Clipmarks | JICWyllie's 'i-prices' clips

Pound and euro slide amid more housing gloom

Fri, 05 Sep 2008 16:09:41 GMT

clipped by: JICWyllie

"Our estimate is for 25 per cent to 35 per cent house-price falls from their height...resulting in up to 1.3 million households, or 18 per cent of mortgages by value, in negative equity under our recession scenario," said Bruno Paulson, senior analyst at Sanford Bernstein, the research house.

Mr Paulson said that house price falls would be "far worse" than in the last economic downturn in the 1990s and could have a huge negative knock-on effect for the UK's mortgage lenders.

Morgan Stanley estimated in April that house price falls of 15 per cent over the subsequent 24 months would put 1.2 million people into the red with their property values.

But if price falls of 25 per cent are sustained, that would put 2 million into negative equity, analysts at the investment bank said

Savills said today that its forecast that house prices will fall by 25 per cent over this year and next was looking like an increasingly safe bet.

Tags: economy, consumers, housing, i-prices, i-decrease, i-record

Why cheaper oil signals trouble

Thu, 04 Sep 2008 18:24:44 GMT

clipped by: JICWyllie
clipper's remarks: Deflation will win over inflation.

But the "good news" will go on until just after the USA election. Then reality will begin to intrude its ugly head, again.

Clip Source: money.cnn.com

Food and energy prices are coming down in part because of a global growth slowdown that could also cool the red hot U.S. export sector - the major bright spot in an economy still struggling with a massive housing bust.

If prices keep sliding, year-over-year inflation numbers - after hitting a 17-year high last month - could soon look much healthier, reducing fears that the Federal Reserve may have to raise interest rates to stamp out rising inflation expectations.

If the growth party is over around the world, the U.S. export boom will quickly fizzle.

A pullback by some of its overseas customers offers the latest bit of unhappy news for the U.S. economy, which this year has continued to grow - if only tepidly - in large measure thanks to slowing imports and rising exports.

The halo effect from exports could already be wearing off.

second-quarter GDP data showed U.S. corporate profits from foreign sources dropped 15% from first-quarter levels, due to softer worldwide economic conditions.

Tags: economy, commodities, i-prices, i-decrease, i-consequences, i-deflation

Brazil: Deforestation rises sharply as farmers push into Amazon

Tue, 02 Sep 2008 09:51:54 GMT

clipped by: JICWyllie

Clip Source: www.guardian.co.uk

Concerns over the destruction of the Brazilian rainforest resurfaced at the weekend after it emerged that deforestation jumped by 64% over the last 12 months, according to official government data.

Brazil's National Institute for Space Research this week said that around 3,145 square miles - an area half the size of Wales - were razed between August 2007 and August 2008.

With commodity prices hitting recent highs and loggers and soy farmers pushing ever further into the Amazon jungle, satellite images captured by a real-time monitoring system, known in Brazil as Deter, showed that deforestation was once again on the rise after three years on the wane.

Brazil's push to expand its economy and develop the Amazon region is posing increasing threats to Brazil's natural resources. They accuse the government of retreating from its promises to defend the Amazon rainforest, which has been decimated since the 1970s by a mixture of logging, cattle ranching and soy farming.

Tags: environment, forests, i-deforestation, i-increase

Insight: The global spending spree has hit a brick wall

Thu, 28 Aug 2008 13:30:55 GMT

clipped by: JICWyllie

Clip Source: www.ft.com

The US consumer is not the only one feeling down and out. Since the start of the year, higher food and energy prices have undermined consumer confidence not only in Detroit but also in Dusseldorf, Delhi and Dalian. The upshot: a global slump in personal spending is unfolding, portending rockier times for the global economy and world financial markets.

At best, global private consumption expenditures – roughly $32,000bn in nominal dollars in 2007 – are expected to rise by 2-4 per cent this year. That compares with an 11 per cent jump in 2007, and contrasts sharply with the boom in personal spending this decade.

Global consumption surged 63 per cent between 2001 and 2007, a bonanza fuelled by easy global credit conditions and soaring equity and housing prices.

consumer spending in developing nations doubled between 2000 and 2007, from $4,500bn to $9,000bn last year

Lost on the “decouplers” is this – the mood among many consumers in the developing nations is just as foul as it is in the US.

Tags: economy, consumers, i-spending, i-decrease

US house price declines slowing

Wed, 27 Aug 2008 12:00:33 GMT

clipped by: JICWyllie

Clip Source: www.ft.com

US home prices posted a record annual decline of 15.9 per cent in June, but the pace of monthly falls slowed significantly, offering hope that the ailing US housing market is edging towards a rebound.

Meanwhile, consumer confidence rose in August by more than expected, according to the Conference Board. Amid declining petrol prices, Americans have grown more confident about the future, though they remain gloomy about the present.

the pace of monthly declines in US home prices, which hovered around 2 per cent earlier in the year, slowed to 0.5 per cent.

Tags: economy, consumers, housing, i-prices

Property prices are slashed but sales head for new low

Mon, 18 Aug 2008 13:38:29 GMT

clipped by: JICWyllie

Clip Source: www.independent.co.uk

Having previously tried to resist market forces, property sellers have begun aggressively to cut the asking prices for their homes, according to the online estate agency Rightmove.

householders slashed the asking price of the average British home by 2.3 per cent last month – a drop of £5,403. In London, the discounting has become even more marked, with asking prices down by 5.3 per cent last month alone, representing a reduction of £21,000 in the four weeks to 9 August

The number of new mortgage approvals, says the Bank of England, is down 70 per cent on last year.

The number of transactions this year is in danger of being the lowest since 1959. This raises serious questions as to whether any short-term incentives by the Government or the Bank of England would be effective

more than £18bn of equity tied up in buy-to-let properties will be cashed in over the next few years, as Britain's private landlords sell out of the sector in their droves.

separate survey

found

Tags: economy consumers, housing, i-prices, i-decrease, i-record

Things will get worse: you can bet the house on it

Sun, 17 Aug 2008 14:14:14 GMT

clipped by: JICWyllie

Clip Source: www.guardian.co.uk

Already, Nationwide calculates that the average home is worth £15,000 less than it was a year ago, and has slipped back to its value in August 2006. Now, analysts are scrambling over each other to increase their predictions of how far prices could fall from their peak. Many say 20 per cent; some up to 35 per cent, or even more.

George Buckley, of Deutsche Bank, points out that house prices in the United States have been falling since 2006, with only tentative signs that the downturn is coming to an end - and the boom in the UK was much bigger.

As the market slides, she predicts that many more buyers will instead opt to buy a smaller property, or share with others. 'Expectations of falling house prices will convince many to defer their property purchase, or sell their property. As more people choose to share with friends, family or strangers, a key source of demand for property at the lower end of the market will be hit, intensifying the downward pressure on prices.'

Tags: economy, consumers, housing, i-prices, i-decrease, i-accelleration, i-record

US stocks surge on ‘watershed’ dollar jump

Sat, 09 Aug 2008 16:33:34 GMT

clipped by: JICWyllie

Clip Source: www.ft.com

US stocks soared on Friday as the dollar saw its biggest one-day jump against the euro in eight years and oil prices plunged.

The moves marked a key reversal of a trend that many investors had followed profitably for months – betting that high commodity prices would keep the dollar weak.

The shift in sentiment was triggered by Jean-Claude Trichet, president of the European Central Bank, who warned on Thursday that third-quarter eurozone growth would be “particularly weak”. This sparked talk that the ECB would be forced to abandon its hawkish policy stance and start cutting interest rates, thereby weakening the euro.

Traders said the violence of the move was testimony to the extent to which the market had been surprised by economic weakness outside the US.

UK economic data has shown increasing weakness this week; officials in Japan warned that the economy was headed for a recession; and the Reserve Bank of Australia said it was planning to start cutting interest rates

Tags: economy, currencies, i-exchange rates, i-trend reversal

E.P.A. Declines to Reduce the Quota for Ethanol in Cars

Sat, 09 Aug 2008 15:23:48 GMT

clipped by: JICWyllie
clipper's remarks: Let them eat gas. At least, cake can be eaten.

Clip Source: www.nytimes.com

The Environmental Protection Agency rejected on Thursday a request to cut the federal government’s quota for the use of ethanol in cars, concluding, at least for now, that the national goal of reducing oil use trumps any effect on food prices from making fuel from corn.

The agency’s administrator, Stephen L. Johnson, said the mandate was “strengthening our nation’s energy security and supporting American farming communities,” and that the mandate was not causing “severe harm to the economy or the environment.”

Recently, high oil prices have led to even more ethanol production than the quota required. On the other hand, rising corn prices made some ethanol operations unprofitable, especially as oil prices started to fall.

“The food inflation that you’ve seen now, at least in the meat and poultry sector, probably is mild compared to what may be coming in the future,” said Joel Brandenberger, president of the National Turkey Federation.

Legislators from farm states applauded the ruling.

Tags: energy, renewables, biofuels, i-policy, i-subsidy, i-consequences

Booming China Suddenly Worries That a Slowdown Is Taking Hold

Tue, 05 Aug 2008 16:57:40 GMT

clipped by: JICWyllie
clipper's remarks: If you think the US is overbuilt, wait until China's new urban property market begins to plunge in value ... just like Japan, but probably worse because there is even more corruption.

Clip Source: www.nytimes.com

Many Chinese have been expecting a post-Olympics economic slowdown, but it has already started and the Games have not even begun.

Chinese factories reported a plunge in new orders last month. Exports are barely growing. The real estate market is weakening, with apartment prices sinking in southeastern China, the region hardest hit by economic troubles.

China’s slowing growth is one reason that gasoline prices have fallen in the United States, for example. Similarly, world prices for metals like copper, tin, zinc and aluminum have tumbled in the last several weeks, as voracious Chinese factories have closed, or cut back their consumption.

Economists expect growth to slip from its recent pace of 11 percent or more annually to as low as 9 or 9.5 percent over the coming year.

9 percent growth will make it much harder to supply jobs to the millions of Chinese moving to cities from rural areas in search of work.

Tags: economy, business, growth, i-decrease

Oil falls to three-month low

Tue, 05 Aug 2008 16:47:42 GMT

clipped by: JICWyllie

Clip Source: www.guardian.co.uk

Oil slid to $118 a barrel as investors predicted that demand from the US and Europe was waning, at a time when some oil-producing countries have increased supply.

supply from Opec, the group of major oil-producing nations, rose for a third consecutive month in July driven by increased output from the world's top exporter, Saudi Arabia. Opec's members produce two in every five barrels of oil.

Angus McPhail from investment firm Alliance Trust said prices could fall to about £100 a barrel - still high by the standards set in recent years - if economic data remains weak.

Changes in the oil prices often takes six to eight weeks to hit the petrol pump.

Tags: energy, oil, i-supply, i-increase. i-price, i-decrease

Inflation Takes Steam Out of Rise in Spending

Tue, 05 Aug 2008 16:41:46 GMT

clipped by: JICWyllie

Clip Source: www.nytimes.com

Consumers spent more in June, but only because the things they bought cost more.

Driven primarily by energy and food prices, inflation grew 0.8 percent over May, the biggest monthly increase since September 2005, the Bureau of Economic Analysis reported on Monday. Spending, by comparison, grew just 0.6 percent in June.

current measure of food and energy prices kept by the bureau, adding in items like clothing — recorded the biggest year-over-year increase since July 1981.

Oil fell $3.69, to $121.41 a barrel, partly on anticipation that struggling consumers would not be buying as much,

“This is a kind of ‘Honey, inflation ate my rebate check’ story,”

Tags: economy, currencies, i-inflation, i-increase, i-record

Housing Lenders Fear Bigger Wave of Loan Defaults

Tue, 05 Aug 2008 12:23:04 GMT

clipped by: JICWyllie

Clip Source: www.nytimes.com

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

Reports last week showed another drop in home prices, slower-than-expected economic growth and a huge loss at General Motors. On Friday, the Labor Department reported that the unemployment rate in July climbed to a four-year high.

Homeowners with good credit are falling behind on their payments in growing numbers,

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly.

“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm

that trades mortgage securities.

Tags: economy, consumers, housing, i-debt, i-mortgage, financial markets, i-risks, i-increase

Don't make the consumer pay for these inflated fuel prices

Sun, 03 Aug 2008 15:01:23 GMT

clipped by: JICWyllie

Clip Source: www.guardian.co.uk

If you want to criticise the free market, look at the design of Britain's energy markets, particularly the wholesale market for gas where the big companies buy and sell to one another. As gas prices shadow every movement in oil price, other European countries have carefully built a substantial infrastructure to hold sufficient reserve stocks of gas in their systems to smooth price changes. Not in free-market Britain.

Amazingly, as North Sea gas production declines and we become more dependent on imports, we have capacity to store only 13 days' worth of gas. Germany has 99 and France 122.

So as wholesale gas prices have risen, the British system has offered no buffer to smooth the impact.

The so-called London loophole, created by the Labour government, excuses the London oil market from independent and transparent oversight.

Speculation is part of the oil price rise, and most of it is rooted in out-of-control London.

Tags: energy, natural gas, i-supply, i-prices, i-policy, i-failure

Shipping Costs Start to Crimp Globalization

Sun, 03 Aug 2008 13:23:33 GMT

clipped by: JICWyllie

Clip Source: www.nytimes.com

Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages.

Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

companies looking to keep prices low will have to move some production closer to consumers. Globe-spanning supply chains

make less sense today than they did a few years ago.

Decisions like those suggest that what some economists call a neighborhood effect — putting factories closer to components suppliers and to consumers, to reduce transportation costs — could grow in importance if oil remains expensive.

Tags: economy, trade, i-globalisation, i-decrease, transport, i-prices, i-increase