Tuesday May 12 Housing and Economic stories

TOP STORIES:

Student-Loan Surge Undercuts Millennials’ Place in U.S. Economy - (www.bloomberg.com) Surging student-loan debt represents a key risk to the economy’s expansion because wage gains are failing to keep up, according to Beth Ann Bovino, U.S. chief economist at Standard & Poor’s. As the attached chart illustrates, the dollar amount of borrowing has increased in each quarter since 2003, when data compiled by the Federal Reserve Bank of New York begins. The chart also displays student loans as a percentage of consumer debt, which has consistently risen since 2007’s third quarter. Education-related loans amounted to $1.16 trillion at the end of last year, a 71 percent increase from the second quarter of 2009, when the latest recession ended. The growth contrasted with declines in mortgages, home-equity loans, credit cards and other forms of consumer borrowing. “Millennials’ heavy student-loan burdens could seriously crimp spending,” Bovino wrote yesterday in a report. “This is not a future anyone wants to see.” She defined millennials as Americans born between the early 1980s and the early 2000s and cited an estimate that they account for about 60 percent of education debt.

Marc Faber: Stocks are about to fall 40%—at least! - (www.cnbc.com) Faber, editor of The Gloom, Boom & Doom Report, believes that stocks in the U.S. and in many places around the globe are in a central bank-fueled bubble. And while he can't put a time on when that perceived bubble will pop, he prognosticates that once it does, the outcome will be horrifying. "For the last two years, I've been thinking that U.S. stocks are due for a correction," Faber said Wednesday on CNBC's "Trading Nation." "But I always say a bubble is a bubble, and if there's no correction, the market will go up, and one day it will go down, big time." "The market is in a position where it's not just going to be a 10 percent correction. Maybe it first goes up a bit further, but when it comes, it will be 30 percent or 40 percent minimum!" Faber asserted.

The Baltimore Riots: A Case for School Choice?  - (www.reason.com)  “There are essentially two problems. . . . One is single parenthood, and the other is the worst schools on earth,”​ said Krauthammer on Tuesday’s Special Report. “Of the first, we have no idea how to solve that. Of the second, we do. If you can’​t improve the schools, give the kids a choice to go to better schools. The parents begged to have that opportunity, but the teachers’ unions won’t allow it and thus the Democrats won’t. If you want to do something, let them choose their schools.”  This idea has merit. The traditional public school system fails inner city youth in two major ways—both of which reinforce the kind of problems on display in Baltimore. First, inner city schools are just plain awful. As Terry Jeffrey pointed out in Townhall, the most recent information shows that the Baltimore school district spends about $18,000 per student and only achieves a reading proficiency rate of 16 percent for eighth graders. That’s a lot of money wasted in pursuit of terrible result. When public schools can’t even teach the vast majority of Baltimore’s most vulnerable kids to read, the traditional education system is condemning them from a very young age to dim college and career prospects.

Billionaire Hypocrisy: George Soros May Owe $7 Billion In Taxes - (www.zerohedge.com) “You support President Obama’s proposal to increase taxes on the wealthy?” That was the question put to George Soros on CNN some three years ago. Here was his answer: “Yes, very much… the super bubble really resulted in creating a great increase in inequality, and now we have the after effect where you have slow growth, but if you could have better distribution of income, then the average American would actually be better off.”  George Soros likes to say the rich should pay more taxes. A substantial part of his wealth, though, comes from delaying them. While building a record as one of the world’s greatest investors, the 84-year-old billionaire used a loophole that allowed him to defer taxes on fees paid by clients and reinvest them in his fund, where they continued to grow tax-free. At the end of 2013, Soros—through Soros Fund Management—had amassed $13.3 billion through the use of deferrals, according to Irish regulatory filings by Soros… Congress closed the loophole in 2008 and ordered hedge fund managers who used it to pay the accumulated taxes by 2017. A New York-based money manager such as Soros would be subject to a federal rate of 39.6 percent, combined state and city levies totaling 12 percent, and an additional 3.8 percent tax on investment income to pay for Obamacare, according to Andrew Needham, a tax partner at Cravath, Swaine & Moore. Applying those rates to Soros’s deferred income would create a tax bill of $6.7 billion…

China Poised To DEMAND U.S. LAND As Payment For U.S. Debt – (www.secretsofthefed.com) Could real estate on American soil owned by China be set up as “development zones” in which the communist nation could establish Chinese-owned businesses and bring in its citizens to the U.S. to work? That’s part of an evolving proposal Beijing has been developing quietly since 2009 to convert more than $1 trillion of U.S debt it owns into equity. Under the plan, China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss. Yu Qiao, a professor of economics in the School of Public Policy and Management at Tsighua University in Beijing, proposed in 2009 a plan for the U.S. government to guarantee foreign investments in the United States. WND has reliable information that the Bank of China, China’s central bank, has continued to advance the plan to convert China’s holdings of U.S. debt into equity owned by China in the U.S. The Obama administration, under the plan, would grant a financial guarantee as an inducement for China to convert U.S. debt into Chinese direct equity investment. China would take ownership of successful U.S. corporations, potentially profitable infrastructure projects and high-value U.S. real estate.

OTHER STORIES:

Treasuries in Longest Skid Since February on Fed Rate Wagers - (www.bloomberg.com)
Euro-Area Bonds Slump for Second Day, Extending $61 Billion Loss - (www.bloomberg.com)
Dollar Bulls Seen Facing More Pain as Fed Ambiguity Tests Rally - (www.bloomberg.com)
Nikkei posts biggest loss in 4 months on weak U.S. GDP, lacklustre earnings - (www.reuters.com)

New York Construction Booms With Focus on Luxury Housing - (www.bloomberg.com)
German unemployment hits lowest level since December 1991 - (www.reuters.com)
Italian Unemployment Rises in Setback for Renzi’s Plans - (www.bloomberg.com)
Sound Global Bonds Plunge After Auditors Found Cash Shortfall - (www.bloomberg.com)
China Rethinks Safety Net for Its Banking System - (www.nytimes.com)