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Some Of Those Lending Decisions Were Bad From The Start

A report from the South China Morning Post. “Mainland Chinese mall landlords have moved to relieve the pressure on stores and restaurants brought on by the Wuhan coronavirus outbreak, by cutting rents and offering zero-rent periods. ‘The developers are answering the summons of the government. [The rent cuts] will not have a big impact on profits of these developers, as the time frame for the rent cut is relatively short,’ said Yang Hongxu, deputy head of E-house China R&D Institute. ‘The bigger impact is likely to be on cash flow, as people are unlikely to purchase houses in times when sales offices of property projects are prohibited from opening.'”

The Financial Express on India. “Wish Town was once a sought-after destination for India’s aspiring middle classes seeking a slice of the ‘good days’ promised by an ambitious Prime Minister Narendra Modi when he swept to power more than five years ago. Now, it’s a symbol of lost hope. A sprawling 1,063-acre property development located in Noida, just outside New Delhi, Wish Town was supposed to give would-be home buyers sparkling shopping malls, pristine golf courses and modern medical clinics. Apartments that should have been delivered by 2012 were billed in the media as ‘global homes with an Indian address.'”

“Today the area is dotted with unfinished apartment blocks, abandoned part way through construction. Dilapidated buildings stand vacant, with overgrown bushes instead of manicured lawns. Most of the streets are empty of cars and people, aside from a few security guards.”

“Home buyers like Manish Choudhary, a senior executive with an information technology company, remain bitter about their circumstances. ‘We can’t plan vacation and buy even normal stuff. I would have sent my child to a better school if the mortgage and rent wasn’t there,’ said Choudhary. ‘The slowdown has hit the class which is paying taxes.'”

From Standard Media on Kenya. “Mondays have turned into dreaded days for more reasons than just being the start of a work week. For anyone who owes a bank money for property they bought through a loan, and has started getting calls and emails about the pitfalls of default, this is the day they find out just how close their lender is to repossessing it. The number of properties going under the hammer has been on the rise, with auctioneers paying for up to six pages in the dailies to list what they have available for sale.”

“And this sale of distressed properties through auctions as banks try to recover the money advanced to struggling customers is expected to continue in the coming months. ‘Another cause for increased foreclosures is that the property market is gaining its real value as opposed to the overrated prices in the last decade or so, where properties were sold for more than double their real market values,’ said Linda Mokeira, a property consultant. ‘Any borrower who bought a property that was overpriced five years ago would rather default on repayments (maybe running for 15 to 20 years) than commit themselves to a lifetime on a property whose real value would be half, or even less, of the purchase price.'”

“An official with one of the leading mortgage providers said some of the banks had burned their fingers owing to careless decisions to lend, even in circumstances where it did not make business sense. ‘Foreclosure is the last resort for any lender, but looking at some of the properties and where they are located, we could say that some of those lending decisions were bad from the start. It was only logical that some of the contracts would end in foreclosure. The credit decision was flawed from the beginning. Theirs was bad lending decision and it was largely expected,’ said the official, who asked not to be named as he is not authorised to speak to the media.”

“The official added that the crisis in the property market was a self-correction of the ‘wanton escalation in property prices that we saw in the early 2000s. There is an oversupply, where most developers deemed there was demand. The yields, whether rental or capital gains, are coming down … it is just a mechanism where the market is correcting itself. In early 2000s, developers were making over 200 per cent returns on investment on their projects.'”

The Times of London on Scotland. “The ‘Boris Bounce’ hasn’t reached Scotland yet so you would be forgiven for feeling hopeless if your home has been on the market for a year and you are now considering a price cut. Lowering the price of your home should be seen as just another marketing strategy, and not a disaster, says Jamie Macnab from the estate agency Savills. ‘There is a stigma and a loss of faith in reducing the price, but sometimes you get to the point where that has to happen,’ he says.”

“There are some sellers who are so fixated on a price that they will instruct their estate agent to list their home at over home report value. They can be guaranteed that every interested party will query the price when they call for more details, and they will always, always be disappointed.”

From PA Now in Canada. “A new report from the Saskatoon and Region Home Builders’ Association (SRHBA) confirms 2019 was a much slower year for the construction industry. From 2018 to 2019, single family home permits in Prince Albert decreased from 85 down to 10. Looking as far back as 2014, there were 156 related permits issues in that year. Prince Albert Northcote NDP MLA Nicole Rancourt read the report and explained to paNOW the bigger picture is fewer permits means fewer people working.”

“‘I read a report here that 3,400 people in Saskatchewan that are unemployed in the industry and when we have people looking for work, potentially outside of our province and losing these trained individuals, that’s troubling,’ she said.”

The Sydney Morning Herald in Australia. “There’s more than just cheap credit at play here. In the second half of 2019, banks were also allowed to slash the internal interest rates that they use when checking how potential customers would cope if interest rates were to rise. And from this month, the government started guaranteeing a portion of 10,000 first-home buyer loans a year. The scheme allows people to take out a loan with a deposit of a little as 5 per cent, without paying the added cost of mortgage insurance.”

“Another house-price boom would encourage more building activity, creating jobs, and could improve consumer sentiment through a so-called ‘wealth effect.’ However, it could also create its own problems. Rising prices would clearly worsen the problem of housing affordability, and lead to people taking on even more debt. ANZ this month pointed out average loan sizes for first-home buyers have been pushed up to a record high of about $410,000.”

“Eliza Owen, CoreLogic’s head of residential research, says the first-home buyer guarantee scheme may ‘marginally boost’ demand from buyers, but it may only be bringing forward purchases that would have occurred anyway. ‘While there’s probably an element of FOMO at play, the first-home buyer cohort will probably decline as prices rise further in 2020,’ Owen says.”

From Domain News in Australia. “Property prices in some of Sydney’s most liveable suburbs have recorded six-figure price cuts, new data shows, with more than a dozen top suburbs now priced below the city-wide median. In Woollahra, ranked 12th out of 569 suburbs assessed for the liveability study, the median house price dropped a whopping $501,887 or 15.2 per cent to a median of $2.8 million.”

“Prices in Cremorne (ranked 28th) dropped about $486,000, the Cronulla (39) median fell about $477,000 and Paddington (15), Mosman (17) and Northbridge (24) all recorded drops of at least $228,000. Of the 100 most liveable suburbs, 11 had a median house price below the city-wide median of $1,142,212, recorded over the December quarter. Jannali, in 13th place, was the most liveable of the suburbs, and the fourth-most affordable with its median falling 2.6 per cent – or $25,426 – over the year to median of $952,500.”

“Sutherland (18) was the most affordable after its median fell 10.2 per cent – more than $100,000 – to $882,500. Engadine (51), Caringbah (98) and Gymea (64), were next – with the latter two also seeing substantial falls of almost $100,000 and $119,000. Warwick Farm saw the largest price drop of any Sydney suburb in 2019, with the median falling 20.2 per cent, or $94,925.”

This Post Has 123 Comments
  1. Lot’s of FB’s in the India article.

    ‘Property prices in some of Sydney’s most liveable suburbs have recorded six-figure price cuts’

    Yeah, and the Australian media/government/central bank are working 24/7 to stampede first time buyers into the buzzsaw. Notice the wider MSM see nothing. Housing bubbles these days are completely contrived acts of policy. I really don’t think Greenspan wanted a bubble cuz when he finally figured it out, he wouldn’t stop warning people about it. But Bernanke and Yellen, it was THE plan.

    1. We can’t plan vacation and buy even normal stuff. I would have sent my child to a better school…

      You bet your child’s future and lost. A more classic picture of a degenerate gambler cannot be framed.

  2. Are we there yet?

    Wealth
    Elon Musk Add$ $2.3 Billion$ to his Fortune in 60 Minute$

    By Sophie Alexander |Bloomberg | January 29, 2020

    Elon Musk’s fortune swelled by $2.3 billion in the span of an hour Wednesday after shares of Tesla Inc. soared in extended trading on stronger-than-expected fourth-quarter earnings and an accelerated timetable for the new Model Y crossover SUV.

    The electric-vehicle maker’s stock, which closed at $580.99, surged 12% to $649 at 5:16 p.m. in New York, boosting the chief executive officer’s net worth to about $36 billion, according to the Bloomberg Billionaires Index.

    1. It lost $862 million in 2019.

      Let’s hope the shut down of the Shanghai factory isn’t a stumbling block for them.

      1. eye reckon one could always $hort.thee.$tock & make ton$ of monie$? … (full di$clo$ure: eye own 0 $hares in Te$la … only a $100.00 depo$it on his futuristic made.in.America Studebaker pickup truck)

        Tesla posts first annual profit

        By Chris Isidore |CNN Business | Thu January 30, 2020

        “… Tesla said that even on a strict accounting basis it expects to be profitable going forward. In the past it was known for burning through cash, raising fears of a cash crunch. Now it said it expects to be cash flow positive going forward except for brief periods tied to the launch and ramp-up of new vehicles.”

        “We continue to believe our business has grown to the point of being self-funding,” said the company in its earnings release. “Continuou$ volume growth, capacity expan$ion and ca$h generation remain the main focu$.

          1. Eyes only pasted the article title, (+ $$$ for True.Believer’$ emphasi$)

            Faux.New$: “We distort, you deride!”

          2. (Eye think yer correct BlueSkye, & Chris is either a nasty journalist or made an unreviewed error.)

          3. An article title is likely all that Robinhood (retail) investors read.

            https://www.cnn.com/2020/01/29/business/tesla-earnings/index.html

            “Tesla posted its first annual profit, easily topping Wall Street’s forecasts in the final three months of 2019.”

            “Tesla has had only a handful of quarterly profits in its 10 years as a public company. On a strict accounting basis the company posted yet another loss for 2019. However, Tesla posted a $386 million profit in the final three months of 2019 using the operating basis followed by most analysts and investors. That left it with a narrow $35.8 million profit for the year.”

        1. “On a strict accounting basis the company posted yet another loss for 2019. However, Tesla posted a $386 million profit in the final three months of 2019 using the operating basis followed by most analysts and investors. That left it with a narrow $35.8 million profit for the year.”

          So what was it, a profit or a loss for the year? Geezuz, has there always been such accounting gimmicks to obfuscate the financials of publicly traded companies?

  3. ‘As China contends with the Coronavirus affecting one of its most populated regions, that nation’s use of fossil fuels is drastically reduced, which is causing a ripple effect worldwide. “You’ve seen China limiting its own population about the country,” Eric Smith, a professor with Tulane University’s Energy Institute says if China’s not using fuel, there’s a lot of it around. ‘

    “To a degree these things are disruptive, they’re shutting down the use of fuels for transportation,” Smith continues. “And that’s what we make in the refineries along the coast.”

    ‘Louisiana refineries mainly make fuels for transportation, and fuel stocks are running high at the moment. The result has been a sizable drop in the price of regular gasoline across the region. But the drop in gas prices due to sizable fuel stocks is just the tip of the iceberg, China buys a lot more petroleum products than gas: “From a petro-chemical standpoint, which is really more important to Louisiana these days, all of the plastics that we are exporting, certainly their prices can do down.”

    ‘But Smith maintains the U.S. is leading low cost producer of these products and he says the low cost maker always comes out ahead. “There’s a lag effect when prices are coming down,” he says. “This is not going to last forever. The Gulf Coast refineries are world-class competitive installations. What you will see are higher cost refineries in other parts of the country are probably suffering more.”

    https://wwl.radio.com/articles/china-lockdown-causes-energy-glut-gas-prices-drop

    1. Wowsers, that Pha$e1 Article v7.6 $it.u.ation didn’t take long to emerge.

      POLICY
      China Viru$ Raise$ Question$ About Its Trade Deal With U.S.

      (Bloomberg) — China’s promise$ in its pha$e-one trade deal to increase purchase$ from the U.S. — which experts already were calling “unreali$tic” — will be even tougher to fulfill now that a new viru$ is hammering demand and interfering with $upply chain$.

      In the first year of the deal, which takes effect in mid-February, China committed to buy an extra $76.7 billion worth of American goods beyond what it purchased in 2017, and an additional $123.3 billion in the second year.

      As the novel coronavirus spreads, attention is focusing on Article 7.6 of the agreement, which states:
      “the U.S. and China will consult “in the event that a natural disa$ter or other unfore$eeable event” delay$ either nation from complying with the agreement.”

      “It obviously is going to have some ramification$ economy-wide, which we hope will not inhibit the purcha$e goal that we have for this year,” U.S. Agriculture Secretary Sonny Perdue said Wednesday. “We’ll have to look ahead and see. But the honest answer is we just don’t know yet. But we’re hoping for a very quick conclusion.”

      https://www.agweb.com/article/china-virus-raises-questions-about-its-trade-deal-us

      1. This is why being codependent with Foreign Country that doesn’t share the same values as USA is a risk and why Globalism is flawed.

        1. They would counter, but who is going to steal our intellectual property and launder money to buy our airboxes if we don’t do bizness with the Chicoms? Let’s hope this thing doesn’t make it into India.

          1. ‘U.S. Commerce Secretary Wilbur Ross on Thursday said the coronavirus outbreak in China could help bring jobs to America, a remark that was quickly criticized as insensitive to China’s plight. “The fact is, it does give businesses another thing to consider when they do a review of their supply chains,” Mr. Ross said Thursday morning on Fox Business. “I think it will help to accelerate the return of jobs to North America, some to U.S., probably some to Mexico as well.”

            ‘Cornell University China scholar Eswar Prasad said the virus indeed demonstrates “vulnerability in global supply chain.” “Relying only on China leaves manufacturers vulnerable,” he said. But, he said, “stated the way Mr. Ross put it, it seems like a low blow at a difficult time for China.” “To suggest that there are potential economic benefits for the U.S. as a consequence of this terrible outbreak does seem beyond the pale,” he added.’

            ‘One U.S. trade-group executive said the remarks are likely to feed the view among many Chinese that the U.S. conducted its trade battle with China to halt the country’s rise, and is now looking to profit from its misery.’

            https://www.wsj.com/articles/ross-coronavirus-outbreak-could-help-bring-jobs-back-to-u-s-from-china-11580400427

            ‘The phrase—“To get rich is glorious”—is the simplified version of what Deng Xiaoping told his country a generation ago: “Rang yi bu fen ren xian fu qi lai,” he declared. “Let some people get rich first.” It unshackled China’s economy, and created the tycoons and super-growth we see today. Dec 7, 2009’

          2. “‘U.S. Commerce Secretary Wilbur Ross on Thursday said the coronavirus outbreak in China could help bring jobs to America …”

            Eye reckon Wibur Ro$$ is knot a “commoditie$ trader” or a grain farmer with bank debt$.

          3. Well fudge…

            ‘India reported its first case when a student studying at China’s Wuhan University contracted the virus in Kerala, a state in southwestern India, according to an announcement by India’s Ministry of Health and Family Welfare.’

            ‘Meanwhile, a 38-year-old Chinese woman from Wuhan tested positive for the coronavirus in the Philippines, local outlet ABS-CBN reported, citing the country’s health minister Francisco Duque III.’

            https://www.theepochtimes.com/india-and-the-philippines-report-first-case-of-coronavirus_3221567.html

          4. WSJ is right. It’s too soon for Wilbur Ross to be saying such stuff. Total lack of tact seems to be a prerequisite for employment with this Administration. (maybe *I* should apply)

            That said, this will beyond this one virus knocking out existing supply chains for, say, 9-12 months. China is already notorious for the pet food scandal, the baby formula scandal, and pollution. Add in the unsanitary culture of eating bats and snakes slaughtered on the street at thousands game-laden unsanitary wet markets, and who is going to trust China for anything anymore? China will start to lose its status as a trusted country to do business with, much less a world power.

          5. The coronavirus tracker has been updated again. 8124 in China and 111 outside China. Strangely the virus seems to be spreading in China, but barely spreading in other countries, at least at the moment. I think we’re seeing cases where people were infected 10-14 days ago, prior to the panic, just presenting symptoms now. So I expect a jump in other countries in about two weeks.

          6. “Strangely the virus seems to be spreading in China, but barely spreading in other countries, at least at the moment.”

            Uh…that’s how exponential growth normally works. I.e. the rate of change (first derivative) is proportional to the number of cases (a small number outside China, a larger one inside).

        2. Don’t $ell that idea to American farmer$, they de$ire “Trade knot Taxpayer’$ Aid$”

          ($elling to Ethiopia, knot as profitable as $elling to a nation of 1,390,000,086+ human$ that enjoy carnitas$ on a daily ba$is)

  4. ‘The bigger impact is likely to be on cash flow, as people are unlikely to purchase houses in times when sales offices of property projects are prohibited from opening’

    Damn unlikely Yang. Good thing you can dump those Irvine shacks to get your money – out?

    You know, in times like these you have to wonder who were the geniuses that hitched our wagon to these commie Chinese? They only live in a quasi- medieval situation but with super-power industrial and biological waste. The air, the rivers and seas are toxic. They spend huge amounts of money on a surveillance state. Kill their domestic opponents. But the bright side is, these Chinese voters are going to punish the CCP at the next election!

    Oh…

    1. I wonder how that central plan to move all the rural Chinese farmers into newly-built high rise urban apartments looks in light of the coronavirus outbreak?

    2. Things could become dire for Best Buy and other retailers if the supply chain of consumer electronics comes to a halt. New smartphones could become hard to find if shipments stop.

  5. Oxide, I do not think it is strange it still is spreading in China but not many cases in the rest of the world. It is the pattern I noticed several days ago. I think the explanation is that Chinese travelers are being monitored closely and isolated quickly. In China it escaped into the general population.

    1. ABQD I think that is correct for the moment.

      However, I fear there will be a second round. As the virus starts to spread in countries without the capacity to stop it–e.g. Thailand–it will begin to enter the U.S. from multiple locations, not just China. At that point anything short of a complete border closure is a sieve.

      I do hope I’m wrong. A lot of it has to do with if it can transmit during incubation, and that hasn’t been shown definitively yet. We should all pray that it cannot. In that case, we humans have a blueprint for how to stop it. We have been successful stopping such things in the past.

      1. We have been successful stopping such things in the past

        There is that thing called the Spanish Flu 100 years ago that took 50 million lives.

        Something not making sense to me is the 3 day quarantine for (some) travelers into the US when the incubation period is 14 days.

        1. Flu is transmissible during the incubation period. That is exactly the kind of disease I said is much harder to stop.

      2. ” We have been successful stopping such things in the past”

        Geez.

        China = “Bad China, Bad!”

        USA = “what? Don’t blame us!”

