KeNo's Housing and Economic Portal: Wednesday September 16 Housing and Economic stories

TOP STORIES:

China Scrambles To Enforce Capital Controls (Which Is Great News For Bitcoin) – (www.zerohedge.com) Officially, China has maintained quasi capital controls for years: on paper no individual is allowed to move more than $50,000 out of the country in any given year while Chinese companies can exchange yuan for foreign currencies only for approved purposes. Unofficially, China's capital controls had been skirted for years, leading to massive capital outflow from the nation over the past decade, leading to such aberrations as massive luxury housing bubbles in places such as Vancouver, London, New York and San Francisco, and seemingly middle-class Chinese politicians and oligarchs sporting Swiss bank accounts funded in the hundreds of millions (or billions). Just last March, we explained the schematic of how easy it is to avoid Chinese limitation on outflows, using nothing more than a UnionPay credit card and a trip to Macau. Here are the highlights: China's underground money is flowing across the border into the gambling hub of Macau, a former Portuguese colony that like Hong Kong is an autonomous region of China. And the conduit for the cash is the Chinese government-supported payment card network, China UnionPay.

US corporate bonds going through a barren stretch - (www.ft.com) US bond markets have suffered the longest barren spell for at least 20 years as stock market volatility has deterred even the bravest investment-grade companies from issuing debt. It is 10 business days and counting since a company last issued US investment-grade bonds, the longest stretch of inactivity excluding Christmases in the records of Dealogic, which go back to January 1995. The last US-marketed IG bonds, excluding financial institutions, were $600m-worth of debt issued by Hershey’s on August 18, the first day of what became a painful six-day rollercoaster in US equities. “Given that no one is desperate to come to market, it can be waited out,” said Jack Flaherty, an investment director at GAM, the asset manager. “Whenever we get some stability back in the market, the machine will turn back on.

Preparing For A Potential Economic Collapse In October - (www.zerohedge.com) There’s no question that the world economy has been shaky at best since the crash of 2008. Yet, politicians, central banks, et al., have, since then, regularly announced that “things are picking up.” One year, we hear an announcement of “green shoots.” The next year, we hear an announcement of “shovel-ready jobs.” And yet, year after year, we witness the continued economic slump. Few dare call it a depression, but, if a depression can be defined as “a period of time in which most people’s standard of living drops significantly,” a depression it is. Many people are surprised that no amount of stimulus and low interest rates have resulted in creating more jobs or more productivity. Were they a bit more cognizant of the simple, understandable principles of classical economics (as opposed to the complex theoretical principles of Keynesian invention), they’d recognise that, when debt reaches the level that it cannot be repaid, a major re-set of some sort must take place.

Death cross patterns spread to all corners of the stock market – (www.marketwatch.com) “Death cross” patterns continue to spread through the stock market like an epidemic, even infecting market segments believed to be more insulated from overseas turmoil. The Russell 2000 index of small-capitalization stocks became the latest victim among the major market indexes. The index’s 50-day moving average fell to 1,222.95 in midday trade Tuesday, crossing below the 200-day moving average (MA), which slipped to 1,224.11, according to FactSet. Many chart watchers believe a death cross, when the 50-day MA crosses below the 200-day MA, indicates that a shorter-term decline has developed into a longer-term downtrend. The Russell 2000’s last death cross appeared on Sept. 22, 2014. The index fell another 7.1% in the three weeks after that before bottoming at a one-year low.

Alibaba Is the Canary in China's Coal Mine - (www.bloombergview.com) It turns out investors were right about Alibaba: No company is more on the front lines of China's economic shifts than Jack Ma's juggernaut. And that's just where the problems begin. Alibaba's shares slide with each new report of middle-class Chinese who are dumping apartments to raise cash, delaying weddings, canceling vacations, terminating automobile orders and cutting up credit cards. A social media app called "Guide on Safe Passage Through the Economic Crisis" is all the rage as hundreds of millions of mainlanders encounter their first bear market. All that most Chinese younger than 50 know is annual growth of more than 10 percent. Crashing stocks and recession are Western maladies, not China's. Ma has hitched the fortunes of his e-commerce behemoth to these people, and the value of his company is falling in sync with them. After surging as much as 75 percent from their initial offering price of $68 each last September, the company's American depositary receipts plunged 16 percent in August, to $66.12, the third consecutive monthly decline in New York. Anyone who doubts that China won't experience a negative wealth effect as Shanghai cracks hasn't looked at Alibaba's numbers. Skeptical investors have shaved $65 billion from its market value since last year's euphoric initial public offering.

OTHER STORIES: