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A Life-Long Debt Trap To Buy A Place To Call Home

A weekend topic starting with KCRG in Iowa. “Chelsie Brown, from Cedar Rapids, is one of many people looking to buy a home in a challenging market. One obstacle she’s run into, and that she’s had to increase her budget since the start of her search. ‘It’s still the same thing. You find a house within your budget, if your budget is 150k, you have to find and look for houses that are 120k, because by the time you get done with everything all said and done and actually make an offer that’s even worth the owners accepting, you’re over asking price,’ says Brown.”

From KPIX in California. “One way that buyers in this hot real estate market are making their offers stand out is by waiving contingencies. ‘Our agents are basically asking the first question: just how uncomfortable do you want to get?’ said Earl Rozran, vice president of experience at Sereno Real Estate.”

From WREX in Illinois. “The housing market is hot right now. Mortgage rates are still near historic lows, and prices and demand are up. But buyers need to make sure they’re not taking on more than they can afford. ‘You simply are just not going to be making annually how much you’re spending on a house so that makes sense,’ said Jill Gonzalez, an analyst with WalletHub.”

From DS News. “The Housing Finance Policy Center Chartbook took a deeper dive into the banner year that was 2020 for first-lien originations, with $4.04 trillion in mortgages originated in 2020, This number exceeds 2003’s volume of $3.73 trillion, the previous record holder, by $315 billion. The 2020 GSE share was up significantly at 59.2%, compared to 42.9% in 2019. The share of private-label securities (PLS) was 0.9% in 2020, down from 1.9% in 2019, and a fraction of its share in the prebubble years.”

“‘The smaller share of portfolio and PLS in 2020 reflects the impact of COVID-19, which made it difficult to originate mortgages without government support,’ the report found. ‘The higher GSE share reflects the large amount of refinances done through this channel. With private capital pulling back significantly because of the economic downturn, the federal government is once again playing the dominant role in the mortgage market.'”

From Money. “Just like lockdown orders unleashed panic buying of toilet paper, the pandemic has fueled a feeding frenzy on homes. Unfortunately, some new homeowners wish they had never stocked up. About a year after the binge began, some homeowners are feeling remorseful and learning that homeownership can lead to heartbreak if you’re not financially and emotionally prepared.”

“In a LendEdu survey, 55% of people said they regret taking out a mortgage during the pandemic. A recent article in the Wall Street Journal profiled homebuyers with serious misgivings about their new homes. ‘I hate this house so much,’ declared one woman who spent $600,000 on a place near Los Angeles last August.”

The Globe and Mail in Canada. “The real estate market in Toronto and other Ontario cities is finally getting fresh listings as rich price tags entice some homeowners to sell. But a gentle stream of properties arriving on the market is doing little to calm the buyers afflicted with ‘fear of missing out.’ ‘People wind up taking big risks. It’s a recipe for trouble,’ warns John Lusink, president of Right at Home Realty Inc., who is watching sales soar across Ontario. ‘It’s like a rocket ship. It’s hard to comprehend, quite frankly.'”

“Mr. Lusink has heard from homeowners who say they have no idea where they are going to go but they want to take advantage of the current mania. Sellers tell him, ‘My neighbour got $1.5-million, and we thought it was worth $900,000, so we’re doing the same.'”

“Elli Davis, an agent with Royal LePage Real Estate Services Ltd., is currently having conversations with a Toronto homeowner who is on the same wavelength. ‘He’s never seen the market higher and it’s time to cash in,’ she says. ‘He’s totally motivated by money.'”

“Ms. Davis points out that not every property goes in a bidding war. And for those that do, house hunters sometimes become so intent on beating the others at the table that they end up with buyer’s remorse. ‘Don’t lose your head because you still have to pay – and the bank might not appraise it.'”

From Global News. “As Canada’s home prices reach the stratosphere, calls on the government to bring the housing market back to Earth — possibly with a soft landing — are growing increasingly urgent. Some of Canada’s big banks have recently joined the chorus. Policymakers should act ‘immediately’ to address soaring property valuations before ‘the market is left exposed to more severe consequences,’ BMO senior economist Robert Kavcic echoed. ‘The action needed today is one that immediately breaks market psychology and the belief that prices will only rise further.'”

From Stuff New Zealand. “Investors and first-home buyers are backing away from the market due to greater uncertainty about the fall out from last week’s housing policy changes, a survey of mortgage advisers suggests. Mortgage advisor Glen McLeod felt the policy changes were rushed and not properly thought through. ‘The reality is those changes are out of step with what’s real in the market. A client in Huntly can now go up to $420,000 but the houses are more like $475,000 which means the houses don’t come under Kainga Ora. It’s not easy to get above 80 per cent lending for any of the banks,’ McLeod said.”

