Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Thu Aug 14, 2008 3:30 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Slump delays 'Cheesegrater' plans. It turns out the City of London does not need a new 47-storey office building. Weak demand for office space and rising construction costs were blamed, as usual this is only a "delay", etc. Really what we are seeing in these types of announcement is the cancellation of future growth. This represents not only a cancellation of investment in materials and construction, but furniture, IT infrastructure, utility connections and all associated services. In addition, this being the City, many of the workers who would have occupied the building will soon no longer have a job where they are now.
There was a cost of course, British Land demolished the building occupying the site from the bottom up. Impressive work. Not cheap. I am sure they are more accustomed to delayed returns on investment than most, but taken together these stories suggest the UK is quickly losing a line of work it relied upon to exist tomorrow.
Having said that, better for it to happen now than halfway. The more investment gets stranded in stuff that will never see exploitation, the more painful the recession (or depression) will be.
nobodypanic wrote:
wachovia
Wankovia. _________________ Volatility. When life isn't exciting enough.
Posted: Thu Aug 14, 2008 4:32 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Twilight wrote:
Really what we are seeing in these types of announcement is the cancellation of future growth. This represents not only a cancellation of investment in materials and construction, but furniture, IT infrastructure, utility connections and all associated services. In addition, this being the City, many of the workers who would have occupied the building will soon no longer have a job where they are now.
Sure, but would building this actually make sense? Meaning, is there anybody who could use the floor space (even 10 years from now)? Or is the city hopelessly overbuilt?
Here in Vancouver the constant mantra is that we are running out of space, but if you look at most buildings (Condos) at night, they are dark, so this doesn't seem to add up.
Quote:
Having said that, better for it to happen now than halfway. The more investment gets stranded in stuff that will never see exploitation, the more painful the recession (or depression) will be.
Do you think it'll make a difference for the little guy? If anything one could argue they should continue to build so that at least the construction worker can feed their families for a longer period, not that anybody would be that alturistic of course.
Personally I just want it to be over with and people wake up and understand how bad it really is.... Think that'll happen anytime soon?
Posted: Thu Aug 14, 2008 5:16 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Snowrunner wrote:
Sure, but would building this actually make sense? Meaning, is there anybody who could use the floor space (even 10 years from now)? Or is the city hopelessly overbuilt?
It would make no sense to keep building there, but the economic impact of not doing so was an observation rather than an endorsement of a continuation. London is overbuilt, but like a singularity it sucks in organisations and people from other regions. Critical mass and all that. Irrational though it is, part of Britain's economic future was in expectations of a continuation of such trends. We can now see the future will not live up to its promise. Obviously we are going to need a Plan B. That needs to start sinking in.
Snowrunner wrote:
Here in Vancouver the constant mantra is that we are running out of space, but if you look at most buildings (Condos) at night, they are dark, so this doesn't seem to add up.
That is a familiar theme the world over, isn't it? I have heard many times that we are a "crowded island" and "they are not making any more of it". All true. But we are going to get our share of empty buildings anyway because there are limits to the prices the market can bear and lending standards blew past them.
Snowrunner wrote:
Do you think it'll make a difference for the little guy? If anything one could argue they should continue to build so that at least the construction worker can feed their families for a longer period, not that anybody would be that alturistic of course.
Personally I just want it to be over with and people wake up and understand how bad it really is.... Think that'll happen anytime soon?
I think they had their day in the sun and I hope they saved something of it. The next government might attempt to deficit spend its way out of this, but I would not bet on it coming anywhere close to replacing recent private sector activity, and it will not be much of a wage in any case. People really do need to start waking up to the situation. At the end of the day, the abandonment of early-stage building sites is a 12-24 month countdown to every trade down to hospitality and furniture retailers seeing layoffs. That is how I see it. I doubt most people see their own role in this. But when you have cranes covering several city blocks in some places, the amount of trickle-down trade taken for granted must be immense.
But without a doubt it is better not to end up with an inventory of unfinished buildings. It means heavier losses for companies and banks, more insolvencies, and eventual demolition costs on top. Better for the worst case to give a few pennies back than take a few pennies more. _________________ Volatility. When life isn't exciting enough.
Joined: Dec 07, 2005 Posts: 2025 Location: Australia
Posted: Thu Aug 14, 2008 7:29 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
b]BREAKING NEWS[/b]
Quote:
US Mint Suspends Sales Of Gold American Eagles
Late this afternoon (08/14/0 we learned the US Mint has suspended all sales of the 1 oz Gold American Eagles. They are not accepting additional orders for these popular bullion items.
