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Headlines Always Said There’s No Bubble, Until There Was

A report from Al-Monitor on Lebanon. “‘Our dream was to have a nice home so we could decorate the way we wanted,’ Nour, not her real name, told Al-Monitor. ‘So we went searching for houses back in 2014.’ The young couple entered the housing market just after a real estate boom, when the sector constituted more than 40% of all banking loans in Lebanon. The bank told the couple that the loan would be at zero interest, and, ‘If there is a change in the interest, it will be $2 or $3, maximum $4, a month,’ Nour would later remark, ‘We didn’t understand back then what was happening.'”

“‘In 2018, we went to the bank to sign the [annual] new schedule of payments, and we saw it would be $126 [extra] each month,’ Nour said. In April the following year, the couple had an extra $500 a month added to their payment, leaving them with a monthly mortgage debt of nearly $2,000, and no knowledge of why it was happening. ‘Our wage in Lebanon is like $1,000 [a month],’ Ahmed said. ‘What do [bank officials] want? We need to live. We have a kid. How much is this house going to cost us, like $1 million?'”

“The new housing being built was expensive with the average value of real estate more than doubling in 10 years, from $48,000 in 2007 to $103,000 in 2017. This contributed to reducing local demand, thus houses staying on the market, including by 2018 approximately $9 billion worth of empty, predominantly luxury, apartments.”

From Bisnow on Dubai. “Where the Arabian Desert meets the Persian Gulf, this city-state seemingly emerges from nothingness. But the value of Dubai’s real estate is plummeting. For the development community, defaulting on a loan was punishable with jail time. That often meant the only way to handle a failed Dubai project was to book a one-way ticket out and never return. ‘There are so many development dinosaurs still lurking around the city from the last crash,’ said Marwan Aboudib, a partner at Dubai city innovation incubator Tekuma. ‘People filed [for] bankruptcy and were chased out of town. You’d see Ferraris simply abandoned at the airport.'”

From Reuters on Nigeria. “Idris Salako, commissioner for the Lagos state ministry for physical planning and urban development, said the government wants to make the city ‘a 21st century economy and destination for investment.’ ‘A lot of structures that are uncompleted or abandoned in the city may be distressed and not fit for habitation,’ he said in a phone interview. ‘Some of them are on drainage channels or unoccupied because of high rent or sales value.'”

The New York Times. “Money is so cheap — a 20-year mortgage can be had in Paris or Frankfurt at a rate of less than 1 percent — that borrowers are flocking to buy apartments and houses. And institutional investors, seeing a chance for lucrative returns, are acquiring swaths of residential real estate in cities across Europe. In some parts of Europe, said Jörg Krämer, the chief economist at Commerzbank in Frankfurt, valuations have already returned to or exceeded levels that preceded the Continent’s debt crisis a decade ago, igniting concerns that the property boom could end badly.”

“The head of a local renters’ group said investors were ‘betting on concrete gold.’ ‘The risks are real, because negative interest rates in Europe are cemented,’ Mr. Krämer said. ‘What’s important for the economy as a whole is to prevent the emergence of a dangerous new bubble.'”

“With little room to maneuver, the European Central Bank recently called on politicians in euro countries to take bolder steps to prevent asset bubbles from growing. ‘This is all new territory,’ Matthias Holzhey, the head of Swiss real estate at UBS said. ‘Some caution is warranted because in the past, no one really forecast a house price crash,’ he said. ‘Headlines always said prices are rising, but there’s no bubble,’ he added. Until there was.”

The Irish Times. “‘What degree of #groupthink is needed to believe that this is consistent with a chronically undersupplied market,’ John McCartney, director of research at estate agents Savills, tweeted last week. He was talking about slowing house prices – the latest official figures suggest they are now rising by just 0.9 per cent on an annual basis, the lowest level in 12 years – and slowing rents.”

“Figures this week show Dublin rent inflation has slowed from 9.6 per cent a year ago to 6.6 per cent. McCartney’s point is that inflation is slowing in both channels of the property market because supply is catching up with demand despite endless suggestions that we’re way off ever meeting the level of demand required. McCartney is a bit of a maverick in the estate agents sector and regularly gets hauled over the coals for not talking up the market from an investors’ perspective, which many in his bailiwick seem constitutionally obliged to do.”

