KeNo's Housing and Economic Portal: Monday December 29 Housing and Economic stories

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Russians Are Flooding Out Of London's Housing Market As The Ruble Crumbles - (www.businessinsider.com) Russian buyers are flooding out of London's property market, according to an amazing Bloomberg piece. Sanctions, bank limitations on withdrawals, and the shattered ruble are killing Russian demand for luxury London housing. All but the wealthiest oligarchs are getting hit by the country's crisis, according to the article: The number of Russians registered through Christie’s International Real Estate to buy homes in the city dropped by 70 percent in a year, said Giles Hannah, the broker's senior vice president. That has led to a plunge in offers for properties priced at less than 10 million pounds ($16 million) as it becomes more difficult for all but the wealthiest to take money out of their home country. "The banks are limiting what they can withdraw and we're expecting further impact as sanctions kick in," said Hannah, who advised Russian families on 180 million pounds of London property deals in the past two years. "The oligarchs are still spending. They already have banks or lawyers over here that allow them to make purchases."

Bankers See $1 Trillion of Investments Stranded in the Oil Fields - (www.bloomberg.com) There are zombies in the oil fields. After crude prices dropped 49 percent in six months, oil projects planned for next year are the undead -- still standing upright, but with little hope of a productive future. These zombie projects proliferate in expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela. In a stunning analysis this week, Goldman Sachs found almost $1 trillion in investments in future oil projects at risk. They looked at 400 of the world’s largest new oil and gas fields -- excluding U.S. shale -- and found projects representing $930 billion of future investment that are no longer profitable with Brent crude at $70. In the U.S., the shale-oil party isn’t over yet, but zombies are beginning to crash it. The chart below shows the break-even points for the top 400 new fields and how much future oil production they represent. Less than a third of projects are still profitable with oil at $70. If the unprofitable projects were scuttled, it would mean a loss of 7.5 million barrels per day of production in 2025, equivalent to 8 percent of current global demand.

The Blacklist That Rules Wall Street’s Loan Market - (www.bloomberg.com) What do Highland Capital Management, Fortress Investment Group LLC and Cerberus Capital Management have in common? The firms, which manage some $110 billion among them, are on a list that says they can never invest in a $155 million loan that’s trading in U.S. markets. RBS Holding Co., the owner of direct marketer Quadriga Art, banned the three firms and seven others last year from buying parts of the loan, according to two people with knowledge of the matter who asked not to be named because the decision was private. They were deemed, the people said, to be too demanding in debt restructurings, a fate that executives at RBS -- which has no relationship to the Scottish bank -- considered as Quadriga’s business faltered. Unlike any other market in the U.S., the blacklist rules in leveraged loans. No regulator polices trading in the $800 billion market. Here, borrowers -- and the investors who control them -- choose who gets into the club. It would be as if Apple Inc. got to decide who could buy its stock.

Justice Department Probes Currency Exchange Site That Vanished With Cash - (www.bloomberg.com) The U.S. Department of Justicehas begun a criminal investigation into the foreign exchange trading website Secureinvestment.com, which vanished last May 1 with as much as $1 billion from investors around the world. The Financial and Capital Market Commission in Latvia is also probing the involvement of Latvian banks used by Secure Investment, says agency spokeswoman Elina Avotina. An investigator with the U.S. Attorney’s office for the Eastern District of New York has interviewed Secure investors in the U.S. and Canada, according to the people who were contacted. Two of those people were quoted in “Anything But Secure” in the December issue of Bloomberg Markets magazine. Bloomberg had interviewed customers in 11 countries on five continents who said they saw their money evaporate with Secure Investment when its website disappeared.

The Skinheads of Europe Don't Like Refugees. Neither Do the Doctors and Lawyers - (www.bloomberg.com) The diplomats, lawyers and celebrities living on the priciest street in Germany’s wealthiest city aren’t thrilled about their new neighbors. Refugees fleeing war zones are moving into the empty office building around the corner from their lakefront road, Harvestehuder Weg, in Hamburg. The four-story building being transformed by borough Mayor Torsten Sevecke sits on a leafy plot abutting a luxury development where apartments cost as much as 7 million euros ($9 million). Locals are suing the city because they’re worried their properties will lose value. “Where will these people buy their groceries? The cheaper supermarkets are far away,” said Barbara, a 70-year-old pensioner who lives in the area but spends most of the year in Spain. She asked that her last name not be published because it would be “embarrassing.” “I’d prefer if the government invests the money in a new building somewhere else.” Record numbers of refugees are arriving in Europe, roiling regional politics and leaving local officials struggling to provide shelter while managing their constituents’ unhappiness. Most displaced people head to Germany and Sweden, where lodgings are being created any place there’s space: in empty schools, campgrounds, a boat on the River Elbe, even purpose-built aluminum crates that resemble shipping containers. In France and Italy, many end up on the street.

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