KeNo's Housing and Economic Portal: Thursday June 8 2017 Housing and Economic stories

TOP STORIES:

Toronto’s Housing Bubble Pops. “The Frenzy is Over – It’s Over” - (www.wolfstreet.com) The magnificent house-price bubble in Toronto, which has raised eyebrows even across the jaded asset-bubble world, is hissing hot air. Residential property sales in Greater Toronto plunged 20% in May year-over-year to 10,196 homes, according to the Toronto Real Estate Board (TREB), with sales of condos dropping 6.4% and sales of detached homes plunging 26.3%. At the same time, new listings – the new supply suddenly coming out of the woodwork – soared nearly 50% year-over-year. The report tried to put a positive spin on it: “Homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains.” And it has already impacted prices. The “TREB MLS Average Price” for all types of homes, dropped 6.2% from April to C$863,910. It remains up 14.9% year-over-year, given the crazy surge in prices over the past months, including the 33% year-over-year gain in March, when prices had gone totally nuts!

S&P, Moody's Downgrade Illinois to Near Junk, Lowest Ever for a U.S. State - (www.bloomberg.com) S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven't agreed on a budget that chips away at the government's chronic deficits. Moody's followed S&P's downgrade Thursday, citing Illinois's underfunded pensions and the record backlog of bills that are equivalent to about 40 percent of its operating budget. Illinois hasn't had a full year budget in place for the past two years amid a clash between the Democrat-run legislature and Republican Governor Bruce Rauner. That's left the fifth most-populous state with a record $14.5 billion of unpaid bills, ravaged entities like universities and social service providers that rely on state aid and undermined Illinois's standing in the bond market, where investors have demanded higher premiums for the risk of owning its debt. Moody's called Illinois "an outlier among states" after suffering eight downgrades in as many years.

The Real Unemployment Number: 102 Million Working Age Americans Do Not Have A Job - (www.zerohedge.com) "I don’t see how anyone can possibly claim that the U.S. economy is doing well... prior to t Did you know that the number of working age Americans that do not have a job right now is far higher than it was during the worst moments of the last recession? For example, in January 2009 92.6 million working age Americans did not have a job, but we just found out that in May the number of working age Americans without a job increased to just a shade under 102 million. We’ll go over those numbers in more detail in a moment, but first I want to talk a bit about the difference between perception and reality. According to the bureaucrats in the federal government, the “unemployment rate” in May was the lowest that we have seen in 16 years. At just “4.3 percent”, we are essentially at “full employment”, and so according to them anyone that really wants a job should be able to find one pretty easily. Of course that is a load of nonsense. John Williams of shadowstats.com tracks what our economic numbers would look like if honest numbers were being used, and according to his calculations the unemployment rate is currently 22 percent. So what accounts for the wide disparity between those numbers? he last recession there were 26 million Americans on food stamps, now we have 44 million, we're on pace to shatter the all-time record for store closings in a single year, and the number of homeless in LA has risen by 23% over the past 12 months... But once again, it is a battle of perception vs. reality."

Banco Popular head tells staff to stay calm, source says ECB meet planned - (www.reuters.com) The chairman of Banco Popular has told his executives that the struggling Spanish lender was solvent and urged them to remain calm and confident, while a source said he would hold a routine meeting with the European Central Bank next week. Popular's shares fell almost 40 percent in the past three days on concern it would not find a buyer or raise new capital to fix its balance sheet, which is weighed down with 37 billion euros ($41 billion) of non-performing real estate assets. One of Europe's top bank watchdogs warned European Union officials that Popular might need to be wound down if it failed to find a buyer, an EU official told Reuters this week. "Banco Popular remains solvent and has positive equity," Chairman Emilio Saracho wrote to his executives in a letter sent on Friday, seeking to reassure them despite what he called the "difficult situation."

John Paulson Is Struggling to Hold On to Client Money – (www.bloomberg.com) The walls keep closing in on John Paulson. A decade after Paulson shot to fame betting on the collapse of the U.S. housing market, the hedge-fund mogul is struggling to persuade investors to stick with him after a string of missteps on everything from gold to European bonds to drug stocks. Since the end of 2015 alone, assets at Paulson & Co. have fallen by $6 billion from losses and client withdrawals. The decline, underscored in the firm’s most recent regulatory filing, leaves Paulson and his employees with just $2 billion in client money. Most of the remaining $8 billion is Paulson’s own fortune. His personal wealth aside, it’s a remarkable comedown for Paulson, one of the biggest names in the hedge-fund business. The idea that he might end up managing mostly his own fortune would have struck many as improbable 10 years ago. At his firm’s peak, in 2011, he oversaw $38 billion -- half of which belonged to outside investors.

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