        By John M. Barry
        SMITHSONIAN MAGAZINE | NOVEMBER 2017

        How the Horrific 1918 Flu Spread Across America
        The toll of history’s worst epidemic surpasses all the military deaths in World War I and World War II combined. And it may have begun in the United States.

        Haskell County, Kansas, lies in the southwest corner of the state, near Oklahoma and Colorado. In 1918 sod houses were still common, barely distinguishable from the treeless, dry prairie they were dug out of. It had been cattle country—a now bankrupt ranch once handled 30,000 head—but Haskell farmers also raised hogs, which is one possible clue to the origin of the crisis that would terrorize the world that year. Another clue is that the county sits on a major migratory flyway for 17 bird species, including sand hill cranes and mallards. Scientists today understand that bird influenza viruses, like human influenza viruses, can also infect hogs, and when a bird virus and a human virus infect the same pig cell, their different genes can be shuffled and exchanged like playing cards, resulting in a new, perhaps especially lethal, virus.

        We cannot say for certain that that happened in 1918 in Haskell County, but we do know that an influenza outbreak struck in January, an outbreak so severe that, although influenza was not then a “reportable” disease, a local physician named Loring Miner—a large and imposing man, gruff, a player in local politics, who became a doctor before the acceptance of the germ theory of disease but whose intellectual curiosity had kept him abreast of scientific developments—went to the trouble of alerting the U.S. Public Health Service. The report itself no longer exists, but it stands as the first recorded notice anywhere in the world of unusual influenza activity that year. The local newspaper, the Santa Fe Monitor, confirms that something odd was happening around that time: “Mrs. Eva Van Alstine is sick with pneumonia…Ralph Lindeman is still quite sick…Homer Moody has been reported quite sick…Pete Hesser’s three children have pneumonia …Mrs J.S. Cox is very weak yet…Ralph Mc-Connell has been quite sick this week…Mertin, the young son of Ernest Elliot, is sick with pneumonia,…Most everybody over the country is having lagrippe or pneumonia.”

        Several Haskell men who had been exposed to influenza went to Camp Funston, in central Kansas. Days later, on March 4, the first soldier known to have influenza reported ill. The huge Army base was training men for combat in World War I, and within two weeks 1,100 soldiers were admitted to the hospital, with thousands more sick in barracks. Thirty-eight died. Then, infected soldiers likely carried influenza from Funston to other Army camps in the States—24 of 36 large camps had outbreaks—sickening tens of thousands, before carrying the disease overseas. Meanwhile, the disease spread into U.S. civilian communities.

        The influenza virus mutates rapidly, changing enough that the human immune system has difficulty recognizing and attacking it even from one season to the next. A pandemic occurs when an entirely new and virulent influenza virus, which the immune system has not previously seen, enters the population and spreads worldwide

        Wherever it began, the pandemic lasted just 15 months but was the deadliest disease outbreak in human history, killing between 50 million and 100 million people worldwide, according to the most widely cited analysis. An exact global number is unlikely ever to be determined, given the lack of suitable records in much of the world at that time. But it’s clear the pandemic killed more people in a year than AIDS has killed in 40 years, more than the bubonic plague killed in a century.

        The impact of the pandemic on the United States is sobering to contemplate: Some 670,000 Americans died.

        In 1918, medicine had barely become modern; some scientists still believed “miasma” accounted for influenza’s spread. With medicine’s advances since then, laypeople have become rather complacent about influenza. Today we worry about Ebola or Zika or MERS or other exotic pathogens, not a disease often confused with the common cold. This is a mistake.

        We are arguably as vulnerable—or more vulnerable—to another pandemic as we were in 1918. Today top public health experts routinely rank influenza as potentially the most dangerous “emerging” health threat we face. Earlier this year, upon leaving his post as head of the Centers for Disease Control and Prevention, Tom Frieden was asked what scared him the most, what kept him up at night. “The biggest concern is always for an influenza pandemic…[It] really is the worst-case scenario.” So the tragic events of 100 years ago have a surprising urgency—especially since the most crucial lessons to be learned from the disaster have yet to be absorbed.

        https://www.smithsonianmag.com/history/journal-plague-year-180965222/

      1. M as in Math
        M as in Masses
        m as in migration

        John Denver: ” … I’m leaving on a jet plane, can’t wait to get back home again. “

      2. Oh Professor, is it somewhat mathematically true that the average person touches their face 2,000+ per day?

        (Why do women tend to sit their purses on the kitchen counter or dining room table?) Run Hwy! … Run!

      3. We have had only one case in America of human to human transmission that is not explained just by math. Human to human transmission in China is rampant.

          1. Maybe this is a clearer notation to make my point:

            dy/dt = k*y(t)

            y(t) = number of cases in a country at time t since the first case appeared

          2. The professor is alluding to the standard “logistic” population growth mode. It is indeed informative on the current Coronavirus situation. You can learn about it here:

            https://en.wikipedia.org/wiki/Logistic_function#In_ecology:_modeling_population_growth

            Don’t worry about the differential equation part, it’s not that important. Basically we want to take actions that push dP/dt, the instantaneous rate of virus growth, down. If you read this article, you will also gain a better understanding of what “R nought” is. R nought being a term which is thrown around a lot in the media right now.

          3. I was just alluding to the exponential growth part of the model. But eventually, limits to growth (hopefully) become a relevant factor:

            dy/dt = k*y(t)*(Y_max – y(t)) / Y_max

            Y_max = asymptotic limit / carrying capacity

            In the case of human disease outbreaks, it gets more complicated than this, as health authority intervention can reduce both the growth rate (dy/dt) and the asymptotic limit.

        1. The Financial Times
          Coronavirus
          WHO declares global emergency as Coronavirus spreads
          First case of person-to-person transmission in US confirmed as infection rate continues to rise
          3 hours ago

          1. Sorry the formula does not match what is happening in the US. The only transmission has been from one spouse to another. We are not witnessing exponential increases in transmissions in this country. With the exception of China it does not seem to be happening anywhere. Sum ting Wong in China. It has managed to get pass screens into the general population. I agree that it may land in less developed countries and take off but it has not happened yet. Our screening tools have greatly improved since the virus was discovered and the race to develop a vaccine is on. It will not have to be contained much longer for countries like the US to avoid the worse. So far it is just like the handful of cases of Ebola which made it to the US and not like the Spanish flu.

