Can't
afford a house? Try buying a house on water.. - (www.cnn.com) How
do you get a foot on the property ladder, when you live in one of the most
expensive cities in the world? For an increasing number of first-time home
buyers like Sandra Reddin, the answer doesn't lie on land -- but in the water. "Doing
the washing-up with swans floating by your window -- I love it," says the
55-year-old, who bought a houseboat earlier this year. In a city where $1 million will buy you a mere
25 square meters in prime central real estate, Londoners are turning to the labyrinth of
waterways silently snaking their way through the metropolis. Centuries ago,
these gently rippling canals were used to transport cargo -- a floating highway
bustling with barges and connecting towns across the country. Now the narrow boats
which heaved goods up and down the UK have become homes for those struggling to
get a foothold in the third most expensive real
estate market on the planet.
While a house in Narrow Boat Close, a street in leafy south-east London, will set
you back an average $350,000, an actual narrowboat costs around a quarter of
the amount.
Get
the federal government out of housing market - (www.azcentral.com) How
badly does the federal government have to screw up before the politicians reach
the conclusion that there is no useful role for it in the housing market? It's
hard to think of a greater screw up than the housing bubble of the last decade.
It led to what is described as the worst economic period since the Great
Depression, at least by those who don't remember the 1970s. One of the main
causes of the housing bubble and burst was a deterioration of underwriting
standards, the criteria that must be met to get a mortgage. And federal
policies were one of the major drivers of that deterioration. Getting a
mortgage used to require a down payment of 20 percent of the purchase price.
The monthly mortgage payments couldn't exceed about a third of the borrower's
income. Defaults by those meeting those criteria were extremely rare. Housing
finance was very boring, but very safe. There was a movement among some private
lenders to ease up on or abandon these underwriting standards. So long as
housing values were rising, went the thought, mortgage lending was virtually
risk-free. If the borrower defaulted, the lender could get his money back out
of the higher value of the home.
Brazilians
Stage Protests and Strikes With World Cup Weeks Away - (www.bloomberg.com) A
police strike in Brazil’s northeast and protests in Rio de
Janeiro and Sao Paulo last night marked what social movements
said was the start of nationwide demonstrations four weeks before the World
Cup. The federal government yesterday dispatched armored trucks and National
Guard troops to quell looting in Recife after police temporarily walked out of
the job in one of the 12 cities slated to host the world’s most-watched
sporting event. Protesters marching in opposition to the tournament clashed
with police in Sao Paulo. Globo TV showed masked youths burning street
barricades and hurling stones in Brazil’s biggest city. “People can complain,
protest, dispute -- that’s legitimate democracy,” Justice Minister Jose Eduardo
Cardozo told reporters last night after traveling to Recife. “What’s not
legitimate is creating panic, disturbance, discomfort and damage to Brazilian
citizens.”
How
Malinvestment Poisons the Entire Economy - (www.oftwominds.com) Malinvestment--the systemic consequence of the
Federal Reserve's policies of near-zero interest rates and abundant
credit--doesn't just inflate destruction asset bubbles: it poisons productive
assets and the entire economy. Malinvestments arise when credit is cheap and
abundant, as it costs speculators very little to borrow money for gambles, and
they can in essence buy lottery tickets in the asset bubble of the
day without having any skin in the game, i.e. without having to put any of
their own money at risk. The classic example in the previous housing bubble
were speculators who bought houses with no-down, no-document low-interest
"liar loans": with no money down and a modest interest-only mortgage
payments, speculators could buy a lottery ticket in the housing mania for
almost nothing, and maintain their gamble for a very modest monthly sum. Given
the potential for an enormous gain should the gambler find a greater fool to
buy the house in a few months, this was an entirely rational and indeed
attractive bet. Today's asset bubbles in stocks, junk bonds, housing, art, bat
guano futures, etc. are being driven by the Federal Reserve, which has replaced
the nuisance of no-document liar loans with unlimited liquidity for bankers, financiers
and insiders.The super-wealthy and corporate cronies can borrow as much nearly
free money as they want from the Fed, without even bothering with qualifying
for the credit.
Portugal
Laden With $293 Billion Debt Exits Bailout Plan - (www.bloomberg.com) Portugal
exits its international bailout program tomorrow, regaining the economic
sovereignty the nation lost after the European debt crisiserupted while facing enduring challenges to its
finances. The Iberian country’s 214 billion euros ($293 billion) of debt is
the third highest in the euro region as a percentage of gross domestic product.
The economy is about 4 percent smaller than in 2010, a year before the
government had to ask for an international rescue. Borrowing costs based on 10-year (GSPT10YR) bond yields are almost twice those of France and all three major ratings companies
consider the country non-investment grade. “There will now be two or three
decades of lean times for the state, which will have to purge that debt
burden,” said Diogo Teixeira, chief executive officer of Optimize Investment
Partners, a Lisbon-based firm that manages 87 million euros in assets including
Portuguese government debt.
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