“McLeod called the policy changes a ‘jealousy tax.’ ‘It’s different if you’re targeting investors with hundreds of properties. Most people have one investment property.'”

From Star News in New Zealand. “The return of higher deposit requirements for investors put the brakes on the housing market in March, with property values in Christchurch and most of NZ dipping on January and February levels. The nationwide median property value for March of $735,000 was a retreat of $30,000 on February levels, with Christchurch falling $30,000 to $505,000, while Auckland suffered the biggest fall. Its median value of $1.05 million was a $50,000 drop on the month before.”

“This is likely the result of investors retreating in the face of 40% deposit requirements. This trend seems supported by changes at a territorial authority level, with Manukau in South Auckland – a hot-bed of investor purchases before the return of the LVRs – dropping $60,000 to just below the million-dollar mark. Also dropping out of the million-dollar club was Wellington, where post-Covid price gains retreated $30,000 to $995,000 in March.”

The Sydney Morning Herald in Australia. “If the Australian property market were a party, it’s at that point where the drinks should be put away, the guests kicked out and the bed turned down for a good night’s sleep. Unless the Reserve Bank, the Australian Prudential Regulation Authority and federal and state governments step in soon, the country is going to wake up with a hangover that will last for years.”

“Sydney’s median house value jumped $50,000 in March, or $1600 a day. Since the start of the year, it has climbed $100,000, which, if it doesn’t slow, could see the median house price value reach $1.4 million by year’s end. In Melbourne, the increase has not been quite as sharp but at $60,000 since New Year’s Day, the median house value could top $1 million by Christmas Eve.”

From ABC News in Australia. “Brendon Miszka and his wife are looking to buy their first home but, despite good jobs and a decent deposit, they’re finding it tough. ‘I think we’re competing with a lot of people that would be happier to take a lot more risk,’ Brendon says. ‘There’s a general attitude that you go off to the bank and see what’s the maximum that the bank is prepared to lend and then go out and try and spend all that money on a property and everything will be OK.'”

“At the AFR’s Banking Summit earlier this week, the chair of APRA acknowledged the chorus, but pooh-poohed suggestions that so-called macroprudential lending limits are a fait accompli. Instead, Wayne Byres played down a recent rise in low-deposit loans and mortgages that are at least seven or eight times the borrowers’ annual incomes.”

“‘It does look like it’s pretty highly correlated with what is a significant increase in the share of first home buyers that have been in the market up to this point,’ he told the gathered bankers. ‘It’s not clear to me that’s a problem that we should be doing anything about.'”

“Aspiring first home buyer Brendon Miszka might not agree with him. ‘The size of the loan is kind of intimidating compared to the income and thinking how long it would take to pay all that back,’ he says. ‘When you see listings with price ranges for maybe $1.2 million and the house ends up selling for $1.9 million — every time something like that happens you wonder, ‘Should I think about increasing the budget, should I try and borrow more?'”

“But he and his wife don’t want to get pushed into a life-long debt trap to buy a place to call home.”

From Domain News in Australia. “In the middle of one of the most jaw-dropping property booms in decades it is refreshing to hear that not every seller is making a motza from their real estate. Take billionaire pub magnate Chris Morris and his wife, who have copped a loss on their Milsons Point penthouse this week. The couple paid $8 million for their crash pad in the Latitude building at the peak of the local apartment market in 2017. Di Jones’ Nigel Mukhi wouldn’t confirm what local sources say was an off-market resale for less than the purchase price.”

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This Post Has 108 Comments

  1. ‘have copped a loss on their Milsons Point penthouse this week. The couple paid $8 million for their crash pad in the Latitude building at the peak of the local apartment market in 2017’

    A peak in past tense?

    1. “crash pad”

      That’s an apt description of a home whose market value is on a oneway road to Craterton.

  2. ‘McLeod called the policy changes a ‘jealousy tax’

    Ouch Glen, that’s a stinging statement.

    ‘The return of higher deposit requirements for investors put the brakes on the housing market in March, with property values in Christchurch and most of NZ dipping’

    I’m so jealous. Take away the guberment gravy and crater.

  3. ‘has heard from homeowners who say they have no idea where they are going to go but they want to take advantage of the current mania. Sellers tell him, ‘My neighbour got $1.5-million, and we thought it was worth $900,000, so we’re doing the same’

    Yeah, no bubble here. Toilet paper, shacks!

    Just why does the guberments/central banks blow these bubbles? Because the globalist economy sux. It’s all they got. They don’t care that millions of people are already fooked beyond recognition. They will simply use that “crisis” to grab even more power.

      1. It’s bad for the economy and peoples lives. We have less to spend on necessities. Less to invest in productive parts of our lives. We spend many years more paying the loans off. The only possible benefit is a short term sugar high. We pay these people to take that choice? A sixth grader could see the folly.

        2. Low Interest rates are selling house via the monthly payment. Adjustable Mtgs. are all the rage. Hard to believe but “here we go again”. BKs have been artificially LOW because of Gubt. stimuli, interest rates, moratoriums, and Courts shut down.
          All dat be over now.

    2. “Just why does the guberments/central banks blow these bubbles? Because the globalist economy sux. It’s all they got.”

      This, ironically, is a function of the gooberment plan to coerce citizens everywhere to borrow beaucoup dollars in order to sink all of their present wealth and future earnings into real estate ownership, leaving no discretionary income behind to support more useful economic activities than used home sales, home construction, home furnishing, home lending, home repairs and renovations, etc etc…

        1. The proles’ wealth and assets aren’t going to transfer themselves to the oligarchy, you know. The Fed needs to orchestrate boom/bust cycles every 8-13 years or so to enable the most efficient looting and asset-stripping of the retail investor muppets.

  4. “You find a house within your budget, if your budget is 150k, you have to find and look for houses that are 120k, because by the time you get done with everything all said and done and actually make an offer that’s even worth the owners accepting, you’re over asking price,’ says Brown.”

    Chelsie Brown, self-made future “victim” and cautionary tale.

  5. ‘Our agents are basically asking the first question: just how uncomfortable do you want to get?’ said Earl Rozran, vice president of experience at Sereno Real Estate.”

    Nice to ask that question of your “clients” before bending them over.

  6. About a year after the binge began, some homeowners are feeling remorseful and learning that homeownership can lead to heartbreak if you’re not financially and emotionally prepared.”

    You ain’t seen nothing yet, speculators. And I’m going to dance on your financial grave when it all comes crashing down.

  7. ‘I hate this house so much,’ declared one woman who spent $600,000 on a place near Los Angeles last August.”

    Walking out your front door into a Bolshevik-malgoverned dystopia might not ease the pain, bagholder lady.

  8. Biden relies on pattern of activity to blame Russia for release of data from what is said to be his son’s laptop

    By Annie Linskey and
    Paul Sonne
    Oct. 24, 2020 at 7:17 p.m. EDT

    “There are 50 former national intelligence folks who said that what he’s accusing me of is a Russian plant,” Biden said at the debate. The former vice president said those former officials had concluded that what Trump was citing about his son was “a bunch of garbage.”

    https://www.washingtonpost.com/politics/russian-involvement-biden-laptop-unproven/2020/10/24/ebae1760-1604-11eb-ba42-ec6a580836ed_story.html

    Hunter Biden, In CBS News Interviews, Describes Family Intervention, Says Laptop “Could Be” His

    By Ted Johnson
    April 2, 2021 7:09am

    Tracy Smith interviewed Biden for CBS Sunday Morning, set to air on Sunday, and Anthony Mason talked to him for CBS This Morning, set to air on Monday.

    When Smith asked Biden whether that laptop was his, he said, “I really don’t know.” She pressed him on whether it could have been his, and he said, “Of course certainly … There could be a laptop out there that was stolen from me. It could be that I was hacked. It could be that it was the– that it was Russian intelligence. It could be that it was stolen from me. Or that there was a laptop stolen from me.”

    https://deadline.com/2021/04/hunter-biden-laptop-intervention-joe-biden-2020-presidential-campaign-1234726695/

    1. Please realize that President Biden can’t be held legally responsible for anything that he does or says, medically speaking.

  10. Is it possible that an ‘everything bubble’ started because of zero interest rates, large deficit spending, and consumers not holding back.

    A surge in commodity prices has Wall Street banks gearing up for the arrival of what may be a new supercycle — an extended period during which demand drives prices well above their long-run trend. A major impetus is the massive stimulus spending by governments as they juice up their economies following pandemic lockdowns. The evidence includes surging copper and agricultural prices and oil back at pre-Covid-19 levels. One theory is that this could be just the start of a yearslong rally in appet
    https://www.bloomberg.com/news/articles/2021-02-26/when-does-a-commodities-boom-turn-into-a-supercycle-quicktake

    1. The backdrop of steadily rising long-term bond yields, in stark opposition to the Fed’s “low rates forever” policy stance, certainly raises questions about the claims made by the “everything is gonna always go up forever” carnival barkers.

      Things didn’t work out that way for U.S. investors during the last significant period of rising Treasury yields and inflation (roughly 1966-1981).

      1. I’m mystified as to what kind of “investor” buys T-bills that return far less than the rate of real inflation.

        1. One that has a balanced portfolio and doesn’t try to predict the future?

          I’m invested in both short- and long-term gov’t debt because they react to different stimulus…same with gold and stocks.