          2. First case of person-to-person transmission

            When you have a single datum, showing calculus equations is meaningless. People know what “spreads like wildfire” is when they see it.

            Supposedly even yesterday, the CCP is jailing reporters who are trying to give out some real information on what is going on in China.

            From our old friends ADVChina who video blogged about Ghost Cities.

          3. Dear Professor, I got an A in all four semesters of Calc, including Dif Eq. It was easier than Organic Chemistry. Why you need to be derisive of me I have no idea, although I note you were talking down to Dan in the first place.

            When you have some numbers to plug into your simple equation please do share your calculated results, although I agree with Dan, that equations without insight are frivolous. My point was that equations without data are useless.

          4. A man is flying in a hot air balloon and realizes he is lost. He spots a man down below and lowers the balloon to shout: “Excuse me, can you help me? I promised my friend I would meet him half an hour ago, but I don’t know where I am.”

            The man below says: “Yes. You are in a hot air balloon, hovering approximately 30 feet above this field. You are between 40 and 42 degrees N. latitude, and between 58 and 60 degrees W. longitude.”

            “You must be an engineer” says the balloonist.

            “I am” replies the man. “How did you know.”

            “Well” says the balloonist, “everything you have told me is technically correct, but I have no idea what to make of your information, and the fact is I am still lost.”

            The man below says “You must be a manager.”

            “I am” replies the balloonist, “but how did you know?”

            “Well”, says the man, “you don’t know where you are, or where you are going. You have made a promise which you have no idea how to keep, and you expect me to solve your problems. The fact is you are in the exact same position you were in before we met, but now it is somehow my fault.”

          5. “The fact is you are in the exact same position you were in before we met, but now it is somehow my fault.”

            Well, eye’d say, actually the person below is in the better position, being “grounded” and knot subject to a sudden bolt of “white lightning!” . … Next subject: the wonderful effects of undetected: “ground faults”

          6. BlueSkye, was actually taking aim at ADan’s comment about comparing the growth in new cases across countries.

            Apologies for coming off as derisive, and point taken about the uselessness of equations without providing insights to their application.

    1. Sadly, there is little chance the Finns will follow the UK out of EU.

      That said, who will be next to bail out?

      1. My guess would be Italy. It really is not receiving a subsidy and a substantial portion of the population favors immigration controls.

        1. Italy could be next. As long as there is investment Poland, the Czechs, the Slovaks and the Hungarians will stay put, and since they have cheap labor it will probably stay that way. As for the rest, it doesn’t look like anyone is ready to bolt.

  6. UK will triumph outside EU! (Maybee these folks will get the same freedom to decide as Harry & Meghan Inc.)

    Éire go Brách
    “Nemo me impune lacessit”
    Cymru am byth

    “Many of the former territories of the British Empire are members of the Commonwealth of Nations. Fifteen of these (known, with the United Kingdom, as the 16 Commonwealth realms) retain the Briti$h monarch (currently Queen Elizabeth II) as Head of $tate.”

    https://en.m.wikipedia.org › wiki
    Territorial evolution of the British Empire

    1. The woman in that article was minimum wage until age 30, started off with $44K after school, lucked into a cheap house in the Midwest, and skyrocketed her salary uo to $140K/year and now she’s at a million.

      It’s not that hard to do that. I’m not doing quite as well, but I’m doing pretty good given that I followed almost the same trajectory. In fact I mentioned it years ago here on HBB: the real winners are those who can keep a high-pay job in a low-cost area. $140K salary and a $135K house? No wonder she’s a millionaire. I bet she could drink Tazo tea and still be a millionaire.

      1. My circumstances are very similar. Good salary in flyover. I did take and pass the California bar but decided not to live there. It was a wise choice. The pay would have been higher but it would not have made up for the much higher cost of living. It is not only the prices but the fact that income taxes really do not properly consider the higher cost of living. Itemizing helps but does not capture all of the additional expenses. California is particularly bad when housing prices are falling and you own a house. A ten percent drop in my home is about 15 percent of my annual income. A ten percent drop in California can be everything you make in a year.

        1. A ten percent drop in California can be everything you make in a year.

          But they love how rich they feel on the way up, for the same reason.

          1. “But they love how rich they feel on the way up, for the same reason.”

            Is that why so many Californians rock on the balls of their feet when they walk?

        2. You lo$t me @: “hi, eye’m Arnold Alois Schwarzenegger from California” … come Aqdan, eye will show you how your face can meet my CA desktop!

          1. Doesn’t Obama care cover your meds Highway? Really sounds like a physical threat. Which clearly shows you lost the debate.

          2. T$k, T$k aq, … like your many “mind.of.minolta” prediction$, you know jack.$ha$ta.

            The man who raises a fist has run out of ideas.

            H. G. Wells

          3. Susan Collins Hate Mail, Vol. 2

            ‘Male voice: “Wow, what a vile piece of garbage you are, Susan Collins. Sorry. But those of us with a brain in the United States, which is about more than half the country, see exactly what the President did. . . . I sure hope you didn’t breed. I sure hope you don’t have children or grandchildren, because their future is [expletive].”

            ‘Female voice: “You’re going to lose, Susan Collins. You’re going to lose. You’re just a little b— for Donald Trump. [Expletive] you.”

            ‘Female voice: “Why are you obstructing justice? Is it because you want to go to hell? Are you in some kind of satanic cult? I don’t understand why you’re doing the devil’s work. . . . Why are you so corrupt? Oh, right, because you’ve always been a stupid, dumb b—.”

            ‘Male voice: “You’re a half-pint little [expletive] cross-eyed [expletive] with a voice impediment. . . . You’re a disgrace—a disgrace—to this country, not just to the Senate, but to your country. You’re a traitor.” More profanity.’

            ‘Some of the language is unprintably worse.’

            https://www.wsj.com/articles/susan-collins-hate-mail-vol-2-11580429528

    2. “Overpriced housing is the road to ruin:”

      A well known fact to all.

      Rent it for half the monthly cost. Buy it later after prices crater for 70% less.