The Free Press Journal on India. “Former Chief Economic Adviser Arvind Subramanian has called the current economic slowdown as the ‘second wave’ of the Twin Balance Sheet (TBS) crisis which will soon turn into a ‘Great slowdown.’ Subramanian said in a draft working paper for the Harvard University’s Centre for International Development, ‘Clearly, this is not an ordinary slowdown. It is India’s Great Slowdown, where the economy seems headed for the intensive care unit.'”

“Towards the end of June 2019, there were a total of 10 lakh houses accounting for Rs 8 lakh crores in top eight cities of India. Soon the downfall was realised and many banks and mutual fund firms stopped lending to NBFCs. On which Subramanian and the former head of the International Monetary Fund’s India office Josh Felman argue, ‘In some ways, this may have been India’s version of the US housing bubble.'”

The Sydney Morning Herald in Australia. “NSW construction companies collapse at levels not seen elsewhere in the country with more criminal misconduct allegations made against them than in other states. Administrators found evidence of wrongdoing in 561 construction industry businesses that failed in NSW in 2017-18, reflecting a pattern of ‘phoenixing’ that is difficult to prosecute because it is not illegal in all cases. Illegal ‘phoenixing’ occurs when company directors move assets from one company to another to avoid debts or liability for issues like building defects leaving creditors with the bill when the company is liquidated. It costs the economy up to $5 billion each year.”

“On Monday, the Herald detailed the broken business model in the NSW building industry that experts say has reached epidemic proportions: developers and builders creating $2 companies to carry out apartment projects, taking the profits and then shutting them down before they can be pursued in court over any defects bill. Less than 11 cents in the dollar was recouped from insolvent companies in 97 per cent of cases over the past 3 years.”

The Globe and Mail in Canada. “Over his career, Ed Rempel, an independent fee-for-service financial planner in Toronto, has seen several housing-market cycles, including the market crash in the late 1980s. ‘I knew people who were multi-millionaires with a house and four or five rental properties. A few years later, they declared bankruptcy. All the properties went down and were worth less than the mortgage. And all the rents went down, they were negative cash flow. They lost everything. There was no diversification,’ he says.”

From The Oregonian. “The Evergreen International Aviation empire, once one of Oregon’s largest employers, had its ups and downs before crashing into bankruptcy. Flying almost the same course has been the fairy-tale estate the company’s late founder, Del Smith, erected alongside the Willamette River in Dundee. More than $18 million was poured into the 46.6-acre property at 22111 Riverwood Road and yet no one stepped up to buy it after Smith died in 2014 and the asking price dropped from $6 million in April 2017 to $5 million in August 2017.”

“Two years later, on Aug. 21, the property was put on the auction block and an offer to buy it ‘as is’ was accepted. The transaction was completed Dec. 16, 2019. The price: $3 million.”

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This Post Has 86 Comments

  1. ‘More than $18 million was poured into the 46.6-acre property…The transaction was completed Dec. 16, 2019. The price: $3 million’

    Again, choose any definition of a bubble bursting and you can see it here. As with NYC, Miami, bay aryans, etc.

      1. Del Smith was the founder of Evergreen Aviation. Founded in 1960, Evergreen was primarily known for commercial helicopter operations in agricultural and forestry applications. The airline division, Evergreen International Airlines, operated all-cargo Boeing 747 freighters. Evergreen ceased all aviation-related operations in 2013 due to financial challenges.

        He also built the Evergreen Aviation & Space Museum
        https://en.wikipedia.org/wiki/Evergreen_Aviation_%26_Space_Museum

        We’ve taken our kids to this Museum many times during their formative years while returning home from our annual visits to Newport on the Oregon Coast.

          1. “When Boeing switched from Evergreen to rival Atlas Air…”

            Atlas likely shared more manna with more Senators.

  2. ‘What degree of #groupthink is needed to believe that this is consistent with a chronically undersupplied market’

    Especially when glut, oversupply, PRICE REDUCED has become common.

    ‘McCartney is a bit of a maverick in the estate agents sector and regularly gets hauled over the coals for not talking up the market from an investors’ perspective, which many in his bailiwick seem constitutionally obliged to do’

    The REIC horse-hockey is global.

  3. ‘In some ways, this may have been India’s version of the US housing bubble’

    Sharp thinking here. India’s been sinking like a turd in a well for many years. “Oh, it may a bubble!” says the IMF egg-heads.

  4. ‘So we went searching for houses back in 2014.’

    ‘The bank told the couple that the loan would be at zero interest, and, ‘If there is a change in the interest, it will be $2 or $3, maximum $4, a month,’ [Really! Trust me on this!]

