Jtc Share Discussion Threads

[jtcod] 26/2/2018 15:08

I have been looking at the Japanese housing market to see if I could find a dynamic between low interest rates and property prices. Along the way I came across this article for last year. It's a fascinating read. https://www.globalpropertyguide.com/Asia/Japan/Price-History"The shrinking population is already producing a surplus of housing units. There are many sightings of abandoned homes in Tokyo. There are already an estimated 8.2 million unoccupied homes in the country, representing 13.5% of all residences,and up 24.4% from a decade ago, according to MLIT. Japan has a total of 60.63 million residences, 16% more than the total number of households of 52.45 million.However, declining household sizes may mitigate the situation. The average household size is projected to decline to 2.37 by 2025, from 2.67 in 2000, and 5.0 in 1950, according to the Ministry of Internal Affairs and Communication. More Japanese are living alone and fewer are living in multiple-generation households, increasing the demand for quality housing.In an effort to reduce the total number of abandoned homes, some abandoned houses and apartments are being put back on the market by the Ministry of Land, Infrastructure, Transport and Tourism, as part of its new 10-year national housing plan. The plan also proposes to offer some of these houses to low-income earners and families with children, and to replace aging condominiums.The government is also trying to stop the Japanese population shrinking:Childcare provision was boosted by the Act on Child and Childcare Support of August 2012.The Comprehensive Support System for Children and Child-rearing, introduced in April 2015, will promote early childhood school education, childcare and child-rearing support services in local communities.The government is expected to approve enhanced support for families with three or more children.Local governments are being encouraged to offer speed dating and other forms of matchmaking, and to support marriage, child-bearing and child-rearing.The government is expanding free nursery care.The government also plans to establish fertility treatment counselling centres in major cities.The government has also been discussing accepting more immigrants – a possible solution to maintain its population and counter its dwindling workforce."

[spittingbarrel] 26/2/2018 15:06

Thanks MT.

[mount teide] 26/2/2018 14:57

sb - its my poor English - what i was trying to say is that:

GBP is up 12% against Dollar
Euro is up 17% against Dollar

will edit accordingly to avoid misunderstanding.

[spittingbarrel] 26/2/2018 14:29

MT - You say GBP has strengthened 17% against the Euro in the last 14 months, according to ADVFN it has weakened by about 3%. Am I missing something?

[jtcod] 26/2/2018 13:49

I'm a fan of Bootle MT. I read his first two books. Hopefully our economy will have a smooth transition.It worries me though that many economists wax lyrical about the upcoming revolution in AI and the resultant spike in productivity that it will herald but I have yet to come across any well reasoned explanations as to how this actually equates to an improvement in living standards for the average Joe and how Governments and treasuries should be addressing it for the good of people. Our whole matrix of production, employment, taxation and distribution is built on the premise that employers employ people, pay tax for the privilege of employing them plus tax on the profits and the employed pay tax from their wages and again in VAT when they spend those wages. That economic model cannot possibly exist in this vision of an AI future not least because there is no incentive for companies to employ people beyond their absolute minimum needs. Given an alternative with no wages, employers tax contributions, no sick leave, maternity leave, pension, redundancy, Drink breaks, lunch times, expense accounts etc and they will cease to employ people quicker than a politician can grasp a photo opportunity with a baby.It's like everyone is partying in the ballrooms of an armada of ships celebrating tomorrow's good fortune whilst the captains have all fallen asleep on their respective bridges. Nobody is asking the question, let alone discussing it and making plans or actually doing something constructive to prepare for that new world.

[mount teide] 26/2/2018 12:44

Since Trump came to power in Jan 2017 the US Dollar Index DXY has declined close to 15% from circa 1.135 to 89.5.

DXY is a weighted geometric mean of the dollar's value relative to other select currencies:

Euro (EUR), 57.6% weight.
Japanese yen (JPY) 13.6% weight.
Pound sterling (GBP), 11.9% weight.
Canadian dollar (CAD), 9.1% weight.
Swedish krona (SEK), 4.2% weight.
Swiss franc (CHF) 3.6% weight.