          I’ve tried to predict the future. Turns out I’m not very good at it!

          3. Why would you buy gub’mint debt that’s going to be printed away by the Fed?

            Because maybe it will be, maybe it won’t. Deflationary forces are still possible, so I’m going to protect myself against that while having an income stream.

            Maybe that part of my portfolio loses out due to inflation, but I also hold stocks and gold, so should net positive.

            Far simpler to orient myself for most (all) market conditions, then trying to guess and time everything.

          4. Don’t put all your eggs in one basket.

            Exactly, that’s why I’ve settled with this allocation. I don’t worry about it, don’t worry about timing the market, or missing big shifts, etc.

            It’s done well so far..time will tell long-term but I’m about to take a break from work most likely, so we’ll see how that goes.

        2. ‘I’m mystified as to what kind of “investor” buys T-bills’

          A deep value investor.

          They can be held at the Treasury instead of as a deposit as an unsecured creditor of a bank. They are available to spend as soon as there are hard assets to buy with a ‘margin of safety,’ i.e. ‘Dry powder.’ They’re easy to hedge with upside by going short dollars, i.e. buying physical gold and silver bullion when they’re ‘giving it away’. I haven’t seen that in a while, but patience is a virtue.

          ‘You can buy a $20K hotrod for $10K if you brought cash.’

  11. In NZ, changes in capital gains and mortgage interest tax deductibility – too little, too late for their booming market?

    “If the Reserve Bank did have to take into account house prices to the degree that they do take into account both inflation and employment, we would at some point have to trade off jobs for houses,” argues Brad Olsen, senior economist at Infometrics.

    So now the Labour government has taken matters into its own hands, with sweeping changes to New Zealand’s property taxes.

    “In previous times, capital gains in New Zealand have generally been untaxed on housing,” observes Mr Olsen.

    “It’s now a very strict rule that anyone that sells a house, previously within five years now anyone within 10 years, has to pay tax on those capital gains.”

    Even more controversially, New Zealand’s government has removed tax deductibility on mortgage interest costs for property investors.

    “Now investors can’t claim their interest payments to lower their overall tax burden,” Mr Olsen explains.

    1. In NZ, changes in capital gains and mortgage interest tax deductibility

      Don’t think for a second that this was done in the name of housing affordability. This was done by New Zealand’s socialist government to raise more tax money to spend.

      1. you are probably correct on the NZ govt’s motivation.

        However, it will add to the stability of the housing market. At least they acknowledge the current problem.

        1. It will be fun to watch their government and banking system deal with the wave of foreclosures and loses.

          I would say they it would also be fun to watch their economy collapse, but that’s already happening. They’re locked down tighter than a bank vault at night and for a near zero number of new Covid cases.

  12. From the MSN Money piece: “The first step to a new home is putting in the work and finding out how much you can afford.”

    Affordable House = 2.5 x Household Income

    That was a lot of work…I need a cold one!

    1. Or do some rental maths:
      Annual rent / household income = 20.3% in our case. Plus our landlord handles all home repairs plus yard care.

      Works for me!

      1. When I renew my lease, I can plan my budget of expenses for the next year, and my only variable expense related to housing is paying more to run the A/C in the summer.

        There are no expensive housing related “surprises” to pay for. I had my oil changed last week and was told I needed new rear brakes, and unlike loanowners, when hit with this unplanned expense of a few hundred dollars, I can actually afford to pay for it.

        All the recent articles about the “winners” of bidding wars regretting their decision make me laugh.

      1. Record-Setting $49 Billion Asia IPO Boom Is Likely to Taper Off
        By Julia Fioretti
        April 3, 2021, 2:00 PM PDT
        – Asian firms raised $49.3 billion through IPOs in first quarter
        – Pipeline centered around tech, growth stocks: BofA’s Highfield

        As in the U.S., initial public offering activity out of Asia has had its strongest-ever start to a year. That frenzy for new shares is likely to taper off as demand falls back to earth in the next few months.

        Asian companies, like their global peers, notched their best first quarter for listings ever, thanks to a flood of liquidity during the pandemic, super-low interest rates, and rallying stock markets. The firms raised $49.3 billion through first-time share sales at home and abroad — a 154% jump over the same period in 2020, data compiled by Bloomberg show.

        IPOs globally raised an unprecedented $215 billion, with almost half of that haul coming from the record wave of issuance by special-purpose acquisition companies in the U.S.

        Now, a global rotation out of highly-valued tech and health-care stocks that have dominated market activity, as well as fading excitement around SPACs in the U.S., is clouding the outlook for new deals.

        Roaring Start

        Asia’s companies have had their best-ever first quarter for new listings

        “Inevitably, there is a mark to market of comparable valuations,” said William Smiley, co-head of equity capital markets at Goldman Sachs Group Inc. in Asia ex-Japan. “In terms of our pipeline, there hasn’t been any significant impact from the recent rotation, but opportunistic issuance may have decelerated.”

