Tuesday July 1 Housing and Economic stories

TOP STORIES:

More Than 1 in 5 Homes in Chinese Cities Are Empty, Survey Says - (online.wsj.com) More than one in five homes in China's urban areas is vacant, and a current housing-price correction is putting additional pressure on the owners of such empty properties, according to a nationwide survey by researchers from China's Southwestern University of Finance and Economics. The vacancy rate of sold residential homes in urban areas reached 22.4% in 2013, or 49 million homes, up from 20.6% in 2011, according to the Survey and Research Center for China Household  inance, which conducted the analysis. The researchers surveyed households in 262 counties in 29 provinces, an expanded sample compared with 2011's survey of households in 80 counties. As of August 2013, the amount of outstanding mortgage loans on vacant homes in China reached 4.2 trillion yuan ($674.33 billion), the report added.

Ottawa real estate agent Chris Hoare accused of attempted murder - (www.ottowacitizen.com) The first neighbour called 911 around 10 a.m. on Wednesday after he heard a woman screaming for help. The police were on their way to the modest Orléans home when they got a second call after someone said the screaming had stopped and there was a man standing over her with a baseball bat as she lay bleeding in the driveway. That’s when a neighbour and friend said the man looked across the street and said someone had better call an ambulance. The woman, still conscious, apparently told her neighbour that her husband had come home and said to meet him in the garage and to close her eyes because it was a surprise. Then someone started swinging a bat at her head. Minutes later, paramedics were treating her wounds and police were arresting Chris Hoare, a prominent Ottawa real estate agent and father of five young children.

Hong Kong Democracy Protest Plan Worries Foreign Businesses - (www.bloomberg.com) The Canadian, Indian and Italian chambers of commerce in Hong Kong joined brokers and executives in opposing a planned pro-democracy protest, publishing a letter that said the demonstrations may “cripple” businesses. Organizers of Occupy Central, who are threatening to bring the business district to a standstill with protests if their demands for universal suffrage aren’t met, should rethink their plans and argue their case through other channels, the foreign chambers said in a quarter-page advertisement in the South China Morning Post newspaper today. “We respect the fact that politics is part of community life here,” the groups said, “However, we cannot, and should not, sit idly by when political actions threaten to disrupt general business activity and with it, the livelihoods of Hong Kong’s workers and their families.”

IMF sounds global housing alarm Financial Times  - (www.cnbc.com) The world must act to contain the risk of another devastating housing crash, the International Monetary Fund warned on Wednesday, as it published new data showing house prices are well above their historical average in many countries. The warning from the IMF shows how an acceleration in global house prices from already high levels has emerged as one of the major threats to economic stability, with countries making limited progress in keeping them under control. Min Zhu, the IMF's deputy managing director, said the tools for containing housing booms were "still being developed" but that "this should not be an excuse for inaction".

Are Americans filling up on too much debt? (cars) - (www.usatoday.com) Americans love cars and debt, so it's only natural that they would combine the two. A new report finds that auto loans are becoming more supercharged than ever as financing terms reach record highs. However, consumers should remember to steer clear of buying more car than they can really afford. The average auto-loan term increased to 66 months during the first quarter, according to Experian Automotive, a global information services company. That is the highest level since Experian began publicly reporting the data in 2006. Making matters worse, nearly 25% of all new vehicle loans originated during the quarter had terms extending out 73 months to 84 months, representing a 27.6% surge from a year earlier. The average amount financed for a new vehicle loan also reached an all-time high of $27,612.

OTHER STORIES:

Vietnam Says China Sent Six Warships to Rig in Disputed Seas - (www.bloomberg.com)

Tensions grow in Hong Kong as China asserts control - (www.marketwatch.com)

Japan Says Chinese Fighter Jets Fly Close to Its Planes Again - (www.bloomberg.com)
Japan blasts Chinese bid for U.N. recognition of Nanjing massacre - (www.reuters.com)

Tax break tug-of-war tightens across the Hudson NYT  - (www.cnbc.com)

Most economists say the Fed is wrong about growth - (www.cnbc.com)

Trillion-Dollar M&A Quarter Makes a Return for Better or Worse - (www.bloomberg.com)