      Palo Alto, CA Housing Prices Crater 17% YOY As Tech Layoffs Ravage Bay Area

      https://www.movoto.com/palo-alto-ca/market-trends/

      As a noted economist stated, “You’d have to have rocks in your head to buy a house in the last 15 years.”/em>

    1. Do NOT buy the dip, warns investor who says a ‘brutal bear market’ looms
      Published: Jan 30, 2020 11:44 a.m. ET
      Watch out for those bears.
      Author photo
      By Shawn Langlois
      Social-media editor

      Kevin Smith, chief investment officer at Crescat Capital, says the bear case for U.S. stocks has never been stronger” and it’s time for investors to be aware of the “gravity” of the current situation.

      “We certainly did not predict the Coronavirus, but it may prove to be the catalyst to tip this market that is trading at truly historic valuation levels after a record long U.S. economic expansion,” he told clients in a note this week. “Median EV-to-sales for the S&P 500, based on our work recently reached an insane, euphoric level of 3.6 times, two times than the tech bubble peak.”

    2. Got financial opioids?
      The Financial Times
      Federal Reserve
      Analysts fear the market is hooked on Fed support
      — Chairman Jay Powell stresses central bank plans to taper liquidity interventions
      — Jay Powell, chair of the Federal Reserve, which is expected to slash interest rates by a whole percentage point over the coming year
      Colby Smith in New York 10 hours ago

      In the months since short-term borrowing costs spiked last September and the US Federal Reserve stepped in to pump tens of billions of dollars into the financial system, officials at the central bank have sought to prepare markets for the day they stop pumping.

      On Wednesday, Fed chairman Jay Powell put market participants on notice, reiterating that the central bank intended to slow down its interventions later this year when the amount of cash swilling around the system reaches an “ample” level. Mr Powell said he expected that to happen sometime in the second quarter.

      Despite that warning, investors say they still fear what may happen when the Fed begins to extract itself, cautioning that there could be a sizeable sell-off in parts of the market that have seen a lift in recent months.

      “If the Fed does stop buying, which it will do, how do they do that without triggering an unwarranted reaction?” said Priya Misra, head of global rates strategy at TD Securities. “The Fed is a little trapped now.”

      1. Market$
        If Value Stock$ Are Toxic, Why Aren’t Junk Bond$?
        They are essentially the same investment in different parts of the capital structure.

        Bloomberg | By Nir Kaissar |January 30, 2020

        If you doubt that value and junk are two sides of the same coin, consider that companies whose bonds are in the junk bin are also likely to find their shares on the discount rack. Of the roughly 1,200 companies in the Russell 3000 Index for which a long-term credit rating from S&P Global Ratings is available, the median price-to-book ratio of firms rated junk (BB or lower) is 17% lower than that of those rated investment grade. Other valuation measures tell a similar story. The median price-to-sales ratio of companies rated junk is 63% lower, price-to-earnings is 15% lower and price-to-cash flow is 35% lower.

        Companies rated junk are also bigger targets for short-sellers, or investors betting that share prices will decline, another sign that trouble tends to spread across the capital structure. The median short-interest percentage of companies rated junk, or the number of shorted shares relative to outstanding ones, is three times greater than that of firms rated investment grade.

        Which raises the question: If the value premium is dead, why should the junk premium persist?

        You won’t find a satisfying answer in theories about value’s purported end. The two I hear most are that the popularity of value investing killed it, mostly because of the proliferation of value funds, and that value companies can’t compete with the innovation, technology and scale of growth firms — the classic new beats old, Amazon beats Walmart, Tesla beats Ford, Netflix beats Walt Disney and so on.

      2. The Financial Times
        Opinion Global Economy
        Reasons to worry about our addiction to loose money
        In spite of central bank ‘petrol’, growth has been lower than economists might have expected
        Gillian Tett
        Anne Richards, chief executive officer of Fidelity Intl Ltd., speaks during a Bloomberg Television interview ahead of the World Economic Forum (WEF) in Davos, Switzerland, on Monday, Jan. 20, 2020. World leaders, influential executives, bankers and policy makers attend the 50th annual meeting of the World Economic Forum in Davos from Jan. 21 – 24. Photographer: Simon Dawson/Bloomberg
        Anne Richards, head of Fidelity International, said ‘a flip of [central bank] petrol on the fire can get things going’ at Davos last week © Simon Dawson/Bloomberg
        Gillian Tett 15 hours ago

        Earlier this week, the Japanese government nominated Seiji Adachi to the board of the Bank of Japan. The news made few waves outside Japan, since Mr Adachi is little known.

        However, global investors should pay attention. Mr Adachi is a renowned “reflationist” who favours massive monetary expansion. So his selection suggests that after two decades of eye-poppingly loose monetary policy, the BoJ is set to double down in 2020.

        That is remarkable. Moreover, Japan is not alone. This week the Federal Reserve left US rates unchanged, after three cuts last year. However, Jay Powell, Fed chair, gave such dovish signals in his press conference amid a pattern of reasonable US growth that markets expect another rate cut later this year.

        The European Central Bank also remains set on an ultra loose course. So do most emerging market countries. Indeed, it is hard to find a central bank today with a tightening mission, other than the Swedes who raised rates from negative to zero in December.

        Is this good news? Many investors might shout “yes”. Most asset prices have soared recently. “Very few people expected 12 months ago that we would see the returns we have seen in the markets in 2019,” Anne Richards, head of Fidelity International, said at the World Economic Forum’s meeting in Davos last week. “A flip of [central bank] petrol on the fire can get things going.”

        Measures of financial conditions illustrate the point. Consider the “financial stress” index calculated by the St Louis Fed, from a composite of market rates and credit spreads. Between 2002 and early 2007, this index moved from plus 1.064 to minus 0.618 (a negative number indicates loose conditions).

        Then, in the 2008 crisis, it surged above 5, before falling below minus one in 2012, as central banks offered support. Last autumn it sank even further and now stands at minus 1.567, its lowest level since records began in 1994. The Chicago Fed’s financial conditions index, which tracks Main Street conditions, echoes this. This implies that funding is even cheaper today than during the pre-crisis credit bubble.

      1. “Millennials = WORTHLESS”

        Wrong. Millennials = positive cash flow for decades.

        All one needs to do is correctly position himself.

        No Child Left Behind = The Gift That Keeps On Giving.

        Dumb ’em down, and profit.

        1. “All one needs to do is correctly po$ition him$elf.”