        Asia’s IPO space faces an added challenge: the travails of Chinese tech firms, which dominate fundraising in the region. These companies are facing a crackdown against monopolistic practices at home and are also in focus as U.S.-China tensions keep rising. Last month, for instance, the U.S. moved forward with a law that could result in Chinese firms that don’t comply with U.S. auditing standards being kicked off American exchanges.

        The red flags are already there, with the investor mania seen earlier this year for deals like the one by Chinese TikTok rival Kuaishou Technology starting to die down.
        …

        1. “IPOs globally raised an unprecedented $215 billion, with almost half of that haul coming from the record wave of issuance by special-purpose acquisition companies in the U.S.”

          Powell bux must find toetag homes…

          1. how much insider stuff is going on here? Selling companies to friendly folks running the SPACs – and some slight skimming going on

    3. Affordable House Long term historic trend = 2 x income for resale house, 2.5 x income for new house

  13. ‘Our agents are basically asking the first question: just how uncomfortable do you want to get?’

    Clearly not protecting their clients’ interests.

  16. SF Gate — California sets reopening date and guidelines for indoor concerts (4/2/2021):

    “If venues separate people into sections, people in the “fully vaccinated” section can sit shoulder to shoulder but they still must wear masks, according to state Public Health Officer Dr. Tomás Aragón.”

    https://www.sfgate.com/bayarea/article/Califorina-concert-reopening-indoors-theater-16073228.php

    Note that this is the state, not private business, requiring this.

    Colored people drinking fountains, back of the bus, etc.

        1. Participating in a BLM/Antifa mostly peaceful protest confers immunity and should propel you to the front of the passport line.

    3. “…but they still must wear masks…”

      What’s the use of getting vaccinated if you still have to wear a scarf over your face? Are we all Muslims now?

      1. What’s the use of getting vaccinated if you still have to wear a scarf over your face?

        Which I why I can’t be arsed to get a vaccine.

        1. Good luck working for Big Tech. It’s only a matter of time before Big Tech companies require their employees to be vaccinated.

  17. Over the last year, Realtor.com has been sending me auto generated price changes for new builds in Texas. Up until today, these changes have reflected a higher price adding 5,000 to 15,000 each time. Today, all 20 new builds in their alert are showing 5,000 discounts. Lack of inventory and overwhelming demand still a problem?

  18. ‘Our agents are basically asking the first question: just how uncomfortable do you want to get?’

    The most rigged market in the history of used home sales has elevated buyer stupidity to an unprecedented pinnacle of imbicility.

    1. That’s gonna be a big fat NOPE.

      I don’t eat out often but I’m looking forward to visiting Colorado counties that lift the security theater mask mandates, visiting businesses without mask mandates and tipping very well.

      No business income and no sales tax revenue for Dumver!

      1. Went to two separate dog parks this weekend. Almost nobody wearing masks – the ones who were were almost caricatures of Biden supporters – or worrying about social distancing. Heads would be exploding among our Bolshevik overlords in Denver if their Commissars were to come down to spy on the kulaks.

        1. We live in a fairly outdoorsy area…near a huge open space park, with plenty of trees and 1980s-era SFRs (i.e. not built on postage-stamp sized lots).

          When we take a walk around the block, we don’t bother to wear masks, as there is hardly anyone outside, it is easy to put 10 feet or more of space between yourself and any other party you encounter, and the near-constant breeze quickly carries away and diffuses your exhalations.

          Nonetheless, our Asian neighbors religiously wear masks and look at us as though we are putting their lives in danger for not following suit. It’s a big cultural divide, as most Caucasians don’t bother wearing one outdoors, based on the perfectly rational presumption that there is no COVID-19 transmission risk.

      2. My household of three went out to a movie theater last week.

        No masks were worn once the lights went down, as we were the only three attendees.

      2. My office is the weight/workout room at the moment. It’s nice — whenever I need a break I just grab some weights, or do some dips or pull-ups.

      1. The decor is the “glam” style, which evidently is still popular. I think of it as Vegas ho-house. I’m sure it’s all leased furniture from the staging company. Which is why I’m a bit surprised at the THREE pieces of Farsi/Arabic(?) wall art. (two in pic 12 and one in pic 16). No staging company wants to turn off potential buyers.

  22. “Most people have one investment property.”

    If most people have a home to live in, plus an investment property for someone else to live in and rent, how is the guberment’s plan to make everyone an owner occupant of a home of their own supposed to work? Seems like you’d run out of houses before everyone could buy one.