A £400m rights issue at Bradford & Bingley (B&B) has closed, with analysts expecting that some of the deal's underwriters will end up with shares. Shares in B&B were trading at 55.25p when the deadline for the cash call finished on Friday - just above the 55p offer price for existing investors. The take-up is forecast to be modest... It is not expected to reveal how many shareholders took up the offer to buy extra shares until Monday. The rights issue was underwritten by banks including Citi and UBS, along with HSBC, Lloyds TSB, HBOS, Barclays, Abbey and the Royal Bank of Scotland.
This is the only private money B&B are likely to see. This rights issue failed twice already and their shares are too trashed for another attempt. There are not many quality assets to sell, all BTL and self-cert. That rules out a sale of the whole institution too, barring a massive taxpayer kickback to cover the coming losses. Their credit rating is in single A territory with negative outlooks and their poor prospects make them the weakest member of their herd, so lending them money will be the act of a government or a masochist. In two weeks' time we will be given an idea of how quickly they will burn through this £400m. I expect they will have a year to come up with a plan for saving themselves and I expect the FSA, BoE and UK government to start cheerleading while they plan a nationalisation. _________________ Volatility. When life isn't exciting enough.
Posted: Fri Aug 15, 2008 12:20 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
I think all this unwinding in commodities boils down to attempts to raise capital (cash) with the housing and credit crisis as the backstop for it. Every time someone defaults on a loan, the banks have to raise their reserves either via borrowing (big commercials borrow from the fed to meet reserve requirements) or by liquidating assets. Borrowing to meet reserve requirements is visible, and can lead to a run on the bank. Hence, I would imagine most bank execs prefer to sell assets which are profitable (as opposed to realizing a loss).
There are a lot of knockoff effects there. For one, as they sell profitable and hence 'good' assets someone is buying them. It may well be that investors who held things like precious metals see a quality asset hit the market at a good price and decide to sell their gold, oil, etc in order to obtain that asset.
Throw in demand destruction and a contracting economy in europe, the states, and parts of asia and you have the whole house of cards unwinding. Even farm products are being dragged down now.
All that said, awareness of the commodities implosion is now creeping into the mindset enough that I would expect a bounce soon (a week or so), although most declines also have a one or two day 'panic' sell near the bottom. The bounce will likely be significant since bear 'corrections' usually retrace 1/3 or more of a decline - and we've had a ferocious decline. It's also likely to be the last good exit point for commodities investors. With that, I'd still expect commodity prices in general to lose 50% of their peak before Q1 2009 is over - including gold and oil.
Bear phases :
1 - Correction of over valuation
2 - Realization
3 - Distress selling _________________ Welcome to the Kondratieff Winter
Posted: Fri Aug 15, 2008 4:06 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
World Economy Shows New Strain
Quote:
European Output Shrinks, U.S. Inflation
Jumps; Fresh Worries in Developing Nations
By JUSTIN LAHART in New York, ALISTAIR MACDONALD in London and
MARCUS WALKER in Berlin
August 15, 2008
The global economy -- which had long remained resilient despite U.S. weakness -- is now slowing significantly, with Europe offering the latest evidence of trouble.
On Thursday, the European Union's statistics agency said gross domestic product in the euro zone contracted 0.2% in the second quarter, the equivalent of a 0.8% annual rate of decline. It marked the first time since the early 1990s that GDP has fallen overall in the 15 countries that use the euro.
In a fresh sign of the pressures facing the American economy, the Labor Department said Thursday that U.S. consumer-price inflation hit a 17-year high in July, rising 5.6% from a year earlier.
With the European growth report, four of the world's five largest economies -- the U.S., the euro zone, Japan and the U.K. -- are now flirting with recession. China is still expanding strongly, but also shows some signs of slowing.
The global weakness marks a sharp reversal of expectations for many corporations and investors, who at the year's outset had predicted that major economies would remain largely insulated from America's woes.
(US) FED DISCOUNT WINDOW BORROWING AVG $17.81B/DAY IN WEEK ENDED AUG 13 VS $17.46B/DAY PRIOR WEEK; M2 DOWN $8.8B, M1 UP $13.1B IN WEEK ENDED AUG 4 - FED
- Primary credit borrowings averaged record $17.70B/day vs $17.37B/day prior week.
- Primary dealer credit facility borrowings zero in Aug 13 week vs zero in the prior week.