    – Fast-forward to 2018 (reality bites)…

    ‘In 2018, we went to the bank to sign the [annual] new schedule of payments, and we saw it would be $126 [extra] each month,’ Nour said. In April the following year, the couple had an extra $500 a month added to their payment, leaving them with a monthly mortgage debt of nearly $2,000, and no knowledge of why it was happening.

    ‘What do [bank officials] want? We need to live. We have a kid. How much is this house going to cost us, like $1 million?’

    – Realtors AND Bankers are liars? (insert my shocked face here)

    1. Do they not offer fixed rate mortgages in Lebanon? Or is this more of the “teaser rate” crap we had here in the last bubble?

      1. Long term, fixed rate mortgages are mostly an American thing.

        Though the idea of buying a property, with or without a mortgage, in Beirut gives me pause. Yeah, I know, the civil war ended, but still.

    1. Btw, Yun’s argument for the decline, is and always will be, shortages of inventory. Must be local because inventories are rising up here in the bay area, ive been suprised to see so many new listings over the holidays here.

      1. And they also never factor into that “shortage” all of the listings for homes that died on the market and expired.

        1. lots of those in my area, realtor. One realtor i gave a 50% offer to and still continues to market to me, told me he instructed all his clients to pull off the mls in dec to relist as new again in jan 2020. he also said jan will be very interesting with all the new listings. The amount of listings going off here dont make much impact as more are added daily and very little sales going on. merry cr8rmas realtor!

  7. The New York Times. “Money is so cheap — a 20-year mortgage can be had in Paris or Frankfurt at a rate of less than 1 percent — that borrowers are flocking to buy apartments and houses. And institutional investors, seeing a chance for lucrative returns, are acquiring swaths of residential real estate in cities across Europe. In some parts of Europe, said Jörg Krämer, the chief economist at Commerzbank in Frankfurt, valuations have already returned to or exceeded levels that preceded the Continent’s debt crisis a decade ago, igniting concerns that the property boom could end badly.”

    – “Money is so cheap…”. There’s your problem! Central banks: Forever blowing asset bubbles. Intuitively obvious to the most casual observer, and yet most every economist – even some Nobel Laureates – are perplexed…A conundrum I guess.

    “…the property boom could end badly.” [Never happens. /s]

  8. ‘Our wage in Lebanon is like $1,000 [a month],’ Ahmed said. ‘What do [bank officials] want? We need to live. We have a kid. How much is this house going to cost us, like $1 million?’”

    Did you not pay attention in math class, Ahmed?

    1. I thought that the “like” interjection was only an American idiom. Do people in Lebanon gag each other with spoons too?

      1. “‘In 2018, we went to the bank to sign the [annual] new schedule of payments, and we saw it would be $126 [extra] each month,’ Nour said. In April the following year, the couple had an extra $500 a month added to their payment, leaving them with a monthly mortgage debt of nearly $2,000, and no knowledge of why it was happening. ‘Our wage in Lebanon is like $1,000 [a month],’ Ahmed said. ‘What do [bank officials] want? We need to live. We have a kid. How much is this house going to cost us, like $1 million?’”

        It was still cheaper than renting. Suck it up buttercup! Real estate only goes up

      2. I thought that the “like” interjection was only an American idiom.

        I hear it in China too. Frank Zappa took it to the whole world. I think it would have remained a local thing for much longer if it hadn’t been for him.

      3. I thought that the “like” interjection was only an American idiom. Do people in Lebanon gag each other with spoons too?

        Being that people in Lebanon mostly speak Arabic, I suspect that the “likes” were introduced in the translation.

    2. “We have a kid. How much is this house going to cost us, like $1 million?”

      “Don’t buy (or create) stuff you cannot afford…It’s in the book. It’s only 1 page long…”

  9. “Money is so cheap — a 20-year mortgage can be had in Paris or Frankfurt at a rate of less than 1 percent — that borrowers are flocking to buy apartments and houses.

    “Flock” being the operative word.

  10. Remember when scdave warned us that the sky would fall and Les Deplorables would run amok if Trump got impeached? Instead, the reaction from everyone aside from the Swamp Creatures and their media minions has been a collective yawn.

    1. WashPost’s Rachael Bade Says Her ‘Merry Impeachmas’ Celebration Wasn’t What Everyone Knows It Was

      JOHN NOLTE19 Dec 2019

      Rachael Bade, the Washington Post staffer who publicly shared her “Merry Impeachmas” celebration and is now apparently lying about it, does not just work for the Washington Post, she’s a congressional reporter for the Washington Post… and a CNN contributor.