          This is a direct quote from Mr. Banker

    1. Built only twelve years ago…sold at over 25 percent below list price, that looks like a flopped flip.

    2. Norma, curious$ … why doe$ Coto.de.Casa. Catch yer intere$t?

      (Eye find it curious that non.”White” females change their clothes from the back.of.a.Cadillac in the parking lot @ Pavilion$ whilst talking to their pimp bringing them food from BurgerKing.)

      Ask me how eyeknow.

    1. “A leading candidate to head the World Health Organization [now Director Dr. Tedros] was accused this week of covering up three cholera epidemics in his home country, Ethiopia, when he was health minister — a charge that could seriously undermine his campaign to run the agency.” Apparently, it didn’t.

  7. It keeps spreading.

    China marks deadliest day as WHO declares global health emergency in fight against Wuhan coronavirus
    By James Griffiths, CNN
    Updated 11:04 PM ET, Thu January 30, 2020
    Wuhan evacuee: When the plane landed, we cheered

    Hong Kong (CNN)
    China marked its most fatal day yet during the Wuhan coronavirus outbreak Thursday as the World Health Organization (WHO) declared the virus a global health emergency.
    Chinese authorities reported more than 40 deaths Thursday, all of them in Hubei, the province at the center of the outbreak of which Wuhan is the capital, bringing the total death toll to 213, with almost 10,000 cases confirmed worldwide.
    As of Thursday night, there were more than 9,600 coronavirus cases confirmed in China, authorities said, an increase of almost 2,000 from the previous day. That surpasses the 2003 severe acute respiratory syndrome (SARS) outbreak that began in southern China, which infected 8,098 people worldwide, killing 774.
    More than 20 countries and territories outside of mainland China have confirmed cases of the virus — spanning Asia, Europe, North America and the Middle East — as India, Italy and the Philippines reported their first cases on Thursday.

    1. Pesky yield curve!

      The Financial Times
      Yield curve
      US yield curve inversion raises growth concerns
      Coronavirus sparks bond market rally and triggers recession signal
      Colby Smith in New York
      8 hours ago
      Line chart of Difference between three-month and 10-year Treasury yields (basis points) showing Recession signal flashes as coronavirus spreads

      The US Treasury yield curve, whose movements are watched by traders for harbingers of recession, has become inverted again as the intensifying coronavirus outbreak revived fears of a global growth slowdown.

      For the first time since October, the yield on three-month US Treasury bills jumped above that on the benchmark 10-year note. An inversion of this portion of the yield curve — which charts yields on debt of different maturities — has preceded every recession of the last half century.

      The gap widened to as much as minus 3.9 basis points on Thursday after the yield on the 10-year Treasury slipped to 1.5 per cent.

    2. Opinion Wonder Land
      A Communist Coronavirus
      China’s political system is eventually going to damage the world, by accident or by intent.
      By Daniel Henninger
      Jan. 29, 2020 6:51 pm ET

      The Wuhan coronavirus is a metaphor for two political ideas that are incompatible with the realities of the modern world: The Communist Party of China and American isolationism.

      We now live in a world in which everything travels everywhere all the time. People, products, ideas and data have become uncontainable. Centuries-long attempts by authorities to control their populations are ending.

      The internet phrase “going viral” implies minimal controls over flows of information and a phenomenon that is by no means benign. Malicious software code that spreads quickly and is difficult to treat is called a computer virus. The coronavirus itself jumped from a “wet” meat market in Wuhan to other countries. All these modern viruses inevitably migrate to the U.S.

    3. “It keeps spreading.”

      now now dear Professor, there are youngin’s reading Mr. Ben’s HB.B blog, bee cognizant of yer red.hot.mi$$le economic proselytizing insertions!

    4. Still not one death outside of China. Seems like the sickest never even made it out of the country. Bottom line no exponential growth outside of China. I Read that tentative date for an experimental vaccine is June.

      1. Bottom line no exponential growth outside of China.

        That would be great. But exponential growth is really hard to identify at the beginning. Seems too early to say that, to me.

        I saw an article claiming that lack of Vitamin D is actually the reason humans spread this stuff so much more easily in the winter than in the summer. Seemed a bit far fetched but if it were true it could explain why China might be much more susceptible to these things than countries where people like to get some sun. But also heard that statistically men are being hit much harder than women. If so I think it would blow the Vitamin D theory out of the water because it’s Chinese women who never go in the sun.

  8. The world did not used to monetize debt. Thus, interest rates used to tell us something. Still waiting for the 2019 recession which was predicted by an inverted yield curve. Obama averaged 1.9 percent GDP growth , now over 2 percent growth is a recession?

    1. US Economy
      Goldman Sachs expects coronavirus outbreak to weigh on US economic growth this quarter
      Published Fri, Jan 31 2020 7:15 AM EST
      Sam Meredith
      Key Points
      — Barring a significant change in the news flow around the virus itself, analysts at the U.S. investment bank said late Thursday that they anticipate a 0.4 percentage point slowdown of U.S. annualized growth in the first quarter.
      — Goldman’s prediction comes as market participants try to assess the potential economic fallout of the coronavirus outbreak.
      — China’s envoy to the United Nations said Friday that there have been more than 9,800 confirmed cases of the virus in China, with 213 deaths.

    2. How’s those Boeing Max “will bee flying in Dec 2019” trade wind$ doing aq?
      T$k, T$k, T$k, another swing, … swisssssssh, swisssssh, swisssssh … maybee you should just bench yer$elf.

  9. Perhaps Mother Nature is trying to hint that bats are not intended for human consumption?

    China
    Published 16 hours ago
    How did the coronavirus outbreak start?
    By Bradford Betz | Fox News

    The World Health Organization’s China office says it began receiving reports in late December of a mysterious virus behind a number of pneumonia cases in Wuhan, a city in eastern China with a population of roughly 11 million people.

    Researchers suspect the virus originated at a seafood market in Wuhan, where wild animals, including birds, rabbits, bats, and snakes are traded.

    It was initially believed the virus came from snakes. But a research paper by a team of virologists at the Wuhan Institute for Virology suggests that the coronavirus more likely came from bats, which was also the source of the SARS outbreak.

    Bats are known to carry multiple viruses without getting sick, according to the New York Times, which said they have caused human diseases in Africa, Malaysia, Bangladesh and Australia, and are thought to be the reservoir for Ebola.

    Authorities shut down the market on January 1. But by then, the virus had spread beyond the market and was being transmitted between people.