  23. Which country is doing a better job of keeping bubble growth under control: China or the U.S.?

    1. The Financial Times
      Chinese business & finance
      China looks to rein in lending to cool property boom
      Small and foreign banks rush to ‘radically’ reduce loans that buoyed Covid recovery
      Residential buildings in Shanghai
      China’s central bank has moved to cool the property market after new home sales surged 133% in January and February
      Sun Yu in Beijing 10 hours ago

      China’s central bank has asked lenders to rein in credit supply, as the surge of lending that sustained the country’s debt-fuelled coronavirus recovery renewed concerns about asset bubbles and financial stability.

      New loan growth hit 16 per cent in the first two months of the year. The People’s Bank of China responded in February by instructing domestic and foreign lenders operating in the country to keep new loans in the first quarter of the year at roughly the same level as last year, if not lower, according to people with knowledge of the situation.

      The directive could translate into a considerable drop in bank lending, the largest source of financing for the world’s second-largest economy.

      The move underscored a change in policy focus as Beijing has shifted regulatory scrutiny to controlling credit risks rather than boosting economic growth, which has already returned to pre-pandemic levels.

      Previous tightening measures, led by stricter quota on real estate lending, have so far failed to quell credit growth. China’s medium-to-long-term consumer loans, comprised mainly of mortgage lending, rose 72 per cent to hit a record Rmb1.4tn in the first two months of this year.

      China’s swift recovery has provided vital support through the pandemic for the global economy and multinational companies, offering a strong source of demand for consumer goods and raw materials.

      China’s gross domestic product expanded 6.5 per cent in the final quarter of last year, making it one of the few countries to register positive full-year economic growth. Beijing has already set a target of at least 6 per cent growth for 2021.

      With the economy humming, policymakers have turned their attention to the risk of overheating, and launched a broad crackdown on excess lending and financial risk.

      “Worries about a pandemic-driven recession are gone,” said Larry Hu, chief China economist at Macquarie Group in Hong Kong. “The top priority is to lower the economy’s debt burden.”
      …

    2. Seems like a move is underway in China to take away the lending punchbowl before the party gets too wild.

      How does this compare with the situation back in the U.S.?

      1. If it looks like a bubble, shimmers like a bubble, and glimmers like a bubble, then it probably is a bubble.

        ‘The action needed today is one that immediately breaks market psychology and the belief that prices will only rise further.’

        ‘If the [INSERT NAME OF YOUR LOCAL AREA] property market were a party, it’s at that point where the drinks should be put away, the guests kicked out and the bed turned down for a good night’s sleep.’

      2. Seems like a move is underway in China to take away the lending punchbowl before the party gets too wild.

        Too little, too late. My money is on the PBOC as the first central bank to lose control.

        1. They still have to learn how to part the waters and turn the sea floor into dry land before they can run their economy into the ground. Nobody does it better than the invisible hand!

    3. The Financial Times
      Opinion Coronavirus economic impact
      A riot of US spending spells trouble for future generations
      Useful infrastructure investment makes better sense than badly designed handouts
      Raghuram Rajan
      Brooklyn Bridge in New York during the pandemic.
      The US needs to invest in bridges, broadband and charging stations rather give stimulus cheques to people who don’t need them
      Raghuram Rajan 10 hours ago
      The author is professor of finance at the University of Chicago’s Booth School of Business

      Is inflation the chief risk arising from colossal levels of US public expenditure during the pandemic? Spending has been spurred by a belief that, as long as the federal government can borrow without a rise in low interest rates, no one really needs to pay. In case markets disagree, the rich can be taxed.

      However, with populations ageing and potential growth slowing, the notion that industrial countries can allow their sovereign debt to grow indefinitely at even the more moderate pre-pandemic pace seems optimistic. Past experience suggests it will be hard to make the rich pay — they will oppose new taxes vigorously and avoid them if implemented. If the $5tn of US spending so far enacted eventually requires ordinary taxpayers to bear some burden, its lack of targeting or restraint will have adverse consequences.

      Defenders of the spending point to tepid inflation over the past decade and the Federal Reserve’s inflation-fighting credibility. Worriers point to the unprecedented levels of spending relative to unused economic capacity, and the Fed’s stated determination to be patient even if inflation rises. But in such unusual circumstances, no one can be confident how inflation will play out.

      Clearer, though, is that all manner of spending has been justified on the grounds that the government can and should offer relief to the pandemic-affected. Undoubtedly, government should help those hit hardest in times of calamity. For example, it makes sense to extend unemployment insurance when local jobs are scarce because of Covid-related shutdowns, or to expand food or rent support to the poor.

      But losses are part and parcel of business, even if they are pandemic-related or government policy-induced. Badly designed grants to small and medium-sized businesses may end up subsidising entities that do not need support. Is a rich dentist, who will surely recoup much of her lost business when the economy reopens, as deserving of help as the community arts co-operative in a distressed neighbourhood? What if that grant goes simply to repay her banker?

