KeNo's Housing and Economic Portal: Monday April 20 Housing and Economic stories

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Dimon Says Once-in-3-Billion-Year Treasury Move a 'Warning Shot' - (www.bloomberg.com) JPMorgan Chase & Co. head Jamie Dimon said last year’s volatility in U.S. Treasuries is a “warning shot” to investors and that the next financial crisis could be exacerbated by a shortage of the securities. The Oct. 15 gyration, when Treasury yields fluctuated by almost 0.4 percentage point, was an “unprecedented move” that would have serious consequences in a stressed environment, Dimon, the New York-based bank’s chairman and chief executive officer, said in a letter Wednesday to shareholders. Treasuries are supposed to be among the most stable securities. Dimon, 59, cited the incident as he waded into a debate about whether bank regulations implemented after the 2008 financial crisis exacerbate price declines by limiting the ability of Wall Street banks to make markets. It’s just a matter of time until some political, economic or market event triggers another financial crisis, he said, without predicting one is imminent. The Treasuries move was “an event that is supposed to happen only once in every 3 billion years or so,” Dimon wrote. A future crisis could be worsened because there “is a greatly reduced supply of Treasuries to go around.”

Hong Kong Housewife Cheers Stocks as Workers Trade at Lunch - (www.bloomberg.com) Hong Kong’s stock market rally is drawing individual investors from all walks of life as the Hang Seng Index soars to a seven-year high. With money from the mainland exchange link contributing to record turnover in the city’s $4.9 trillion stock market, a crowd of part-time traders hunched over computer screens at Bright Smart Securities & Commodities Group in Hong Kong’s central business district to take advantage of the surge in Chinese demand. “Things are getting quite exciting,” said Chow Man, a 68-year-old housewife who favors Chinese banks and infrastructure stocks and says she has as much as HK$200,000 ($25,000) in play. “It’s becoming like a hobby for a lot of mainland investors to trade stocks now. That’s why more of them are taking opportunities in Hong Kong.”

Despite Constant Saudi Bombing, Yemen Rebels Advance, Seize Key Town; Ayatollah Trolls US, Saudis on Twitter – (www.zerohedge.com) It appears that when the US inadvertantly "misplaced" $500 million of weapons in Yemen, the bulk of which fell right in Houthi rebel hands, it created a very credible adversary... for the US and its Saudi-backed coalition allies. Because despite the bombing campaign by the Saudi-headed coalition, AP reports that the rebels seized a key provincial capital in a heavily Sunni tribal area on Thursday as their patron Iran called the two-week air campaign a "crime" and appealed for peace talks. According to media reports the Houthius overran Ataq, capital of the oil-rich southeastern Shabwa province, after days of airstrikes and clashes with local Sunni tribes. The capture marked the rebels' first significant gain since the Saudi-led bombing began.

Exhausted world stuck in permanent stagnation warns IMF - (www.telegraph.co.uk) The global economy is caught in a low-growth trap as innovation withers and the population ages across the Northern Hemisphere. It will not regain its lost dynamism in the foreseeable future, the International Monetary Fund has warned. The IMF said the world as a whole has seen a “persistent reduction” in its growth rate since the Great Recession and shows no sign of returning to normal, marking a fundamental break in historical patterns. This exposes the global economic system to a host of pathologies that may be hard to combat, and leaves it acutely vulnerable to a fresh recession. It is unclear what the authorities could do next to fight off a slump given that debt ratios are already at record highs and central banks are running out of ammunition.

The U.S. Government's $800 Billion Gamble on Student Loans – (www.bloomberg.com) One of the big potential costs to U.S. taxpayers over the next years is an enterprise that's currently estimated to be even a bit profitable for them: financing student loans. Right now, the federal government borrows money at interest rates that are lower than the rates it charges students. That means the U.S. makes about 14 cents on every dollar lent, according to the Congressional Budget Office. It's a win-win for the government -- make a little cash while helping young Americans pursue an education so they can earn more down the road. There's no guarantee this will stay this way, however, if more students start to delay or renege on their obligations. While the CBO expects the government to continue to make money on the business until at least 2025, gains are forecasted to shrink. On subsidized student loans (the most basic kind), the government is forecast to start losing money as early as next year. The CBO already revised up its estimate of how much the loans will cost the government for 2016-2025 by 30 percent, citing higher estimates of the number of loans in default (which in turn would mean the government won't be able to collect on as many payments as initially thought).

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