      Paul Kane identifies as a Washington Post congressional reporter.

      Mike DeBonis identifies as a Washington Post congressional reporter.

      So what we’re talking about here, is not a group of opinion columnists or pundits. These are five people who identify, who pass themselves off as, and who are sold to us as unbiased, capital “J” journalists.

      And yet, here they are, not only joyously celebrating Donald Trump’s impeachment… Oh, no, that’s not the worst of it. The worst of it is that they know the institution they work for — the corporate media — is now so corrupt, so deranged with hate, so bubbled and tribal, that it is okay to “own the Trumptards” by tweeting out a photograph of that celebration without any fear it will result in any kind of disciplinary action.

      Keep in mind these despicable people would never dare wish us a “Merry Christmas,” because that actually would result in sanctions and disapproval within their social circles, a tsk-tsk from that plague of Jeffs known as Zucker and Bezos.

      https://www.breitbart.com/the-media/2019/12/19/nolte-washposts-rachael-bade-says-her-merry-impeachmas-celebration-wasnt-what-everyone-knows-it-was/

    2. https://www.nationalreview.com/2019/12/an-impeachment-role-for-the-supreme-court/

      “The preferable next step would be for the Senate to ask the Supreme Court to determine whether the four grounds cited by the Constitution for removal of a president are exclusive, and accordingly this impeachment bill need not be tried, or those categories are merely illustrative, and Gerald Ford was correct when he said impeachment can be for any reason the majority in the House of Representatives determines.”

      “Only the impartial judgment of the third coequal branch of government can cure the system and both parties of this potentially terminal illness of degrading impeachment into a parliamentary non-confidence motion. This is not just the appropriation of a post-Watergate tendency into an accepted practice; it is a radical alteration of the Constitution without any explicit reinterpretation, much less a formal amendment.”

      1. With all due respect I don’t think the High Court has to approve anything. I think a dismiss without a trial is within the power of Senate based on the Constitution giving sole power to Senate.

        They loved to say that the House could make any rules they want and impeach for any reason. Likewise the Senate can do what they want and dismiss IMHO.

        The House didn’t have to get a Constitution test by the high Court while a Kangaroo Court was conducted, so why should the Senate

        If the Framers wanted this much involvement from the High Court they would of put it in.

        1. I don’t think the High Court has to approve anything

          It doesn’t have to but may be asked to. The constitutional implications extend beyond this impeachment.

          2. Wouldn’t it be that if he was tried in Civil / Criminal Court for crimes after he was ousted he would have Constitution protection in a criminal trial.

            Abuse of power doesn’t seem to carry criminal liability. But if they accused him of treason like they were with the Russian Hoax,it carries penalty of death. Bribery carries a 5 year prison term and 2million dollar fine per each infraction.

            It’s very serious business when a party is accused of a crime and Trump accusers don’t get this.

            This lynching of Trump while the Dems ignore real crimes by the FBI, Clinton and Biden is the sickest thing I have ever seen.

          3. The issue is ripe and particularly consequential. I’d be surprised if the Supreme Court turned it down should it be asked.

          4. The issue that I think the Supreme Court needs to address is the threshold for impeachment, specifically the meaning of “high crimes and misdemeanors.” Without that clarification, we’ll have perpetual partisan impeachment proceedings.

          5. Without that clarification

            I don’t think “clarification” could possibly prevent what has been going on. We’ve had three years of accusations that turn out to be empty at best, fabricated and lied about at worst, only to be dropped and the next new thing is in our faces, relentlessly. These gangsters don’t need “clarification” when they can make stuff up as they go along with impunity.

          6. I don’t think “clarification” could possibly prevent what has been going on.

            Agreed, but it could limit the use of the impeachment process.

            FWIW, I’m intellectually starved. I found the article intriguing.

    3. I’m definitely yawning.

      Investors, on the other hand, were busy today buying stawks. S&P over 3200 for the first time ever.

    4. Instead, the reaction from everyone aside from the Swamp Creatures and their media minions has been a collective yawn.

      I think all the non-swamp folk tuned it out a long time ago.

  11. April the following year, the couple had an extra $500 a month added to their payment, leaving them with a monthly mortgage debt of nearly $2,000, and no knowledge of why it was happening. ‘Our wage in Lebanon is like $1,000 [a month],’ Ahmed said

    A monthly payment that is 2X their monthly income. Sounds sustainable.