The EU are terrified that the ECB's ongoing programme of QE will only have a short lived effect on growth and inflation as a result of the US approach since Trump took office, which they recently described as that of a currency manipulator and are threatening retaliation.

GBP and Euro has strengthened 12% and 17% respectively over last 14 months against $US.


The European Central Bank is constitutionally accountable to nobody and legally immune to democratic interference. Its staff, and it itself as a corporate body, are legally immune to criminal prosecution by any national legal system. The European Central Bank is the only central bank in the world which has no government behind it.

The ECB, along with the European Commission, is a component part of the unelected, undemocratic political / financial organisational basis of the United States Of Europe. Opposition to this was the main reason many people gave for voting to leave the EU.

[mount teide] 26/2/2018 11:47

Roger Bootle MD of Capital economics who was one of the few economists who correctly predicated a decade of ultra low interest rates following the 2008 financial crash sets out the economic argument for Brexit and leaving the Single Market and Customs Union.

[jtcod] 26/2/2018 08:41

BAThe problem is that the overall debt has also grown over the time along with other significant liabilities. In 1945 debt to GDP dropped fast. From 2008 it is still up there 10 years later and that only tells us a fraction of the liability story. I am looking for a reason to believe that the economy is vibrant enough to handle such a burden of debt and so far I am not confident it is vibrant enough to cope. I suspect the landscape needs to change first. We need to see a sustained rise in inflation.

[blusteradjuster] 26/2/2018 07:18

JTC,

Current U.K. GDP is around £2trn and growing (for now) about 4-5% per year.

Where debt is concerned, forget real GDP (which is just an inflation-adjusted growth figure anyway, it’s not an absolute) and instead think nominal GDP (growth or absolute).

[blusteradjuster] 26/2/2018 07:13

I suspect you’re making the (often made) mistake of using real GDP growth when you say the economy “hardly grew at all”.

For such calculations, inflation IS a factor - so nominal GDP growth should be used.

Nominal GDP has grown in the 4-5% range for the last 5 years I believe - so nominal GDP has grown about 25% in that period.



“During 2010 to 2015 while Public Sector Bank Debt went down by £0.9 Trillion, unfunded Public Sector and State Pension Debt went UP by a staggering £1.4 Trillion to £6.24 Trillion and Public Sector Net Debt by £0.53 Trillion to £1.48 Trillion - while the economy hardly grew at all!”

[maxk] 26/2/2018 00:14

No CK, you go to the back of the class.

Clue: It's not the gov who are lending the money, they are only guaranteeing it's repayment...plus interest.

That's you and me on the hook + the great british taxpayer.

[constable ken] 25/2/2018 23:44

"Circa £57,000 for 30 years @ 6.8%=£435,000, at which point the taxpayer has to pay this bill for every student who never earns enough to repay any of their loan."

If the government lends a student £57k and it doesn't get paid back the government is out £57k. Go to the back of the class. Moron.

[jtcod] 25/2/2018 17:03

There are so many areas of Taxpayer liability these days MT, the old measure of Debt/GDP is almost meaningless.

[mount teide] 25/2/2018 16:47

The Taxpayers Alliance Report makes worrying reading.

The only area of National Debt to have dropped since 2010 has been Public Sector Bank debt - down 76% from from £1.29 Trillion to £0.31 Trillion.

During 2010 to 2015 while Public Sector Bank Debt went down by £0.9 Trillion, unfunded Public Sector and State Pension Debt went UP by a staggering £1.4 Trillion to £6.24 Trillion and Public Sector Net Debt by £0.53 Trillion to £1.48 Trillion - while the economy hardly grew at all!

Austerity? What Austerity!

Change £Trillion to £Billion in the above report and if you did't know otherwise you could be excused for thinking these were the financial statements of a low growth, free spending African Banana Republic on a collision course with insolvency.

