KeNo's Housing and Economic Portal: Thursday March 9 2017 Housing and Economic stories

TOP STORIES:

Are 100-Year Mortgages Next? Effects of Negative Real Interest Rates on Nordic Housing Bubble - (www.wolfstreet.com) Finland and Denmark, the Nordic countries with the least negative rates, experienced the least housing price growth. Wage growth did not keep up with housing prices, (except in Denmark), further illustrating that negative interest rate policy, in general, which intends to go all out for growth, does not properly stimulate the economy and does not promote sustainable growth across all sectors. The Nordic case clearly illustrates that central banks should only maintain price stability which upholds currency integrity. The rates, when correctly managed, act as a regulator, ensuring the economy remains diversified. No one sector can take all the growth. The “negative (real and deposit) interest rate” experiments are failing. They’re distorting the economies which undertook them. Surging housing costs are aggravating inequality and depriving other sectors in the economy. For example, retail sales since 2007 in Norway grew only 8% despite a brisk population increase (up 11% over the same period) and expanding consumer credit (up 13%).

Investor Group Attacks Snap’s No-Vote Shares, Stock plunges - (www.wolfstreet.com) The third day was not the charm. Not for Snap, the company that owns the Snapchat app. An investor revolt, spearheaded by the Council of Institutional Investors, against Snap’s non-voting class A shares is now deflating a big part of the hype around its IPO. The hype worked like this: The market capitalization of Snap would be pushed so high that major indices, including the S&P 500 index and the MSCI USA Index, would include the stock, and that index and pension funds that track these indices would all have to buy the shares, and thus drive up the share price even further. That was the bet. And now news of the revolt is spreading. Snap’s class A Shares plunged 12.3% to $23.77 at the close on Monday. Down 16% from their high in the morning. Shares now trade below the price at which they opened on March 2 during their first moments in the public market.

Only In Cali - Strip Poker Playing Ex-Mayor Stole Money From Kids Programs To Fund Filipino Fetish - (www.zerohedge.com) Anthony Silva, the former Mayor of Stockton, California who we previously noted was arrested for playing strip poker with teenagers, is now facing a litany of new charges alleging that he stole hundreds of thousands of dollars from the Boys and Girls Club of Stockton to fund, among other things, trips to the Philippines and monthly payments to the dating site filipinocupid.com. "He destroyed 45 years of good work at the Boys & Girls Club, a well-respected and heavily endowed institution for his own personal, ill-gotten gains," District Attorney Tori Verber Salazar said. Silva allegedly used the cash on dating website filipinocupid.com. He also allegedly used the money on trips to the Philippines, South Lake Tahoe, Motel 6 and Best Buy. Silva is also accused of what Himelblau called "double dipping." He explained employees who work at the Stockton Kids Club are paid by the Stockton Unified School District. But, Himelblau said evidence was found that Silva also pocketed grant money given to the Kids Club by the national Boys & Girls Club.

Rising European Bank Deposits Wind Up at ECB as Lending Sputters - (www.bloomberg.com) Banks in the euro zone, flush with new deposits, have turned few of them into loans to companies and consumers. Instead they’ve parked most of the money at the European Central Bank, where they’re paying billions of euros for the privilege of keeping it there. Since June 2014, when the ECB cut rates below zero, deposits at euro-zone banks have jumped by 802 billion euros ($848 billion), according to central bank data through the end of January. Lending to nonfinancial companies and consumers in the currency area rose by 169 billion euros over the same period, while deposits at the ECB in excess of required reserves soared by 1.1 trillion euros. Negative rates were supposed to bring down borrowing costs, thereby encouraging lending. But banks in some European countries have cut loans because they’re struggling with piles of bad debt and weak capital levels. Where lenders are healthier, there’s little demand for funds because of uncertainty about global trade and regional growth. Banking and sovereign-debt crises in some euro-zone nations also curtailed cross-border lending.

Conservatives Savage GOP Obamacare Plan Despite Trump Praise - (www.bloomberg.com) President Donald Trump threw his weight behind a House Republican plan to replace Obamacare, even as conservatives mounted their own savage attack on the bill, with one Republican senator declaring it “dead on arrival” in the Senate. Trump held a White House meeting Tuesday with the House Republican vote-counting team to rally them behind the bill, setting up an unexpectedly close alliance between the president and House Speaker Paul Ryan, who defended his bill as the fulfillment of a long-running GOP promise. “I want to thank President Trump,” Ryan told reporters Tuesday afternoon. “Doing big things is never easy, but we have made a promise and we’re going to keep that promise.” And Trump told the House Republican vote-whipping team members he is “proud” to support the new plan. “You can choose your doctor. You can choose your plan,” he said at the meeting. “It’s called good health care.”

OTHER STORIES:

Brazil, Widening the Hunt for Corruption, Finds It Under Every Rock - (www.wsj.com)