  13. Eurozone banks made huge euro-denominated loans to Turkish developers to fund a speculative building spree. Now Istanbul’s skyline is littered with half-finished skyscrapers, while the Turkish lira is again sliding against the dollar and euro, making the importation of building supplies prohibitively expensive and making it increasingly doubtful that cash-strapped Turkish borrowers can repay their loans. Looks like EU banks are going to need more bailouts.

    https://english.alarabiya.net/en/business/2019/12/19/Turkish-lira-slides-again-after-Ankara-s-latest-intervention.html

  14. Fauxahontus is convening a pow-wow of Indians to issue a groveling apology for falsely claiming to be one of them. She’ll have to make heap big promises of taxpayer largess to Native American tribes to get them to smoke the peace pipe over her cultural appropriation.

  16. After World War 2 when the USA went into Nation building mode, the 30 year
    fixed loan for shelter that was based on reasonable qualifying made sense.

    The job stability before Globalism and unfair trade made the secondary market for home loans a good investment.

    The removal of the Glass Steagal Act in the late nineties turned lending into a fraud and a way for Wall Street to create ways to make money on highly leveraged loans that were misrated and bailed out on. the taxpayers dime

    This massive fraud has not been corrected and the false market was reinflated.

    You have the Government backing faulty loans and fake rigged prices that include school loans.

    Savers are penalized , pension plans are penalized and a high price is paid for lack of proper correction of the Wall Street fraudulent lending scam that started to burst in 2005.

    You have to separate lending from investment as the Glass Steagal Act enforced when it came out of the correction of the stock market crash in 1929.

    In other words they discovered that you can’t make a loan based on the notion that the investment will go up. You can only make a loan based on the party qualifying with a proper current value of the investment, rather than a notion of future value.

    Lending is just a big joke now and prices are just as fake as 1929 stock prices.

    I’m happy that a Court just ruled that Obamacare is unconstitutional. Basing your insurance payments on your income rather than your health risk or age is Commie. The medical industry wants to get around 11thousand per head per year as well as price fix. Another example of rigged markets that the Government interference is corrupting.

  17. Our friend, Diana Olick, at CNBS with the shortage story again

    https://www.cnbc.com/2019/12/19/housing-shortage-hits-new-record-low-igniting-prices.html

    “Supply is leanest on the low end, where demand is strongest. For homes priced below $100,000, inventory was down 15% annually. For those priced between $100,000 and $250,000, supplies were 7% lower annually. Supply is only growing on the high end of the market, where demand is weakest.”

    So what is the stats on the high end (i.e., how much is it growing?) or we only show stats that benefits the “shortage” narrative? I bet demand at $50,000 houses is even higher, just like there is a great demand for $10,000 Lamborghini or Ferrari.
    …
    “The expectation is that prices are going to continue increasing, especially at the lower price points,” said Jessica Lautz, vice president of demographics and behavioral insights at the NAR. “At the very high end there is supply, but there are not many buyers at the very high end of market.”

    “Demand is surging, despite rising prices.”

    How many houses are listed for $100,000 – 200,000? Even in low prices states like Texas, you are not seeing houses listed in these price range.

    1. A few years back when we were walking homes with a realtor, we were told that the houses that were listed for $200K to 250K where we were interested in buying were essentially vacant lots intended to be sold to builders, to then tear down whatever was on them for a new, more expensive home.

      Not sure if that’s representative of other parts of the country, but it’s a contributor to that “shortage” in this area, if only in desirable zip codes. Still plenty of homes in that price range or lower around here, if you don’t object to getting burgled, assaulted or shot at.

    2. There is definitely a shortage of affordable housing. But not because there’s a shortage of houses. Its simply due to this effed-up market and bubble.

  19. The Irish Times. “‘What degree of #groupthink is needed to believe that this is consistent with a chronically undersupplied market,’

    I remember stories here of entire neighborhoods of unsold new construction in Ireland after the Bubble 1.0 crash.

  21. https://www.nytimes.com/2019/12/19/technology/tech-IPO-san-francisco.html?

    “But then the wave of tech initial public offerings — the one that was supposed to mint San Francisco’s new ultra rich — fizzled. The stock of Uber, the ride-hailing giant, has dropped nearly 30 percent since the company went public in May. Lyft shares are down nearly 40 percent. Pinterest and Slack have declined, too.

    San Francisco has been left as a slightly more normal town of tech workers who got rich-ish, maybe making a few hundred thousand dollars. But that doesn’t go far in a city where the median cost of a single family home is about $1.6 million.”