- Foreign central bank holdings of US agency debt down $5.43B
- Foreign central banks holdings of US Treasuries down $828M
As I predicted several weeks ago, foreign investors would begin to retreat as foreign economies weakened, and foreign investment in US debt would go down. Without outside purchases to maintain the huge US current account deficit, and federal budget, thing could get real interesting, real fast. Then everything is going to fall!
Quote:
Bloomberg reports that The Baltic Dry Index, the benchmark for shipping costs, fell for 23 consecutive sessions through Aug. 12, the worst decline since the third quarter of 2005. The index will average 40 percent less next year and sink another 47 percent in 2010, according to Goldman Sachs Group Inc. STX Pan Ocean Co. Ltd. and the other 11 smaller members of the Bloomberg Dry Ships Index have retreated as much as 34 percent in three months.
Quote:
"What we have is a classic cyclical downturn,'' said Andreas Vergottis, research director at Tufton Oceanic Ltd., the world's largest shipping hedge fund manager. ``People are not buying cars and people are not buying houses, and when that stops, it travels backwards all the way back to the mine.''
Quote:
The Baltic Dry Index reached a record 11,793 on May 20 and has dropped 40 percent since then. The index will average 8,498 this year, 5,099 next year and 2,719 in 2010, according to Hong Kong-based Goldman Sachs analysts Tom Kim and Edman Wong.
Quote:
Economic activity in the eurozone fell in the three months to the end of June for the first time since the launch of the euro a decade ago. Confirmation of the slowdown comes a day after Japan reported a fall in second quarter GDP and the Bank of England gave a bleak outlook for the UK economy, suggesting inflation is becoming less of a concern for policymakers and boosting growth is now the main objective.
As the energy contribution of fossil fuels for the production of non-energy goods and services falls, the world's economy will fall.
Available Energy
Joined: Dec 07, 2005 Posts: 2025 Location: Australia
Posted: Fri Aug 15, 2008 4:06 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Twilight wrote:
This is the wrong thread for PMs.
It is part of an economic collapse scenario that is playing out.
But I do keep it short and sweet in this thread. _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
This is an incomplete picture, of course, and doesn't get into HELOCs and other asset-backed security holdings in Level II and maybe even Level I. But it gives a picture for why Indymac failed when it did. And what's with Citi?
When the tide goes out you can see who's swimming naked. And speaking of tides, I'm catching one. One final week of kayaking before the termination dust starts to fall and we say goodbye to summer. We've got increasing swings in volatility never seen before on the world stage for oil, gold, and the USD, and some hurricanes brewing. I wonder how recognizable the economic landscape will be when I get back?
And, no, I won't be swimming naked. Even bleach-blonde polar bears have got to wear stuff to get in the water up here at this time of year. _________________ "When fascism comes to America it will be wrapped in a flag and carrying a cross." --Sinclair Lewis
Posted: Sat Aug 16, 2008 1:11 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Here comes the real collapse in home values. 10 cents on the dollar??????
Quote:
They have been told to ‘de-lever and raise capital’ but it fell on deaf ears for over a year. Now, here comes the ‘asset’ sales all at once. First, the FDIC said it will be liquidating IndyMac, then Merrill with $30 billion two weeks ago, this week Fannie says 54k homes may be bulked and now Lehman will likely sell $40 billion. To raise capital the banks burned through sovereign funds late last year, preferred buyers this year and now are selling common stock and/or ‘assets’. It’s all they have left.
In my opinion, banks stumbling all over themselves to get ahead of each other in the bulk real estate ‘asset’ unwind at the end of the Spring/Summer selling season is the wildcard that will deliver a cripling blow to the housing market for a long time to come.
Joined: Jun 15, 2008 Posts: 60 Location: Somewhere in the cold north
Posted: Sat Aug 16, 2008 2:36 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
shortonoil wrote:
Here comes the real collapse in home values. 10 cents on the dollar??????
Quote:
They have been told to ‘de-lever and raise capital’ but it fell on deaf ears for over a year. Now, here comes the ‘asset’ sales all at once. First, the FDIC said it will be liquidating IndyMac, then Merrill with $30 billion two weeks ago, this week Fannie says 54k homes may be bulked and now Lehman will likely sell $40 billion. To raise capital the banks burned through sovereign funds late last year, preferred buyers this year and now are selling common stock and/or ‘assets’. It’s all they have left.
In my opinion, banks stumbling all over themselves to get ahead of each other in the bulk real estate ‘asset’ unwind at the end of the Spring/Summer selling season is the wildcard that will deliver a cripling blow to the housing market for a long time to come.
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we learned the US Mint has suspended all sales of the 1 oz Gold American Eagles. They are not accepting additional orders for these popular bullion items.