World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start - (www.bloomberg.com)

Monday June 30 Housing and Economic stories

TOP STORIES:

Stunned unions cry foul after tenure rules struck down - (www.latimes.com) Teacher unions are criticizing a judge's decision to overturn a California law that has long protected the state's public educators -- even ineffective ones -- through tenure and seniority. In his ruling Tuesday, Los Angeles County Superior Court Judge Rolf M. Treu said the laws governing job security were unconstitutional because they harmed predominantly low-income, minority students by allowing incompetent instructors to remain in the classroom. The protections "impose a real and appreciable impact on students' fundamental right to equality of education," he wrote. "The evidence is compelling. Indeed, it shocks the conscience." State and local teachers’ unions reacted swiftly, saying the ruling was misguided and that poor management was to blame for districts that fail to root out incompetent instructors.

London's Taxi Driver Protests Are Giving Uber The Best Advertising It Could Ever Have Hoped For - (www.businessinsider.com)  Uber is seeing a massive uptick in sign-ups following thousands of black cab drivers staging protests in the streets of London. An estimated 4,000 to 5,000 black cabs participated in the protest today, according to London's transportation agency. That's because they're convinced Uber is operating illegally in the city. But despite their efforts, people are actually flocking to Uber. The car company says it's seen an 850% increase in new riders. “Londoners are voting with their fingers, tapping the app in support of new and innovative services as we see our biggest day of sign-ups in London today since launch two years ago,” Uber UK & Ireland General Manager Jo Bertram told The Next Web.

Qingdao Port Probe Said to Focus on Loans to Decheng - (www.bloomberg.com) China’s investigation of whether metals stockpiled at Qingdao Port fall short of collateral obligations used to secure loans is focused on Decheng Mining, said two bankers assisting with the probe. Decheng’s owner, Chen Jihong, has been detained as public security officials look into the case at the northeastern port and continue a separate inquiry in northwestern Gansu province, said the bankers, who asked not to be named because they aren’t authorized to speak publicly. Singapore’s foreign ministry said it is providing consular assistance to Chen. Foreign and local banks are examining lending linked to metals at Qingdao amid concern that risks are more widespread in China, where traders use commodities from iron ore to rubber to get funding. China’s customs agency issued rules to help prevent goods being pledged multiple times as collateral for loans at Qingdao Port, said two people with direct knowledge of the matter. Analysts at Barclays Plc and Goldman Sachs Group Inc. said the probe may weigh down the price of copper, already the worst performer among the six main materials traded on the London Metal Exchange this year.

Many Seek New Homes Near Cities but are Priced Out  - (www.finance.yahoo.com)  The average price of a newly built home nationwide has reached $320,100 — a 20.5 percent jump since 2012 began. That puts a typical new home out of reach for two-thirds of Americans, according to government data. Yet many builders have made a calculated bet: Better to sell fewer new homes at higher prices than build more and charge less. Their calculation is partly a consequence of the growing wealth gap in the United States. Average inflation-adjusted income has declined 9 percent for the bottom 40 percent of households since 2007, while incomes for the top 5 percent exceed where they were when the recession began that year, according to the Census Bureau. Buyers have historically paid about 15 percent more for a new home than for an existing one, a premium that's reached 40 percent today, according to the real estate data firm Zillow. An average new home costs about six times the median U.S. household income. Historically, Americans have bought homes worth about three times their income.

Spanish 10-Year Bond Yield Lowest Since at Least 1789; Reflections on Absurd Risk Assumptions - (Mish at globaleconomicanalysis.blogspot.com) Those searching for absurdity in government bonds can find it in a multitude of places. For example, and via translation from Libre Mercado (courtesy of my friend Bran who lives in Spain) please note Spanish 10-Year Bond Yield is Lowest Since at Least 1789.   The interest rate offered on the secondary market for Spanish bonds maturing in ten years is at historic lows, below equivalent yield in U.S. treasuries, which has not happened since April 2010. The evolution of Spanish debt is even more striking when viewed from a broader temporal perspective. Today the Spanish 10-year bond is the lowest since at least 1789, the year of the French Revolution, as noted in the graph above. This is something unprecedented.