  10. How contagious it is before symptoms appear, and how long the latent stage lasts, will be key factors in containing the outbreak.

    These questions also relate to how economically disruptive necessary containment measures need to be, as invisible cases are hard to isolate. Judging from the situation on the ground in China, the answer appears to be, “pretty disruptive.”

    China
    China coronavirus ‘spreads before symptoms show’
    26 January 2020

    A new coronavirus that has spread to more than 2,000 people is infectious in its incubation period – before symptoms show – making it harder to contain, Chinese officials say.

    Fifty-six people have died from the virus. Health minister Ma Xiaowei told reporters the ability of the virus to spread appeared to be strengthening.

    1. Speaking of housing, doesnt superbowl weekend set the tone for the year to come?

      “That weekend is the weekend where the housing market either goes crazy or it takes a nap,” Kelman said on NPR, later referring to the weekend as a sort of “Groundhog Day for the housing market.”

      “What I’ll be watching that weekend is just how many people are touring houses and, on Sunday night, how many of them decide to make an offer,” Kelman continued.

      Link from the expert last jan

      http://www.businessinsider.com/super-bowl-real-estate-housing-market-outlook-glenn-kelman-2019-1%3famp

      1. Yes, housing.

        Harrison Schwartz
        ETF Analysis
        Coronavirus May Be The Catalyst That Will Pop China’s Massive Property Bubble
        Jan. 28, 2020 12:53 PM
        Summary
        — China’s massive banking system is backed by its highly speculative real estate sector.
        — Due to government intervention, the property bubble has continued to grow for years and has only snowballed.
        — When the Chinese economy finally cracks, investors will realize just how large the bubble has become.
        — Evidence suggests that Coronavirus could be worse than SARS, indicating that it could quickly pull the Chinese economy into a recession.
        — Panic is unwise, but it seems best to reduce exposure to Asian equities and debt to an absolute minimum.

  11. China is collapsing faster than Bay Area housing prices.

    Santa Clara, CA Housing Prices Crater 13% YOY As One Bay Area Broker Concedes “We Burned Scores Of Buyers Over The Years”

    https://www.movoto.com/santa-clara-ca/market-trends/

    As a noted economist stated, “Get what you can get for your house today because it will be less tomorrow for decades to come.”

  12. The late T. Boone Pickens estate just was cut $30 million. Do not spend that inheritance until you actually receive it despite what Mr.Banker might say.

  13. Set to pass 10,000 cases within days of the outbreak hitting the news. IIRC, this is ramping up much more rapidly than SARS did.

    Mapping the Coronavirus
    Outbreak Across the World

    By Cedric Sam, Chloe Whiteaker and Hannah Recht
    Updated: January 31, 2020, 6:45 AM PST

    An outbreak of a pneumonia-like illness that started in the Chinese city of Wuhan has put health authorities on high alert around the world. It’s led cities to be cordoned off, caused airlines to cancel flights to and from China and has disrupted global supply chains. The World Health Organization declared a global emergency on Jan. 30 as the illness continued to spread, the same day the U.S. issued a travel advisory telling Americans not to visit China.

    The new coronavirus—named 2019-nCoV—is thought to have originated in the food market of the central China metropolis and has since infected more than 9,000 people. Deaths and cases are likely to rise until the outbreak is contained.

    9,959 Confirmed cases worldwide
    213 Deaths worldwide

  14. What did the USA get from China other than cheaply made toxic products that resulted in a gut of our job and manufacturing base, and the Rich got to richer.

    What Country would have this level of betrayal from Politicians that would dewealth their majority working class Citizens, with a Communist Nation like Red China no less.

    Globalism, much like Climate Change, is a power grab that has lead us to a battle in the USA between the have and have nots of the likes we have never seen before.

    I submit that the Politicians betrayals have resulted in the ushering in of Commie solutions to the mess the Politicans created to begin with.

    This mess could be corrected before it’s to late if they ever really start talking about what the real issues are.

    We have at least 30
    years of faulty political experiments that have proven to be a failure that has made all matters worse in the USA.

    Whoever said Diversity Is Our Strength had to many drinks.

    You can’t have a One World Order unless all Countries had the same Constitution, payscale and Religion or values ,it’s as simple as that .

    Trade with Countries is acceptable as a conditional thing that benefits both sides. The concept of free trade without conditions or tariffs is just what the one percent power brokers getting rich off this want you to believe.

    It’s really interesting to watch how extreme the reaction to Trump has been. At the very least it has exposed the Swamp that DC is and has been for a long time .

    To think that this corrupt den of sin called Federal Government has the power to tax and alter a Citizens life to something that would smash Constitutional protections in the final analysis.

    We need to get back to the intent of the Framers of this Republic before it’s to late. The Communist Republic or The Globalist Republic was not the intent of the Framers of this Nation Government insuring equal distribution of wealth was also not a Constitution right for obvious reasons.

    The Politicans duty to not sell out the USA in favor of a small fraction getting richer by Globalism is another matter, and this needs to be corrected.

    Sorry I indulged in a rant, but It really is a critical period.

    1. We need to get back to the intent of the Framers of this Republic before it’s to late

      I don’t disagree, but what vehicles do you see available for doing so?

      1. You would need laws passed that penalize the one percent that have really become Global Companies taking advantage of the payscale difference. Likewise you would need to give tax advantage to Companies that produce in the United States. Really, once a so called USA Company makes a choice to produce in another Country and to give jobs to that Foreign Country , they need a tax penalty.

        I could go on and on about measures that could be done such as tariffs, but it’s clear that there will be pain in altering back to the intent of the Framers.

        Certainly the answer to the this Rich getting richer by Globalism is not Communist take over of USA, put this is what we are in danger of.

        There are gave problems with Casino Nation that was a direct result of the repeal of the Glass/ Steagal Act in 1998. This Act needs to be brought back if we are to have any sanity in financial markets again as well as proper lending.

        I’m not saying that solutions won’t bring some pain to some sectors, but the long term benefit will be worth it.

        I don’t really think the Rich globalist would want a Communist USA, but they are playing with fire in creating the circumstance for that by their greed.

        Policies between 1945 and 1975 were the best I ever saw in the USA in terms of the balance of power in the USA regarding wealth distribution under a capitalism structure.

        Anyway , just kiss America goodbye if the tides don’t turn.

        Really there are a lot of things that could be done to restore this Nation

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