a Statistical Recovery. When unemployment is rising, it is hard to talk of real recovery. Without the stimulus in the latter half of the year, growth would be much slower.

So should we, as Paul Krugman suggests, spend another trillion in stimulus if it helps growth? No, because, as I have written for a very long time, and will focus on in future weeks, increased deficits and rising debt-to-GDP is a long-term losing proposition. It simply puts off what will be a reckoning that will be even worse, with yet higher debt levels. You cannot borrow your way out of a debt crisis.



plus the inflation adjustment used was low...
GDP price index - Q/Q change - SAAR 0.6 %

[briarberry] 01/2/2010 15:03

Budget sees record $1.6 trillion deficit in 2010