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- The End of ‘Financialization’ | Fung Global Institute Publications
A call by Andrew Sheng for global economic and financial structural reform:
Finance theory taught that risk is best diversified, but geographical diversification through globalization disguised the fact that everything was interconnected and became more and more co-related with each other. Borderless finance meant that no firm, no country was an island. The failure of one hub, like Lehman, led to cascading failure like a tsunami sweeping down everything in its path.
After five years of QE, a strong global recovery remains elusive. This happened despite massive increases in public expenditure that blew up the sovereign debt of advanced countries to 100 per cent of GDP, and central bank balance sheets have doubled or trebled whilst interest rates are near zero. Against the tide of the liquidity trap, policy makers shot off three arrows, monetary policy (first arrow), fiscal policy (second), macro-prudential policy (third), but the fourth (structural reform) is still on the bow in many countries.
Now the threat of withdrawal of the first arrow is threatening to send the emerging markets back to recession.
… the solution to unsustainable financialization is not more debt, but more equity or the net worth of real sectors — households, enterprises and the government sector. That has to be generated through real sector reforms — the asset side of the balance sheet.
- Strategies and Geographies Targeted by Private Real Estate Investors – October 2013
In terms of which regions investors view as the best investment opportunities for real estate funds, North America is thought to be presenting the best opportunities by a significant 71% of respondents. Only 30% of respondents felt that Europe was presenting the best opportunities, with Asia and emerging markets outside of Asia listed by 16% and 13% of investors respectively.
- Fracking Fantasies: Has The Shale Bubble Already Burst? | Economy Watch
Are a number of places in the US being propped up and then caused to boom sustainably even in the short term by the recent fracking phenomenon?
Texas in particular comes to mind when one thinks of wealth from fracking. It’s real estate is quite hot, and fracking has played a big role in that.
Will fracking pan out the way its main supporters have marketed it?
Here’s an article that suggests the marketing has been more than a bit hyped.
We’ve seen articles that are nearly the exact opposite. We’ll include the next one (with a possible link to this again) to better complete the news coverage on this highly controversial but nevertheless important issue for real estate.
Just like the famous Gold Rushes of the 19th century US shale gas development turned out to be a limited and regional market opportunity.
The average depletion rate of wells in the Bakken Formation (the largest tight oil play in the US) is reported to be 69 percent in the first year and 94 percent over the first five years (37 percent and 50 percent in the Barnett Formation). Due to the lack of reliable data on shale industry many experts (for example, Deborah Rogers from Energy Policy Forum) await possible future write-downs in shale assets. Naturally smaller investors will not hear about the write-downs in the news.
There seems to be tit for tat news coverage of fracking. Each side makes a claim (exaggerated or not). The other counters.
We want our actual- and would-be-investor readers to be aware of the possible future implications for real-estate investments.
- Solid Fundamentals, Strong Central Banking Behind Philippine Upgrade – Real Time Economics – WSJ
Not so long ago, Indonesia and India were considered the Asian countries most likely to get investment-grade ratings from all three major ratings firms.
But the Philippines leapfrogged them and scored the trifecta first after Moody’s lifted its Philippine rating Thursday to Baa3, the lowest-rung on the investment-grade rating. Standard & Poor’s and Fitch raised the Philippines to investment grade earlier this year.
The designation could mean a wave of new investment for Manila as markets increasingly differentiate among developing economies.
Moody’s announcement cited robust economic growth, fiscal and debt consolidation, political stability and improved governance. It also noted the archipelago’s “relative lack of vulnerability” to external shocks such as the anticipated scale-back of the U.S. Federal Reserve’s economic stimulus.
That resilience is thanks to the Bangko Sentral ng Pilipinas, which has kept the Philippine banking system strong and funding conditions stable.
- Re-Examining The Chinese Property Market: Deflating Bubble Fear – Forbes
They are making some progress in China. Will it be enough? Will it be sustained and enhanced?
“Ghost cities” similar to Weizhou and Ordos continue to crop up in China due to the collapse in the export driven, low-value added manufacturing sectors and troubled local governments’ balance sheets. However, the Tier 1 cities (China’s four most developed metropolises) and Tier 2 cities (10 high-growth cities with smaller economies and population density) that are property developers’ major markets continue to grow, driven by consumption demand. Investment-driven purchases have fallen from approximately 50% of all home buys to 10% since the implementation of home purchase restrictions in 2011. Although affordability is always a major complaint in China, developers are addressing the issue by building smaller units for the mass market.