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- China's risky mortgage lending is tacking a credit bubble onto a real estate bubble - Quartz
...official mortgage lending data doesn't capture the entire debt picture for China's new homeowners. Excessively high housing prices are making it hard for most to cough up the required 30-40% down payment. As a result, banks [are] becoming "very creative in helping consumers" make mortgage down payments, says Junheng Li, head of research at JL Warren Capital.
One increasingly common scheme (link in Chinese) involves an informal version of "reverse mortgages," which aren't legal in China. When a prospective buyer can't pay the down payment, banks allow the buyer's parents to take out a loan using their home as collateral in order to generate the cash.
Because these loans aren't technically allowed, they sometimes "take the form of auto or other types of discretionary consumer loans," says Li, whose forthcoming book, Tiger Woman on Wall Street, argues that China suffers from a housing bubble. This has been going on for a while, she says, particularly in big cities.
In other words, banks are exposing themselves to more risk than their balance sheets reflect. In using improvised reverse mortgages, banks are lending to a set of people deemed too risky by Chinese regulators. That's pretty much the definition of "sub-prime lending."
What's more, the majority of home loans in China have variable interest rates (pdf, p.13). As the government shifts from monetary to fiscal stimulus and the slowing economy causes businesses to default, cash is starting to dry up. Unless the government intervenes, that will cause interest rates to rise for homeowners— the very thing that triggered the US housing collapse. This isn't just theoretical; in the wake of June's credit crunch, some banks have already raised mortgage rates by 10% (link in Chinese).
The article does outline ways in which China's lending standards are tighter than they were in the US before the US housing crash, but whether we know enough about everything shady going on over there in China or not is a huge question. We had a hard time finding out the shady practices going on right here in America and still don't know the whole of it.
Read the source article ... https://qz.com/118282/chinas-risky-morta ge-lending-is-tacking-a-credit-bubble-on to-a-real-estate-bubble/
- Stuck Working Part-Time? Blame the Economy - Real Time Economics - WSJ
It's tough finding a job these days. It's even tougher to find one that's full-time.
More than four years after the recession ended, nearly a fifth of American workers are part-timers, well above normal levels. More than 8 million people are working part-time because they can't find full-time jobs. That's given rise to fears of deep, structural shifts in the U.S. labor market due to technology, globalization or perhaps the new health care law, which will require companies to provide health insurance to full-time employees.
But a new paper from the Federal Reserve Bank of San Francisco argues there's a simpler explanation for the rise of part-time work: the weak economy.
Part-time employment is generally a mirror-image of the overall economy. When times are good, people pick up more hours, and more of them qualify as full-timers, which the Labor Department typically defines as anyone working 35 hours or more. When the economy sours, more people end up working part-time.
Let's hope things pick up enough to be able to put the unemployed and underemployed to work in solid, full-time, high-paying jobs.
Read the source article ... https://blogs.wsj.com/economics/2013/08/ 26/stuck-working-part-time-blame-the-eco nomy/?mod=WSJBlog
- City tech sector to expand by a quarter this year
28 August 2013 London, UK - Knight Frank Research expects the technology media and telecoms (TMT) firms that are transforming London's the City district to acquire 1.6 m sq ft of office space in 2013, a 23% increase on last year. In 2003, TMT office take-up in the City was 454,000 sq ft. 2013 will mark the third consecutive year that TMT firms have been the largest source of office demand in the City. Moreover, activity is spreading from fringe locations, like Shoreditch and Farringdon, into the City Core and Holborn. These are districts that historically have been linked to the traditional City industries of finance and law.
Read the source article ... https://www.knightfrank.co.uk/news/city- tech-sector-to-expand-by-a-quarter-this- year-01917.aspx