OTHER STORIES:

Trillion-Dollar M&A Quarter Makes a Return for Better or Worse - (www.bloomberg.com)

China’s Record Oil Hoarding Seen Keeping Crude Above $100 - (www.bloomberg.com)

China Misses Bond Auction Target for Second Time in Two Months - (www.bloomberg.com)
ECB may buy 'simple and transparent' ABS, says Mersch - (www.reuters.com)

Dove-hawk tradeoff could mean earlier rate rise - (www.reuters.com)

World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start - (www.bloomberg.com)
Fed Prepares to Keep Record Balance Sheet for Years to Come - (www.bloomberg.com)

Goldman Shuns ‘New Neutral’ After Doubting ‘New Normal’ - (www.bloomberg.com)

[Feldstein] Warning: Inflation Is Running Above 2% - (online.wsj.com)

Friday June 27 Housing and Economic stories

TOP STORIES:

Did the VA Pay Out Bonuses for Screwing Veterans?  - (www.thedailybeast.com) The VA health care system has so many perverse incentives that it may have actually given rewards to those who treated veterans the worst. As the scandal in the Department of Veterans Affairs widens, new attention is being paid to the bonuses doled out to the leaders of VA hospitals where dozens of vets died—and whether the promise of performance pay led administrators to cover up how long their patients were waiting for care. There’s no proof yet that the VA employees who placed veterans on secret waiting lists—where some of them died in line—were motivated by bonuses. But multiple officials at the institutions under investigation have received tens of thousands in bonuses in the recent past. Though the bonuses are designed to reward exceptional performance, they can potentially create perverse incentives. Pay rewards tied to reporting metrics that are susceptible to manipulation could be encouraging VA executives and employees to focus on massaging statistics—at the expense of providing real services for veterans.

Grad Students Could Win Big as Obama Slashes Debt Payments - (www.businessweek.com) So in practice, borrowers who were once excluded—as many as 5 million, according to the early reports—will be able to see their monthly payments cut by as much as one-third. But the biggest windfall will probably be for people who take on a lot of debt, such as business and law students. That’s for two reasons: First, as Jason Delisle of the New America Foundation told Bloomberg Businessweek in 2012: “Undergraduates can’t borrow enough, so the change [from IBR to PAYE] is very marginal to them. If you’re only paying $20 a month, a 33 percent reduction in monthly payments is not that big a deal. But if you are paying $800 a month, a 33 percent reduction is a big deal.” The second reason why grad students may benefit the most is that PAYE has more generous loan forgiveness terms than IBR. Under PAYE, the remaining balance of the student loan is forgiven after 20 years of on-time payments, rather than 25 years under IBR. 

Buy a House or Pay Off College? $1.2 Trillion Student Debt Heats Up in Capital - (www.bloomberg.com) Jennifer Day spends 12 percent of her monthly take-home pay on debt that funded a master’s degree in urban and regional planning, money she’d rather be saving toward a home. “I spend $364 a month for student loans,” said Day, 33, who conducts market research for the hospitality industry at a consulting firm in New Orleans. “To me, that is a down payment or ultimately savings down the line.” Under a bill sponsored by U.S. Senator Elizabeth Warren, a Democrat from Massachusetts, Day would save about $75 a month on her payments. The legislation, which could reach the Senate floor as soon as tomorrow, would let borrowers with federal and private loans refinance their balances at lower interest rates. Alleviating the burden on student-loan borrowers, who have amassed more than $1.2 trillion in debt, has been a focus this week of Democrats concerned about their drag on the economy. President Barack Obama issued an executive order yesterday to expand a program easing student-loan payments. He also endorsed Warren’s bill, which would help former graduate students like Day, whose federal loans typically carry higher rates than those on undergraduate loans, with some as high as 8.5 percent.

