A report from Reuters on China. "The Chinese city of Enshi has moved to stabilize house prices amid a worrying property slump by urging developers to stop drastic price cuts, threatening punishing measures unless such 'wrong behaviors' stopped. Developers have slashed prices at some estate projects in Enshi, a small city with less than one million in the central province of Hubei, as many new projects further strained an already slowing market, according to a three-page document issued by the Enshi Real Estate Association to its members seen by Reuters."

"'Some estate projects have sought to promote sales by cutting prices drastically and this has caused wide concern in the society and had a negative impact on Enshi’s property market,' said the document dated June 6, which listed ten 'tricks' developers had pursued to cut prices in various ways."

From Quartz on China. "For decades, the burgeoning power of China’s middle-class has been promised as a cure-all for many of the global economy’s troubles (not to mention its own). Enriched by three decades of rapidly rising wages, Chinese consumers should have long ago begun turbo-charging sluggish economies everywhere."

"That hasn’t happened. In past years, it’s largely been because they received a much lower share of national income than was their due. But there’s a new reason, one that should alarm both China’s leaders and the scores of foreign companies still waiting for China’s middle-class consumers to ride to their rescue."

"After a decade-long real estate boom, home prices in many Chinese cities are unnaturally high. In Beijing and Shanghai, buying a home costs about what the average family would earn in 23 years if it spent none of its income. And in 2016, Chinese residents began splurging on borrowing, most of it in the form of mortgages—as well as untold sums of high-interest personal loans—to buy increasingly pricy homes."

"For economists and other observers, the chronic thrift of Chinese consumers has long implied the existence of a backup engine for when growth stalled and corporate debt maxed out. 'For years, there was this idea that China’s silver bullet for an economic slowdown was its high household savings rate,'” says Andrew Polk, economist at Trivium, a Beijing-based research firm."

"Suddenly, however, what had been a rainy-day abstraction became a reality. Chinese consumers are now deep in debt. The Bank for International Settlements calculates that individual Chinese borrowers owe $6.8 trillion, as of December, up from $4 trillion three years earlier, much of it for home mortgages."

From Rethink Tokyo. "China’s housing industry seems to have reached breaking point. Nikkei reported earlier this year that 65 million units are vacant across the nation. Sales volumes in 24 cities fell by 44% in the first week of 2019, compared with a year earlier. More worrying is the fact that many of these units are brand new and have never seen a tenant."

"Whole residential communities on the outskirts of China’s tier two and three cities are turning into ghost towns before they ever come to life. It is a peculiar case, as the vast number of empty apartments, on the one hand, suggests gross oversupply, but on the other hand young Chinese people – especially men, who are culturally pressured to buy a home to attract a spouse – can simply not afford apartments."

"Between 2015 and 2018, prices have surged by over 40% in some cities. This oxymoron of overpriced oversupply has seemingly been caused by a real estate industry of bad players that developed at break-neck speed and without much foresight. In fact, Moody's Investors Service has assigned junk status to 51 of the 61 Chinese property companies it assesses."

"One might worry that Tokyo’s real estate market will fall victim to a similar fate. After all, redevelopments are mushrooming all over the city here as well, prices are on the rise, and at the same time, the Japanese population is falling."

From Nippon on Japan. "Japan’s latest Housing and Land Survey has found that a record 8.46 million homes were unoccupied in 2018, an increase of 3.2% on the level five years ago. This represents 13.6% of all homes (up from 13.5%). The increase is attributed to the growing trend of families to live separately from grandparents, who are themselves are rapidly aging, and is further exacerbated by the fact that Japan’s population is declining."

"Emphasizing the seriousness of the problem, Yoneyama Hidetaka, chief researcher at consulting firm Think Dyne, explains, 'It’s one thing if the building is properly maintained, but many houses are simply left to rot, and will eventually become eyesores.' He adds that more vacant dwellings can also mean more crime and wastage of public services."

The Wall Street Journal. "'Modern monetary theory' is the latest craze to circulate among the chattering classes. It is a fuzzy, post-Keynesian theory that has caught on in antiausterity circles. The MMT doctrine states that fiscal deficits don’t matter as long as countries borrow in their own currencies and inflation stays in check. This is like manna from heaven for proponents of more government spending and larger fiscal deficits."

"Not surprisingly, MMT has reared its head in Japan, where debt is denominated in yen, inflation is nowhere to be found, and the ratio of government debt to gross domestic product has gone to the moon. MMT advocates claim Japan provides proof for their theory, but nothing could be further from the truth."

"Separate, potent forces have given rise to two seemingly strange trends in the Japanese economy: dramatic changes in the savings-investment balances in the public and private sectors, and the failure of monetary policy. MMT doesn’t explain either one."

"Separate from Japan’s overall savings surpluses, its broad-money metrics have grown at a snail’s pace. Since Japan’s bubble burst in 1990-91, broad money has grown at a paltry 2.6% a year, as measured by M2. In addition, since the 1950s money velocity has been negative, decreasing at an average rate of close to 2% a year. This is one of the most striking and consistent macroeconomic relationships on record. Japan’s slow broad-money growth mixed with a contracting money velocity has held down nominal GDP growth."

"As long as M2 growth in Japan remains minimal, low inflation—or outright deflation—will prevail regardless of whether the public and private sectors are running savings surpluses or deficits. As Milton Friedman counseled, 'Inflation is always and everywhere a monetary phenomenon.' The same is true of deflation. Money dominates."

"According to the Bank of Japan, the basic idea of interest-rate targeting is that if interest rates can be pushed low enough, sooner or later companies or households will start spending. But as Irving Fisher showed a century ago, interest rates follow inflation; they don’t precede it."

"MMT advocates would have us believe that governments can run deficits without limit as long as they are financed by securities denominated in their own currencies—at least until inflation takes off. What they fail to understand is that budget deficits have nothing to do with inflation, unless they are financed by rapid broad-money growth. Money dominates economic trends, and classical monetary theory tells us why. Beware of those peddling MMT snake oil."