      Least deserving of support are large companies like airlines. Those should go through bankruptcy if they are in financial difficulty, as they have in the past. That lets them write down their debts while continuing operations. Yet even these have been aided on the specious grounds that their financial distress would hold back economic recovery. Businesses have suffered in the pandemic, but so has the ordinary taxpayer. If government transfers to businesses are not essential for their survival or growth, they are unfair gifts from the ordinary taxpayer to the (often wealthier) shareholder, and will undermine spending’s political legitimacy.

      In a recession, another rationale for spending is to stimulate economic growth. We are not, however, in a normal downturn. Pent-up savings will fuel demand for travel, restaurants and hotels as the economy reopens. A fair amount of these savings derives from people’s inability to spend when stuck at home. Was more largesse really needed?

      And could it have been better targeted?
      …

    4. The Financial Times
      IPOs
      Chinese tech groups scrap IPOs at record pace after Ant listing pulled
      Companies cancel plans to sell shares on Shanghai’s Star Market as regulatory scrutiny rises
      A sign for Shanghai’s Star Market
      A record 76 companies suspended their applications to list on the Star Market in March
      Hudson Lockett in Hong Kong and Sun Yu in Beijing April 3 2021

      A record number of companies are abandoning attempts to list on China’s answer to the Nasdaq, as regulators increase scrutiny of technology businesses after scuppering Ant Group’s $37bn initial public offering.

      A Financial Times analysis of figures released by Shanghai’s Star Market, which was launched to fanfare in July 2019, shows a record 76 companies suspended their IPO applications in March, or more than double the previous month.

      The flurry of cancellations pushes the total number of aborted attempts to list on Star to more than 180. In November, the month that Beijing pulled Ant’s listing due to concerns over its lending business, the total number of cancelled IPOs stood at just 12.
      …

  26. When TBTF banks are hiring risk managers, maybe competence and merit should be the chief criteria, rather than gender/diversity.

    Credit Suisse Weighs Replacing Risk Chief in Looming Executive Shake Up

    https://www.bloomberg.com/news/articles/2021-04-04/credit-suisse-weighs-replacing-risk-chief-in-looming-executive-shake-up?srnd=premium-asia&sref=ibr3A0ff

    Credit Suisse Group AG leaders are discussing replacing chief risk officer Lara Warner while sparing Chief Executive Officer Thomas Gottstein as they tally losses that could reach into the billions from the collapse of Archegos Capital Management, according to people briefed on the matter.

    The bank is set to give investors an update on the Archegos fallout, including the fate of top executives such as investment bank chief Brian Chin, two of the people said. They also said the Swiss firm is planning a review of its prime brokerage business, which is housed in the investment bank.

    1. “…gender/diversity…”

      That’s a great Democrat smoke screen for discriminatory race- and gender-based hiring, which is otherwise illegal.

      1. As well as creates a new high-level position for a person to oversee diversity initiatives, which conveniently can’t be filled by whitey.

    2. >>“In an area of banking run mostly by men steeped in risk models, her more business-focused approach hasn’t always gone down well, according to conversations with about half a dozen current and former employees who spoke on condition of anonymity. Several left after she took over, while those who stayed were challenged to engage more with the business, according to people who worked with her.”

      “When TBTF banks are hiring risk managers, maybe competence and merit should be the chief criteria, rather than gender/diversity.”

      +1 Once this “gender/diversity” cancer finds its way into the vital organs of any organization it’s time to update your resume and begin another job search.

      1. So help me out. Why is a “business-focused approach” a bad thing? A bunch of people stuck in risk modeling might benefit from a business perspective. Was this really a gender issue?
        Not that I’m sticking up for the girl, I’m not. I just want a merit issue to actually be about merit.

        (oh and they might want to be careful about the fate of someone named “Brian Chin.” 😏 )

        1. I just searched on the, “business-focused approach.” Lots of material to read. I’m an engineer (think conservative), so I’m not the right person to answer your question regarding fancy new approaches to getting to same old job completed.

    1. Those wouldn’t be the same “disadvantaged minorities” who are “unfairly” stopped by the police at a higher rate than others?

      1. “Stop and frisk” may have been racial profiling, but it also stopped a lot of crimes from being committed.

  28. Re-post of a recent but soon to be classic.

    Wall Street Journal — New Realtors Pile Into Hot Housing Market. Most Find It Tough Going (3/21/2021):

    “The red-hot housing market has achieved a number of milestones this past year. Perhaps the most telling is this: There are more real-estate agents than homes for sale in the U.S.”

    https://archive.is/2Y8Kp

    2. It really does seem like a historically terrible time to buy, but perhaps if the pandemic foreclosure and eviction moratoriums are extended forever, it will look smart in retrospect.

