Friday September 2 2016 Housing and Economic stories

TOP STORIES:

Fear Spreads of a Housing Crash in Canada - (www.wolfstreet.com) Canadians have been gung-ho about their magnificent housing bubble, feeding it with an endless willingness to pay every higher prices, even as regulators and international institutions issued warnings, as short sellers began circling, as subprime liar-loan scandals made their reappearance, and as a generation was getting priced out of the hottest housing markets in Canada, the metros of Toronto and Vancouver, and as locals came up with an acronym to describe what has fired up the market: HAM – Hot Asian Money. But the Vancouver housing bubble, the hottest even in Canada, hit rough waters in early summer. By July the first serious troubles appeared. Even as apartment prices soared 27% year-over-year and detached house prices 38%, overall sales plunged 19%, while sales of detached homes plummeted 31%. Then on August 2, British Columbia’s notorious 15% transfer tax on home purchases involving foreign investors took effect. Preliminary data indicate that sales over the first two weeks in August plunged 51% year-over-year, with sales of detached homes down 66%.

German Savers Lose Faith in Banks, Stash Cash at Home - (www.wsj.com) German savers are leaving the security of savings banks for what many now consider an even safer place to park their cash: home safes. For years, Germans kept socking money away in savings accounts despite plunging interest rates. Savers deemed the accounts secure, and they still offered easy cash access. But recently, many have lost faith. “It doesn’t pay to keep money in the bank, and on top of that you’re being taxed on it,” said Uwe Wiese, an 82-year-old pensioner who recently bought a home safe to stash roughly €53,000 ($59,344), including part of his company pension that he took as a payout. Interest rates’ plunge into negative territory is now accelerating demand for impregnable metal boxes. Burg-Waechter KG, Germany’s biggest safe manufacturer, posted a 25% jump in sales of home safes in the first half of this year compared with the year earlier, said sales chief Dietmar Schake,citing “significantly higher demand for safes by private individuals, mainly in Germany.”

Digging Into China’s Growing Mountain of Debt - (www.bloomberg.com) Some prominent investors are worried about China’s debt. George Soros sees an “eerie resemblance” between conditions in China now and those in the U.S. leading up to the financial crisis in 2008. “It’s similarly fueled by credit growth and an eventually unsustainable extension of credit,” Soros told the Asia Society in New York in April. BlackRock Chief Executive Officer Laurence Fink was asked about China’s mounting debt on Bloomberg TV in May. “We all have to be worried about it,” Fink said, adding that he remains bullish on China’s economy in the long run. And in June a Goldman Sachs report warned that the country’s large and unaccounted-for shadow-banking activities raised concern “about China’s underlying credit problems and sustainability risk.”

Health Insurers’ Pullback Threatens to Create Monopolies - (www.wsj.com) Analysis suggests ACA exchanges are likely to offer just one coverage option in 31% of U.S. counties. Nearly a third of the nation’s counties look likely to have just a single insurer offering health plans on the Affordable Care Act’s exchanges next year, according to a new analysis, an industry pullback that adds to the challenges facing the law. The new study, by the nonpartisan Kaiser Family Foundation, suggests there could be just one option for coverage in 31% of counties in 2017, and there might be only two in another 31%. That would give exchange customers in large swaths of the U.S. far less choice than they had this year, when 7% of counties had one insurer and 29% had two.

This Is How Badly We're Managing Our Student Debt - (www.bloomberg.com) Government-backed student debt is big business: About one in six U.S. adults has a student loan owned or guaranteed by taxpayers, and the feds pay their contracted loan servicers and debt collectors close to $2 billion annually to counsel borrowers on their repayment options and collect monthly payments on nearly $1.3 trillion of federal student debt. The U.S. Department of Education updates the public every three months on how borrowers are faring with their federal student loans. Bloomberg crunched the numbers on where the federal student loan portfolio stood as of June 30. Here's what we found. Less than $3 of every $5 is being repaid on time. More than 42 percent of loan balances are either delinquent, temporarily postponed, in default or in bankruptcy, or borrowers are seeking to shed the debt by convincing the feds that their disability prevents them from ever repaying what they owe. 

OTHER STORIES:

Beneath Yuan’s Quiet, China Worries Rise - (www.wsj.com)
Central bankers fear threat of low-growth rut - (www.ft.com)
Chinese banks braced over industrial restructuring - (www.ft.com)

Germany's economy minister: U.S.-EU free trade talks have failed - (www.reuters.com)
As Fed nears rate hikes, policymakers plan for 'brave new world' - (www.reuters.com)
Rajoy Seals Ciudadanos Pact Ahead of Spain Confidence Vote - (www.bloomberg.com)

Syria à la Carte: Turkish Invasion Highlights Rapidly Shifting Alliances - (www.spiegel.de)
Turkey ratchets up Syria offensive, says warplanes hit Kurdish militia - (www.reuters.com)
Two Regional Fed Chiefs Doubt Central Bank Would Raise Rates Twice This Year - (www.wsj.com)