A Little Student Loan Debt Never Hurt Anyone  - (www.bloomberg.com) Student loans seem to be the same sort of evergreen political winner for Democrats that tax cuts are for Republicans. Every month seems to bring another plan to fiddle with student loans to make them less expensive for the students and more expensive for the government. Massachusetts Senator Elizabeth Warren has a bill out that would let student loan holders refinance at lower rates; President Barack Obama is signing an executive order to open up especially generous income-based repayment terms to millions more students, even if they don’t have a financial hardship. My friend Mark Kleiman thinksthat anyone who is paying attention to items like these has no choice but to become a fanatical partisan Democrat. Well, I have been paying quite a lot of attention to student loan issues, and I haven’t yet taken the step of becoming a Democrat, much less a fanatical partisan one. I haven’t even taken the lesser step of endorsing these plans, which I think are a bad idea.

Veterans' Three-Month Wait for Doctors Pressures Congress - (www.bloomberg.com) Another report of delays in medical care for U.S. military veterans -- this one showing 57,400 have waited more than three months to see a doctor -- is adding pressure on Congress to come up with a legislative fix. An internal audit released yesterday by the Department of Veterans Affairs showed that an additional 63,900 veterans who enrolled in the VA health system in the past 10 years haven’t received doctors’ appointments. The report comes as the Senate is set to advance bipartisan legislation to revamp the system. “American veterans are depending on us completing this legislation, ensuring that our veterans are getting the care and resources they are promised by a grateful nation,” Senate Majority Leader Harry Reid, a Nevada Democrat, said on the chamber floor yesterday after the report was published.

OTHER STORIES:

All It Took to Cure Baldness: Laser, Garage and Crowdfunding - (www.businessweek.com)

A Federal Response to Navy SEAL's 'Threat Assessment' of Keystone - (www.businessweek.com)

Exclusive: As bank fines soar, U.S. threatened $16 billion BNP penalty - (www.reuters.com)

Sprint, T-Mobile Said Near Price, Termination Fee Accord - (www.bloomberg.com)
Microsoft Faces China Backlash to Windows Amid U.S. Spat - (www.bloomberg.com)

ECB creating ‘dangerous’ bubbles: German think tank - (www.cnbc.com)

ECB's Weidmann says entering "new ground" with latest measures - (www.reuters.com)

How Europe’s amazing bond rally could end in new crisis - (www.marketwatch.com)

Currency Carry Trades Rise in ECB’s Negative-Rate World - (www.bloomberg.com)

Thursday June 26 Housing and Economic stories

TOP STORIES:

Weed-Munching Goats Run Out of Detroit  - (www.abcnews.go.com) Goats brought in to clean up part of a Detroit neighborhood are getting the boot, after it was discovered that a city ordinance bans farm and wild animals. The 18 goats were supposed to munch weeds and other troublesome vegetation from a four-acre lot, after which the land would be converted to an urban farming project. “Once the vegetation was cleaned up, then we would have the volunteers come in, take the trash out of the area, and using the goats and the volunteers we would be clearing this ground for future agricultural use,” said Kevin Pollara, a consultant for the project in Brightmoor, a neighborhood on the city’s west side. He said the project, called Idyll Farms Detroit, would have been a success, but the animals will be removed. “We will be in full compliance. We will be removing the animals, because we’re interested in complying,” he said. “We’re not looking to fight with the city. We want to collaborate with the city.”

Obama's new student debt plan may end up backfiring - (finance.yahoo.com) The White House says the new executive order will affect as many as five million borrowers, but it will not be available until December 2015. Yahoo Finance Editor-in-Chief Aaron Task has reservations about the order. “In 20 years the debt goes away if you haven’t repaid it all and guess who it goes back to? The taxpayer. And I just don’t think that that’s going to end very well for the taxpayer. It does give an incentive for someone to make less money because their debt payment is going to be less and they know over the course of time that debt’s going to go away,” he says. Yahoo Finance’s Lauren Lyster points out that this might encourage students to take out more debt than they normally would. Task adds, “That might be the origin of the student debt crisis in the first place - the availability of credit.”

The Nation's Most Vicious Obamacare Fight Just Took A Wild Turn - (www.businessinsider.com)  McAuliffe and the state Senate, which up until this week was narrowly controlled by Democrats, have bickered with the Republican-controlled House of Delegates in Virginia over the expansion, which the governor says could expand coverage to as many as 400,000 Virginians. But late Sunday, Virginia Republicans effectively teamed up with one Senate Democrat and threw the debate for a loop. State Sen. Phillip Puckett is set to resign on Monday, a move that led some Democrats to accuse Republicans of "buying" Senate control.  Puckett's resignation leads the way for him to get a job as deputy director of the state tobacco commission and for his daughter to be confirmed for a state judgeship. Depending on how you look at it, it's politics at its worst — or best. "Republicans I've talked to are chortling," Larry Sabato, founder and director of the University of Virginia Center for Politics, told Business Insider. "They think it's one of the cleverest things they've done."

Where have all the missing American workers gone? - (finance.yahoo.com) The unemployment rate has been on a slow downward trajectory since the recession ended nearly five years ago. While the overall jobless level has dropped to non-recession levels, the number of the working-age people with jobs is barely over 6 in 10, hovering at a level reminiscent of the late 1970s. In May, the U.S. workforce-participation rate — the combination of those with jobs and unemployed workers actively seeking them — was just 62.8 percent, the same as the month before. Job markets have been essentially flat since October. Where have all the missing workers gone? A key factor, nearly all agree, is the growing exodus from the job market of Baby Boomers. Born roughly in the post-World War II period from 1946 to 1964, these workers are now at or fast approaching retirement age.

Retirement Savings Fears Grip Americans: “I Don’t Have Enough” - (finance.yahoo.com) Americans are freaking out about their personal savings – and for good reason. A recent Gallup pollfound that 59 percent of those surveyed were very or moderately worried they won’t have enough money for retirement – by far their biggest concern. Many people once counted on a triad of support for retirement – Social Security, personal savings, and employer-sponsored pensions. Yet in the wake of the Great Recession and a long stretch of high unemployment and stagnant wages, the once-dependable foundation has been crumbling. Employers have phased out generous defined benefit pension programs in favor of 401(k)s and other workplace-based retirement accounts. Personal savings have taken a dive as many people have tapped retirement savings to pay the rent or help make ends meet. And many young people seriously question whether the Social Security trust fund will be able to pay them anything by the time they retire.

OTHER STORIES:

Fed's Bullard says macroeconomy much closer to normal - (www.reuters.com)
Central Banks Channel Piketty Inequality Concerns, Nowotny Says - (www.bloomberg.com)

Fewest Americans Filed Jobless Claims Over Past Month Since 2007 - (www.bloomberg.com)

Fed Saw Modest to Moderate Growth as Labor Market Improved - (www.bloomberg.com)

China's Central Bank Prevails in Policy Battles Over Economic Future - (online.wsj.com)
German Media Slam ECB Rate Move - (online.wsj.com)

Shanghai Island Shows Property Boom Promise as Debt Balloons - (www.bloomberg.com)
Japan Growth Picks Up More Than Estimated on Investment: Economy - (www.bloomberg.com)

Wednesday June 25 Housing and Economic stories

TOP STORIES:

China’s Property Developers Face Record Wave of Maturing Debt - (www.bloomberg.com) Chinese property developers face a record surge in maturing debt next year, as the country’s banking regulator says it’s monitoring risks from the cooling real-estate market. The amount of dollar-denominated bonds that must be repaid in 2015 will jump to $2.83 billion, the most in data compiled by Bloomberg going back to 1993. Most Chinese builders listed on the mainland or in Hong Kong are behind fiscal-year sales targets and achieved less than 33 percent of their target in the first four months, analysis based on Bloomberg data show. The China Banking Regulatory Commission will monitor the financial and cash-flow conditions of developers, and will support first-time homebuyers’ borrowing needs, Vice Chairman Wang Zhaoxing said at a briefing in Beijing today. Moody’s Investors Service revised its credit outlook for Chinese builders to negative in May after home sales slumped 10 percent in the first four months.

