Joan Miquel Joaquim

SPAIN: Housing Statistics (UPDATE February 2012)

2012-02-15T18:00:00.000+01:00

Data released: Statistics on Transfer of Property Rights (Dec 2011)
Houses inventory at Dec 2010.

Source: INE (National Statistics Institute)

Including official statistics of started and finished houses according MFOM and till November 2011

Labor Reform to Stimulate Growth

The Government of Spain last week approved a law reducing companies’ firing costs and making it easier for them to opt out of wage-bargaining agreements in a bid to tackle the jobless rate. The Government believes that the financial crisis and the old labor law is not flexible enough is the main reason that caused the current high unemployment rate, the introduction of new labor laws aimed at reducing the costs of the dismissed workers, and improve the flexibility of internal, expecting to promote employment, stimulating economic growth.

It is reported that Spain the labor force the unemployment rate was 24.5%, the unemployment rate of young people up to 46%, ranking most European countries. The main important feature of this law is to reduce the dismissal compensation and encourage the hiring of young people through tax relief.

And this week, the National Statistics Institute in Madrid published the data of property transfer of December. According to the data we compiled, the number of transactions fell 18.0% percent from a year earlier. While the transaction of new house and existing house fell 20.4% and 15.6% respectively.

According to the estimate of the Bank of Spain, Spain’s economy may shrink 1.5 percent this year, as the government tightens its budget for the third year. Nevertheless, the reforms carried out by the Rajoy government are regarded as promising. The European Union Financial Services Commissoner Michel Barnier said reforms undertaken by Spain are heading in the right direction to enable the country to emerge from crisis.

See Data

INTERACTIVE CHARTS (Automatically updated)

The new homes sales in December 2011 is 11,099 units, fell around 30% comparing with one year earlier. Comparing with that of November, the intermonthly variation rate is -20%.

In annualized data, Spain home sales slump for 10th straight month as recession hurt ecoonomy.
The registered property transfer fell more than 30% from Feb 2012.

Less than two months since taking over from Spain’s Socialists, Rajoy’s People’s Party government has given the nation’s banks a year to increase provisions against 175 billion euros ($232 billion) of troubled real-estate assets in a bid to push down property prices and restore the flow of credit. Spanish banks’ bad loans are mounting while deposits are lower and lending has dropped at the fastest pace on record, the latest available Bank of Spain data show. Lacking of financial support the new started project keeps dropping.

If you have been following my updates on this topic, you might already knows that the following coincident series (stared/finished) suggests us an initial average construction time of 36 months, by implying this results, it is not difficult to analyse on the variation of market stock.

Considering this coincident series we have a base case of finished houses for the next months:
This forecast suggests that the decline trend of the stock increasing rate.

The analysis of flow variables such as finished homes and sold homes, helps us to we investigate the variation on stock and also we facilitate to provide credible forecast.

Depends on different economy environments, we can construct two scenarios. This two scenarios differs on the assumption of new home sale. The base case with an average of last three months and the conservative case, reducing the average in 25%. The data complied by our research suggests that this reduction is mainly driven by the decrease in provision.

And for Catalonia:

All the figures above provide us a very clear market information. Absolute numbers help us to follow the market situation, however comparative analysis enable us to catch the trends. The best indicator to protect your investment from the worst effects of over and under supply while maintaining the momentum given to the market by the classic property cycle is the availability rate.

When residential availability rate in the central main European cities is moving in direction to a certain level that seems likely to be crossed, other market indicators change its trends. This level can be seen as a pivotal measure for the residential market, is that we call "natural" rate.

Our own studies define this level of "natural availability rate" in a 2%. No discussion about the inverse relationship between the availability rate and prime prices in the case of central in the main European Cities, like Paris, London or Milan, and this level of 2% as a trigger for price rising and shortage on some products, has been consolidated after different historical analysis.

According the "Ministerio de Fomento", by December 2010, the rates of total unsold homes (including homes more than two years old) per Spanish regions were as following:

As the ratio of new houses unsold reduce to natural ratios over inventories, prices starts to moderate its fall. This is what are happening in Catalonia (Barcelona).