An incoming Corbyn Labour Party would surely compromise to help fix these problems before it’s too late, would't they?

The short answer is “No.” On the contrary, the threat of insolvency is something that Socialists welcome. They view it as a means to an end.

The key to understanding this dynamic is to recognise what Socialists want. They want government control over economic matters, and so they adopt their preferred strategy to further that goal - wholesale Nationalisation making the taxpayers responsible for their financial obligations.

Who are the real culprits for our present financial plight?

It’s very convenient to blame politicians for our fiscal shipwreck, but the bottom line is that a lot of the electorate want the government to do things for them, and so they vote for big spenders.

The reason so many Western Governments are broke is staring most of their electorate in the face whenever they look into a mirror.

[jtcod] 25/2/2018 16:28

ZhoYou are correct to point out the exchange rate effect as it is misleading but we really aren't growing GDP at any meaningful level and what happens when Brexit kicks in? There is no easy solution to dwarf this debt mountain unless inflation comes back in a big way.

[jtcod] 25/2/2018 16:07

Here is a chart.https://tradingeconomics.com/united-kingdom/gdp

[jtcod] 25/2/2018 16:05

Zho it was USD and so was the 2.6trillion now. Sorry for wrong symbol.

[zho] 25/2/2018 15:33

>>A contributing factor no doubt is that our GDP peaked at £3trillion in 2007>>

I seem to remember GDP being roughly £1.5 trillion 10 years ago so I wonder if you've taken a dollar figure (the exchange rate was roughly 2 dollars to the pound before slumping to $1.40ish post Lehman Bros).

[top tips] 25/2/2018 14:45

Immupharma (IMM) report Phase 3 Lupuzor results this month or next (Q1 2018).

Results from Phase 2b indicate it is more efficaceous, safer and faster acting than the only other competitor drug on the market, GSK's Benlysta.

Blockbuster multi-billion $ sales or a quick takeover are the prize.

[jtcod] 25/2/2018 13:40

It’s funny where research can take you some times. This morning I started by trying to nail down the true level of debt and liability that UK tax payers are faced with. I wanted to compare it to the 235% all-time peak debt/gdp ratio reached in 1945. It’s been an interesting, though as yet incomplete exercise but this 2015 report put some meat on the bones.
hxxps://d3n8a8pro7vhmx.cloudfront.net/taxpayersalliance/pages/5508/attachments/original/1434447400/Real_National_Debt.pdf?1434447400
As you will see from the chart Unfunded State Pensions were over £4trillion and represented the lions share of liabilities. The overall total is beyond 450% against current GDP of £1.85trillion.

That USP figure comes from an ONS report of 2014 btw. The next update from the ONS will be this year, though no specific date has been given for its release.

This chart shows peak Debt/GDP in 1945.
hxxps://www.ukpublicspending.co.uk/spending_chart_1900_2017UKp_17c1li111tcn_G0t_UK_National_Debt_since_1900

Note how fast this figure fell after the war. It got me thinking about the drivers for this ability to reduce the burden. Especially as after the financial crises in 2008 we are in a worse state 10years later.

(Edited above para due to inadvertently quoting USD figures.)

I got to thinking along the lines of population dynamic being a contributing factor also because Japan is partly in a high risk state as their existing population size and more importantly- mix - simply cannot deliver the tax take they project for their future Pension obligations. This led me to look at population dynamics.

If you enjoy statistics and have the time I recommend you google UK Historic Population Chart and click on images then flick through them.


I found this exercise fascinating.

This is an interesting chart that shows how the industrial revolution was significantly assisted by falling mortality rates. I did wonder if the industrial revolution had drawn huge amounts of foreign workers and that may have explained this population explosion but throughout the 1800’s foreign workers, as a % of working population, grew no more than 1.5%.
hxxp://chartsbin.com/view/28k

What I wasn’t expecting was the following chart though. This is the most frightening chart I have ever seen!