    OH DEAR

    1. On the day of the Uber IPO, I was on a road trip. And listening to CNBC and Bloomberg on Sirius XM. Those channels were giving practically nonstop coverage of that IPO. That’s how high the expectations were.

      2. “To wit: Kalanick Set To Liquidate Entire Uber Stake After $2.5 Billion Dump“

        Joining newmans club of getting out before its worthless. Cant blame him!

    2. “But that doesn’t go far in a city where the median cost of a single family home is about $1.6 million“

      OH THE HORROR!!! When you want to get on the property ladder, you got to pay (me) to play. 3% down is a mere 48k which is nothing to all the rich, cash suitcase carrying, IPO or money laundering marks. Remember, NOW is the best time to buy! Or sell!

    2. Haha…bad boy Boris!

      Boris Becker had to cough-up a several million after he fathered a daughter, Anna, with waitress, Angela Ermakova, on the staircase of the restaurant Nobu in 1999. “–On the staircase?” “Well, there was no broom cupboard.”

    1. And all mortgages in the UK are recourse. Walk away when your house is underwater and the bank will come after you for its pound of flesh.

      1. They can come after you all they want. If you don’t have the ability to repay what you borrowed, the lender is going to have to eat the loss on the loan. Given the magnitude of the UK housing bubble, and the dire financial straits of many if not most UK FBs, there are going to be massive write-offs of non-performing loans.

        1. They can (and do) garnish your wages. It might take a long time, but you will pay it back.

          There will be write offs, but they will also come for their pound of flesh. And from what I have read, it’s a lot harder to file for BK in the UK than in the US.

  25. How many Yellen bux perished in China’s bike-sharing speculative mania?

    Rusting relics from China’s sharing economy

    “It now appears bike sharing [was] the stupidest business, but the smartest brains of China all tried to get in,” Wu Shenghua, the founder of now-defunct 3Vbike, told the Reuters news agency. “It now seems ridiculous.”

    But before the wheels fell off, the road ahead was paved with eco-friendly green intentions, which would lead to a pot of gold just over the horizon.

    https://www.asiatimes.com/2019/12/article/rusting-relics-from-chinas-sharing-economy/

    1. It would take a heart of stone to read about Real Journalists at globalist propaganda outlets losing their jobs right before Christmas, and not laugh.

    1. Citizen! Calling out St. Greta on her hypocrisy or challenging the dogma crafted by her globalist handlers is strictly verboten! Your social credit score is now on review for downgrade.

  31. The supra-national banking organizations are belatedly warning that the massive debt burdens built up after 10 years of central bank “accommodative” monetary policy are going to crush developing countries – not to mention the American middle class. Looks like the gold collar criminals at the international banking bodies see the implosion of the Everything Bubble approaching, and are shifting into CYA mode.

    https://news.yahoo.com/massive-debt-wave-could-crash-developing-countries-world-183454098.html

  32. “The head of a local renters’ group said investors were ‘betting on concrete gold.’ ‘The risks are real, because negative interest rates in Europe are cemented,’ Mr. Krämer said. ‘What’s important for the economy as a whole is to prevent the emergence of a dangerous new bubble.’”

    Even cement eventually breaks up and crumbles into gravel.

    The Wall Street Journal
    Economy
    A Pioneer of Negative Rates Pauses the Experiment
    Sweden’s central bank, the first to apply negative rates on deposits, moves key rate back up to zero
    By Paul Hannon
    Updated Dec. 19, 2019 8:42 am ET

    Sweden’s central bank, one of the pioneers in wielding negative interest rates, became the first to end that policy Thursday, a move closely watched by other institutions that have resorted to what was supposed to be a radical and short-lived measure.

    In 2009, the Riksbank, the world’s oldest central bank, became the first to charge commercial banks to hold deposits rather than pay them interest. In 2015, it lowered its key policy rate below zero, following a similar move by the European Central Bank the year before.
    …

  33. “Ed Rempel, an independent fee-for-service financial planner in Toronto, has seen several housing-market cycles, including the market crash in the late 1980s. ‘I knew people who were multi-millionaires with a house and four or five rental properties. A few years later, they declared bankruptcy. All the properties went down and were worth less than the mortgage. And all the rents went down, they were negative cash flow. They lost everything. There was no diversification,’ he says.”

    No diversification is bad, but I suspect that a fatal level of leverage may have been the real problem.

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