Linking ≠ endorsement. Enjoy and share:
- World Bank: Asia Still on Top | Pacific Money | The Diplomat
“East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world’s GDP growth — more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable,” said Axel van Trotsenburg, World Bank East Asia and Pacific Regional vice president.
- Felix Salmon smackdown watch, debt prioritization edition | Felix Salmon
Interesting article on debt prioritization:
On Thursday I said that the US is not going to default on its bonded debt, even if the debt ceiling is reached: “with Jack Lew (or anybody else, really) as Treasury secretary, you can be sure that debt service payments would be priority number one”.
This is not a popular view within the blogosphere, maybe because it’s generally associated with Republicans trying to say that hitting the debt ceiling wouldn’t be that bad.
Our position is that prioritized payments would be very easy to pay. It’s setting them in the order of priority that would be difficult. The argument for paying off on the Treasurys is logical if one is taking the longer-term view that defaulting on those would do long-lasting damage to the expression “Full Faith and Credit of the United States.”
- A Lonely Housing Bear Predicts a Big Tumble – Bloomberg
Digging into the data does, however, reveal one reason why Hanson [Mark Hanson, Menlo Park, California, real estate analyst, blogger and founder of consultancy Hanson Advisers] is so leery of housing now. Some 58 percent of existing-home sales in 2013 have been made by all-cash investors purchasing large swaths of distressed properties to lease to renters. Hanson says private-equity firms caused about 50 percent of the price appreciation in cities like Phoenix and Las Vegas, and generally overpaid by 10 percent to 20 percent, according to his calculations.
With gains of more than 35 percent since the crash for properties in Las Vegas, Phoenix and other of the hardest-hit regions, these vultures will begin to lose interest, he figures. With property prices and interest rates both higher, they may find better opportunities in Treasury and high-yield bonds than in houses. That’s because as house prices rise the yield you can get from renting the house declines. The loss of some of these buyers will remove what Hanson sees as an artificial support for prices.
We think he’d be right were it not for the Fed and Janet Yellen as the pick. The Fed will double-down on QE to keep mortgages as low as can be until people buy other than all-cash. Institutional investors leaving will free up more housing for traditional buyers. Still, it won’t be easy.
Now, if the US defaults and can’t get its act together fairly quickly, that could certainly gum up the works.
- Queens Real Estate | Long Island City Apartments
Yesterday, we linked to an article on Brooklyn. Well, Queens is now really taking off following in Brooklyn’s footsteps it seems.
New York City’s new development activity has long been focused on popular neighborhoods in Manhattan and Brooklyn. But with home prices on the rise in Queens, some major Manhattan developers are now venturing into the borough for the first time.
Builders like the World-Wide Group, the Lightstone Group, L+M Development and Property Markets Group are building massive rental towers in Queens, most of them in rapidly developing Long Island City.
Statistics on Queens’ new development are hard to come by, since the city’s largest brokerage firms don’t track transactions in the borough. But over the next three years, Queens is slated to see the construction of more than 8,000 units of new residential housing, according to estimates from the brokerage Aptsandlofts.com. That figure is a big increase from the immediate aftermath of the recession, brokers said, and it’s roughly on par with the pace of building in Manhattan, where approximately 5,350 new rental and condo units are expected to come online in the next 24 months, according to data from new development marketing firm Corcoran Sunshine.
- Five Things You Need to Know About Janet Yellen – Real Time Economics – WSJ
1. She has pushed the Fed to use aggressive new policies to boost the economy. Ms. Yellen, who focused much of her academic research on the costs and causes of unemployment, has consistently called for the Fed to respond forcefully to high joblessness. …
2. She has a record of being concerned about excessive inflation. …
3. She is a good forecaster. …
4. The financial crisis made her a believer in tougher financial regulations: …
5. She believes in transparency, and the markets thinks she’s a good communicator. …
Contrary to some negative comments about her and before it crashed, she said that the housing market looked worrisome.
Anyway, we agree that good-paying jobs are critical to the US economic recovery. The idea that the Fed should only care about inflation without balancing that off against unemployment seems unconscionable. We believe that at the very least, we can, and should, have controlled, minimal inflation with low unemployment. Your thoughts?
- China’s Investment Addiction by Yu Yongding – Project Syndicate
It is difficult to judge how serious China’s property bubble is and when it might burst. But one thing is certain: China has invested too much in real-estate development.
With per capita income at less than $6,000, homeownership in China is roughly 90%, compared to less than 70% in the United States. Average floor space per capita is 32.9 square meters, while median floor space per family in Hong Kong is just 48 square meters. China has 696 five-star hotels, with another 500 on the way. Five of the ten tallest skyscrapers under construction worldwide are in China. In my view, this is madness.
- Four Factors Weighing on Labor Markets—and Implications for Fed Policy | BlackRock Blog | Global Market Intelligence
In recent posts, my colleague Russ Koesterich outlined why the U.S. labor market recovery will continue to frustrate the Fed, and Jeff Rosenberg examined one key reason why the central bank is set to keep rates low for some time. I agree with these points, and want to step back and talk about some of the long-term structural headwinds that labor markets face today.
1. Transition to Temporary Hiring: …
2. Demographic Challenges: …
3. Technological Disruption: …
4. Skills/Jobs Mismatches: …
It’s a short article and well worth reading.
- Aussies: The world’s richest | | MacroBusiness
Credit Suisse has today released its 2013 Global Wealth Report, which reveals that Australian households are the wealthiest in the world when measured by median wealth. From the Age:
How much of it is based upon a speculative housing bubble? There’s some debate in Australia about that here: https://www.propertyobserver.com.au/econ omy/is-there-a-property-bubble-the-exper ts-have-their-say/2013100365490