KeNo's Housing and Economic Portal: Monday March 17 Housing and Economic stories

TOP STORIES:

Bank Run Full Frontal: Ukrainians Withdrew 7% Of All Deposits In Two Days - (www.zerohedge.com) Well that escalated quickly. It seems the ouster of Yanukovych, heralded by so many in the West as a positive, has done nothing to quell the fear of further economic collapse in Ukraine:

*UKRAINIANS WITHDREW AS MUCH AS 7% OF DEPOSITS FEB. 18-20: KUBIV

*DEPOSIT WITHDRAWALS STILL HIGH IN THE EAST, KUBIV SAYS

This is around a 30 billion Hyrvnia loss (over $3 billion) in just 2 days for the banks and the new central bank chief is considering "stabilizing loans" to help banks deal with the liquidity crisis (though Ukraine's reserves stand at a mere $15 billion). Reserves are in freefall... and will only get worse if the bank run continues.

Ex-Ambassador Explains The Paradox That Led To Crisis In Venezuela - (www.businessinsider.com) Venezuela President Nicolás Maduro has only exacerbated problems inherited from predecessor and mentor Hugo Chavez and holds primary responsibility for protests throughout the country, says Duke Professor Patrick Duddy, the former US ambassador to the Bolivarian Republic of Venezuela from 2007 to 2010. It all comes down to economics, including a paradox involving the combination of price controls and currency controls, as Duddy explained (emphasis ours): What we can see from the statistics is that things have gotten worse in the last 9 months … Last year, inflation was about 25%. This year, inflation is at 56% … The Scarcity Index is often well over 20%. Food prices have gone up much higher than the overall inflation rate. Prior to the legislative elections in December, the government not only railed against the private sector and high prices for consumer goods, but they essentially mandated that prices be lowered as a concession to the public, thus essentially emptying the shelves in the stores that did have some stock. But how were they going to replace that stock when these items are not manufactured in the country and the government is restricting access to dollars?

Ukraine Bonds to Currency Slide as Russia Points to Default Risk - (www.bloomberg.com) Ukraine’s bonds ended a three-day rally and the currency plunged to a record asRussia warned the former Soviet republic may default, while the nation’s interim leaders delayed a vote on a unity government. The hryvnia, which is managed by the central bank, lost 6.4 percent to 9.8000 per dollar, extending its slump this year to 16 percent, according to data compiled by Bloomberg at 6:07 p.m. in Kiev. The yield on government bonds maturing in April 2023 climbed 30 basis points to 9.56 percent, after the rate fell 211 basis points in the last three days. Ukrainian assets are coming under renewed pressure following remarks by Russia’s deputy Finance Minister Sergei Storchak that the nation’s neighbor faces a “high” probability of defaulting. Russia has suspended a $15 billion aid package and Ukraine’s acting President Oleksandr Turchynov said the country needs as much as $35 billion of foreign aid to be able to meet its obligations.

Hong Kong - Landlords biting their fingernails as luxury flats stay vacant - (www.scmp.com) If you could ask a crystal ball any question, what would it be? Landlords of Hong Kong luxury residential properties would probably want to know when they can find tenants to fill their vacant homes. The down cycle of the luxury residential market began when the Hong Kong financial sector was hit by the global financial crisis in 2009. There was little hiring, and companies started cutting housing budgets for expatriates and often hiring them on local terms. As a result, demand for large flats of 2,000 square feet or more, with asking rents of HK$80,000 and above, previously targeted at top management, has been declining. Apartments in the prime districts of The Peak and Southside have been the most affected, with average rents dropping 10 per cent and 7.1 per cent, respectively, last year, according to property consultant Savills.

Fed Misread Crisis in 2008, Records Show - (www.nytimes.com) On the morning after Lehman Brothers filed for bankruptcy in 2008, most Federal Reserve officials still believed that the American economy would keep growing despite the metastasizing financial crisis. The Fed’s policy-making committee voted unanimously against bolstering the economy by cutting interest rates, and several officials praised what they described as the decision to let Lehman fail, saying it would help to restore a sense of accountability on Wall Street. James Bullard, president of the Federal Reserve Bank of St. Louis, urged his colleagues “to wait for some time to assess the impact of the Lehman bankruptcy filing, if any, on the national economy,” according to transcripts of the Fed’s 2008 meetings that it published on Friday. The hundreds of pages of transcripts, based on recordings made at the time, reveal the ignorance of Fed officials about economic conditions during the climactic months of the financial crisis. Officials repeatedly fretted about overstimulating the economy, only to realize time and again that they needed to redouble efforts to contain the crisis.

OTHER STORIES: