Will
China's housing bust turn foreign buyers into desperate sellers? - (www.ochousingnews.com) Chinese
citizens invest in housing because it’s one of the few investment opportunities
available to them. Until recently, there were no property taxes in China, so it
cost very little to own property, so many Chinese invested in real estate as a
store of wealth. Once valuations became detached from any fundamental value
based on cashflow, the Chinese housing market became a Ponzi scheme similar to
the US housing market during our bubble — except that the Chinese bubble is
much, much larger. Is it ready to burst? A Chinese housing market crash could be even more disastrous
than America’s:
Investment drives China’s economy. And housing fuels a large share of that
investment, contributing 33% of fixed-asset investment, says Zhang Zhiwei, an
economist at Nomura—and, consequently, 16% of GDP. The decade-long housing boom
that’s kept China’s GDP aloft has so far defied the bubble warnings, which
began as far back as 2007. But the building binge is finally catching up
with China. Not just because sales are faltering (paywall). After building around 13.4%
more floorspace each year, China finally has too much housing, argues Zhang in
a note this week. The quirks of China’s economic model mean that a housing
crash will be more devastating for the economy than many realize. …
Ukraine
to Impose Wealth Tax on Deposits; Run on Ukrainian Banks Coming? - (Mish at globaleconomicanalysis.blogspot.com) IndexToday has
an interesting story on a Ukraine Wealth Tax. The Prime Minister of Ukraine
Arseniy Yatsenyuk proposed on Wednesday 19th of March 2014 the adoption of
taxes on wealth of the richest Ukrainians in order to tackle the economic
crisis in the country, clarifying that the law will apply to him as well. The
Ukrainian prime minister stated that the proposed tax measures should apply on
deposits more than 50,000 hryvnia (less than 4,000 euros). The measure is
expected to affect approximately 10% of the population. During the ministerial
council meeting, Arseniy Yatsenyuk cited his own tax return as an example
showing that interest on his deposits amounted to 714,000 hryvnia (47,000
euros).
'Dire' consequences loom for
jobless Europe - (www.cnbc.com) While
there are reasons for "cautious optimism" as the euro zone shows
signs of economic recovery, high unemployment in the region will fall by just
one percentage point in the next four years and in some areas it will spike
before dipping, a new study finds. Stubbornly high unemployment rates not only
pose a real threat to the recovery, as consumer demand will remain subdued, but
young people are also at risk of spending less time in employment, creating
potentially "dire" consequences for businesses. Unemployment in the
euro zone is currently sitting close to a record high of 12 percent, and is
forecast to fall at a very slow rate over the next two years before reaching 11
percent by 2018, according to the spring EY Eurozone Forecast (EEF). Figures
from European Union's statistics agency show approximately 19.175 million are
without a job across the euro zone and in Greece, unemployment is set to climb
to 28 percent this year before it falls by 3 percent in 2018. Youth
unemployment in both Greece and Spain have reached a staggering 50 percent,
presenting "major concerns" in terms of social tensions, education
and labor mobility, the EEF said.
Rough
road ahead for GM as U.S. Congress plots safety probe - (www.reuters.com) The
U.S. congressional investigation into General Motors Co automobile defects will
bring aggressive scrutiny to a company with powerful lobbying clout and strong
ties on Capitol Hill. GM's recall of 1.6 million vehicles, due to an
ignition-switch problem linked to 12 fatalities, has put the Detroit automaker
in Congress' cross hairs, with potentially dramatic hearings kicking off in
April. GM Chief Executive Mary Barra is scheduled to testify on April 1 to a
U.S. House of Representatives panel investigating the ignition problem. In what
could be a preview of such testimony, Barra on Monday declared in a video that
"something went wrong with our process" and "terrible things
happened." The handling of the defect by GM, which first noticed it in
2001, and federal regulators is the top priority of the powerful House Energy
and Commerce Committee, according to aides.
China
Funds Post Record Outflows as ETF Money Exits Bear Market - (www.bloomberg.com) Chinese
equity funds are posting their biggest outflows on record as concern deepens
that the world’s second-largest economy is
slowing. Investors pulled out a net $1.5 billion in the week through March 19,
of which $1.3 billion came from exchange-traded funds, Citigroup Inc. said
today, citing EPFR Global. Emerging-market funds had outflows of $4.1 billion
in the 21st straight week of withdrawals, analysts Markus Rosgen and Yue Hin
Pong wrote in a report, while European funds had inflows for a 38th week.
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