Look what falling mortality rates did for the world population:
hxxps://d3n8a8pro7vhmx.cloudfront.net/taxpayersalliance/pages/5508/attachments/original/1434447400/Real_National_Debt.pdf?1434447400

So I lost my thread but it makes me wonder if global warming really is the the biggest danger faced by civilisation. :-)

[mount teide] 23/2/2018 21:32

The 'Global Investment Yearbook 2018' - produced by Credit Suisse Research Institute with authors from the London Business School, aims to provide an in-depth and long-term look at investment returns.

In the UK, between 1900 and 2017, investing in the stock market would have netted an annualised return of 5.5% while house prices saw increases of 1.8% a year.
UK bonds returned 1.8 per cent and cash returned 1% a year.

Overall, the report insists residential property would not offer premium returns over the long term. 'Residential property should not be purchased with an exaggerated expectation of a large risk premium. It is equity assets that provide an expected reward for risk. The real case for equities is that, over the long term, stockholders have enjoyed a large equity risk premium,' the report said.

In the US, investing in stocks produced annualised returns of 9.6% a year between 1900 and 2017.

Bonds returned 4.9% on an annualised basis, cash 3.7% and inflation averaged at 2.9% a year over the same period.

This was reflected around the world, with equity returns since 1900 coming at between 3 and 6% in every location the authors examined.
'Equities were the best-performing asset class everywhere,' the report said, while bonds beat cash in every country except Portugal.

'This overall pattern, of equities beating bonds and bonds beating bills, is precisely what we would expect over the long haul, since equities are riskier than bonds, while bonds are riskier than cash,' it added.

[spittingbarrel] 23/2/2018 10:39

Interesting chart, thanks MT

[mount teide] 22/2/2018 22:23

Following chart compares the GSCI Commodity Index(20 major commodities) v S&P500 over nearly 50 years. The hugely cyclical nature of the GSCI Commodity chart closely mirrors the Baltic Dry Index Shipping Chart over a similar period.

[mount teide] 21/2/2018 15:26

The problem Apple, Tesla, BMW and the rest of the technology sector has is that 54% of the worlds Cobalt production comes from the DRC, one of the poorest country's by GDP per capita in the World.

A Nation where the 14 year two term presidency expired in 2016 - only for President Kabila, the Robert Mugabe trained Dictator to refuse to step down. Following which political violence and government repression intensified, despite widespread opposition and international condemnation. Kabila's senior officials have since deliberately stalled plans to organize elections, while his henchmen, secret police and security forces has systematically silenced, repressed, and intimidated the coalition of voices calling for credible, timely elections.

Against this backdrop, last week without any prior consultation, shocked and appalled foreign mining companies operating in the DRC, learnt that Kabila's ministers had comprehensively reformed the DRC Mining Code, all changes effective IMMEDIATELY, despite previously telling major companies like a furious Ivanhoe they would get at least 10 years notice before any Code changes would apply to them'

Some of the hugely material changes likely to have a major impact on the businesses of foreign mining companies like Glencore and Ivanhoe operating globally important Cobalt and Copper mines in the DRC:

1 - Permits the DRC to raise the royalty on cobalt to 10% from 2% should the government decide that the mineral is a 'strategic' substance.

2 - All producing and under development base metal mines in the DRC, are now subject to an immediate 75% hike in royalties

3 - A swingeing 'super profits tax' of 50 per cent if the copper price rises by 25% above the price used in the mine’s feasibility study

Whoever is advising the DRC seems to believe that industrial metal prices could rise substantially over the years ahead, and so suggested amendment of the 2002 DRC Mining Code to ensure the Nation (Dictator and his criminal cabal) benefits from any major spike in future pricing.

The DRC mining code 'reforms' can only have a negative impact on the global supply of Cobalt and Copper - by potentially reducing capital investment by existing mine operators and frightening away prospective investment from other western mining companies in the DRC and potentially the wider African mining sector.