      Personal Finance
      Buying a Home in 2021: How to Budget, Prepare for Bidding Wars and Surging Prices
      Difficult decisions await those brave enough to navigate a sizzling real-estate market
      By Julia Carpenter
      April 3, 2021 12:00 am ET

      If you’ve been thinking about buying a house, you’re not alone. After the pandemic and a record drop in interest rates sparked a frenzied search for new space, this spring’s selling season is poised to be a doozy.

      Even in a red-hot housing market with low inventory and high competition, the usual buying questions still apply. But there are some extra considerations to mull.

      Has the pandemic changed how much house you can afford?

      First, look at what you have saved up for a down payment and what your monthly mortgage payments would be. For renters, what you’re currently paying a month is a good barometer. Owning a property includes upfront expenses, like closing costs, and ongoing costs, like maintenance and homeowner’s association fees. Aim for a monthly mortgage payment that won’t stretch your budget too far, along with some cushion to handle emergencies and other unexpected fees.

      A house budget must consider the following: the mortgage rate, how much you saved for a down payment, how much you can afford in monthly mortgage payments, local housing prices and other expenses such as taxes and closing costs.
      …

  29. R u ready for a big change in how stonk investors view rising Treasury yields?

    Big Change Could Be Coming in How Stock Investors View Rising Treasury Yields
    James Hyerczyk
    Fri, April 2, 2021, 12:14 PM·4 min read

    Investors were expecting a big number and Friday’s U.S. Non-Farm Payrolls report delivered it and then some. It was essentially a reversal of the March 2020 report and sent another powerful message that the U.S. economy is on a strong path to recovery.
    Job Growth Booms

    The U.S. Labor Department reported job growth boomed in March at the fastest pace since last summer, as increased vaccinations and more pandemic relief money from the government, paved the way for perhaps the greatest economic growth surge in 37 years.

    Market Reaction

    Stock futures showed a muted reaction to the numbers, though government bonds yields rose. Wall Street wasn’t open for trading on Friday. March E-mini S&P 500 Index futures were open for a brief time. They extended gains and were up 0.43%. But keep in mind that volume was extremely low.

    The bond market was on a shortened day due to the Good Friday observance. However, yields on the benchmark 10-year notes rose to 1.7072%. Two-year Treasury yields rose to 0.1782%.

    In the Forex market, the U.S. Dollar Index firmed and was up about 0.16%.

    Pent up volatility is likely to strike the market early next week after investors take the weekend to digest the data.
    Markets Are About to Go into a Transition

    What I mean by, “markets are about to go into a transition”, is that what worked in the recent past may not work anymore. This especially refers to correlations. Specifically, the relationship between yields and stocks, yields and the U.S. Dollar and perhaps yields and gold.

    There’s no hard and fast rule to follow, it’s just an observation of a sudden change in the price action that will tell us that conditions are transitioning.

    Investors tend to be set in there ways when there is a strong trend. However, when conditions begin to shift, there is often a volatile reaction because trend traders have been caught off guard by the change in the fundamentals.

    For example, there was a time when all three stock indexes were moving in the same direction. Then the pandemic hit and growth stocks rallied more than value plays. Then the vaccine rollout began and investors sold growth stocks and bought value stocks of companies that would benefit the most when the economy reopened.

    Each time the market transitioned, some investors were caught on the wrong side of the trade. What I am trying to do is give you a reasonable chance to catch the transition before the majority of investors do.
    …

    1. “What I am trying to do is give you a reasonable chance to catch the transition before the majority of investors do.”

      He who cuts bait and runs first cuts best.

    2. If the economy is on such a strong path to recovery, why is the Fed not trimming back its “emergency measures”?

        1. “A home wrecking…”

          There’s plenty of women who’d get dumped in a heartbeat for Melania. Marla was (is) gorgeous and ageing well too.

          1. Jill still has good enough legs to show off with a shorter skirt, but there are ways to do it without resorting to leather and fishnets.

          2. Alzheimer’s Joe should divorce her and marry some guy in drag. That would be very current year.

      2. Ha! That was exactly the word that I thought of when I saw it. Jill thinks she’s Madonna and Joe doesn’t know who he is.

    2. “Apparently all dignity…”

      I dunno. That hem could come up another 4 to 6 inches, IMHO. 🙂

  32. if a Canadian with nothing to lose, wanted to send a message with a shooting, that person would prefer to shoot up government institutions.

    The time might be coming when angry Canadians start murdering and executing these treasonous bastards for lowering interest rates and encouraging money laundering in the real estate markets.

    The Bank of Canada should also be burned to the ground for rewarding the speculators and money launderers.

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