Why Obamacare Can't Be 'Fixed' - (www.bloomberg.com) Monica Wehby, the Republican Senate candidate in Oregon, has fallen prey to a common delusion: that Obamacare can be "fixed." On her campaign website, Wehby, a surgeon, runs through a list of changes she wants made to the president's health-care overhaul. She would, among other things, get rid of the individual mandate to buy health insurance, offer more catastrophic insurance options on the exchanges and make it easier for people to buy insurance across state lines. But she also wants to keep several Affordable Care Act provisions, including the one that bans insurers from discriminating against people with pre-existing health conditions. You can see why Wehby would find this mix of policies attractive: Polls find that people dislike Obamacare, but they like the idea of "fixing" it and they like the discrimination ban. (They like it less when pollsters mention the costs of that ban.) In the effort to take the popular side of every health-care question, though, Wehby has come up with a plan that doesn't hang together.

Caesars Receives Notice of Default From Bondholder Group - (www.bloomberg.com) Bondholders sent a unit of Caesars Entertainment Corp. (CZR) a notice of default, intensifying a battle with the largest owner of casinos in the U.S. The notice was sent yesterday by investors owning at least 30 percent of Caesars Entertainment Operating Co. second-lien, 10 percent bonds due in 2018, according to a filing today. The creditors said the company defaulted on its obligations by transferring assets, such as Bally’s Las Vegas hotel, to an affiliate, and by removing the parent company’s guarantee on the operating unit’s debt. There are $3.7 billion of the notes outstanding, according to a filing by Caesars. The notice escalates the conflict between Las Vegas-based Caesars, purchased in a 2008 buyout byApollo Global Management LLC (APO) and TPG Capital, and some of its creditors. The company, which has $23.4 billion in debt outstanding, said the asset transfers followed a rigorous, independent process designed to provide liquidity crucial to its business.

Europe Faces Either A Rotten President Or A Constitutional Crisis - (www.businessinsider.com)  The European Union is in deep trouble. Growth is sluggish at best, unemployment punishingly high and deflation threatens. The European elections returned many populist, anti-EU members to the European Parliament; public support for the project has plummeted. Against this background, the squabble over who should be the next president of the European Commission, the EU's executive arm, looks an ever more dangerous tragicomedy: Franz Kafka meets Dario Fo.

The front-runner for the job is Jean-Claude Juncker (pictured). The former prime minister of Luxembourg was picked as "lead candidate" by the centre-right pan-European political group, the European People's Party (EPP), in March.

Housing foreclosures caused suicides - (www.sciencedaily.com)  The recent U.S. foreclosure crisis contributed significantly to the nation's jump in suicides, independent of other economic factors associated with the Great Recession, according to a study by Dartmouth and Purdue professors publishing Monday. The study, publishing in the June issue of theAmerican Journal of Public Health and available online now, is the first to ever show a correlation between foreclosure and suicide rates. The authors analyzed state-level foreclosure and suicide rates from 2005 to 2010. During that period, the U.S. suicide rate increased nearly 13 percent, and annual home foreclosures hit a record 2.9 million (in 2010). "It seems that foreclosures affect suicide rates in two ways," said co-author Jason Houle, assistant professor of sociology at Dartmouth College. "The loss of a home clearly impacts individuals and families, and can arouse feelings of loss, shame, or regret. At the same time, rising foreclosure rates affect entire communities because they're associated with a number of community level resources and stresses, including an increase in crime, abandoned homes, and a sense of insecurity."

OTHER STORIES:

No, the Jobs Market Isn't Back to Normal - (www.bloomberg.com)

What Americans Don't Know About Student Loans: A Lot - (www.bloomberg.com)

Canada Jobless Rate Rises For the First Time This Year - (www.bloomberg.com)

Separatists in eastern Ukraine attack border post - (www.reuters.com)
China Regulator Pledges to Expand Credit as Economy Slows - (www.bloomberg.com)

Chinese military spending exceeds $145 billion, drones advanced: U.S. - (www.bloomberg.com)

American Airlines' Retirees Are Furious Over Changes to Their Flight Benefits - (www.bloomberg.com)

Draghi Unveils Historic Measures Against Deflation Threat - (www.bloomberg.com)

Ex-Deutsche Bank Trader Facing Record $17 Million Fine - (www.bloomberg.com)

Putin and Obama Don't See D-Day the Same Way  - (www.bloomberg.com)