The price falling from the last period seems reaches its limits. It seems there are no more spaces for further decrease. If you are looking for a property, we strongly recommend t that, now is the best time particularly for individual investors. The mathematics here is that, if you are too prudential enough, you might just give up many high quality properties.

Stock of unsold homes over annualized sales:
This ratio also reflects the dynamic evolution between the supply and demand. The higher the ratio is, the more stock the market has. Comparing that with Spain, Catalonia is always a favored destination for investors.

Conclusion:

Since the beginning of 2012, the new established Rajoy government has been carrying out several reforms. Under the pressures of both economy contraction and severe employment situation, these reforms have been taken out effectively and efficiently.

As an entrepreneur, I welcome the reforms. The labor reform enable us to keep the competitive of the firms. The financial reforms cause more difficulty for financing, however, eventual providing us a healthy environment.

Based on the side of the property market, the analysis on market breakdown implicates the current availability rate in Barcelona and its future short-term trend are conditioned for the next month sales. Given that these reforms make progress in a midterm, we will see a significant rise on prices of new homes in Barcelona Metropolitan Area, and same in Madrid and Valencia.

Regards,

J. M. Joaquim

SPAIN: Building Activity (Updated February 2012)

2012-02-10T12:30:00.000+01:00

Data Released: Building Permits on August 2011
Release Date: February 2012
Source: Ministerio de Fomento (Construction Statistics)

Latest Bank Reforms Helps to rebuild Market Confidence

The Spanish Cabinet announced in this month that, banks have a year to make 50 billion euros of provisions against real estate assets. According to Bloomberg, the government will make banks increase the ratio of provisions set aside for land to 80 percent from 31 percent, Economy Minister Luis de Guindos said. For unfinished developments, the provisioning level will rise to 65 percent from 27 percent and to 35 percent for assets including finished developments and houses.

Meanwhile Spanish unemployment registrations jumped by the most in three years in January as the economy edged into its second recession since the end of 2009. The number of people signing on for jobless benefits increased by 177,470 to 4.6 million, according to an emailed statement by the Labor Ministry in Madrid.

“With the economy now expected to be in recession over the next few quarters, employment is set to shrink for a fifth straight year,”

However, the outlook of Spanish economy is not that dark as its statistic appears. The latest bank reform got many positive reviews from institutions. Moody's Investors Service believes that the restructure of its banking sector will help restore investor confidence and help banks regain access to market funding. According to the ratings agency, "We consider the government's plan credit positive since it will compel the clean-up of losses embedded in banks' balance sheet and improve transparency on banks' real financial health, helping to restore much needed market confidence."

Construction Activity Data

The official statistics of building permits issued by Spanish municipalities 2011 ( (in sqm) on August 2011 (month 56 from the last peak),suggests both industrial sector and logistic sector have an improved performance than previous month (July 2011).

The annualized data appears that the index of industrial and warehouse sectors rebounds from the in the lowest points in the previous sector. Furthermore, the warehouse index suggest logistic sector keeps a moderate and staple increase tread.

Monthly data breakdown by different sectors (Last 3 months)

The monthly breakdown also supports the analysis based on annualized data that warehouse sector has a better performance. The another conclusion is our forecast of office sector. The disappointing sector reflects of the weak economy.

Interactive Charts automatically updated

The following chart provide us the commercial construction activities data in absolute values.
(current year values are up to present update):

The annual accumulated data for the last 5 years allows us to have a better view of the current situation. The current trend suggests that only the warehouse sector will exceed the previous year while industrial sector might match the data of previous years and other sectors drop further.

Comparison of different trends:

If in the 90's the housing building activity drove the recovering in the retail sector, in the present cycle retail activity follows other drivers because housing activity, although have reached its trough, is not recovering.

By comparing Industrial and Logistic cycles we have the following graph:

The micro peaks sequence analysis seems to confirm that we could drop further, despite of the strong recovery in logistical sector. As we already stated, the industrial sector might be impacted by the weak economic performance. The concern is that the current crisis might already change the business pattern that companies are much cautious, which has an lagging effect from the recovery.

Conclusions:

Weak economy outlook accompany with contraction policy, exaggerate the intense of market. The statistics seems fails to provide any motivation for invest. However, the widely different performance between sectors,
reminds investors the importance to keep the right portfolio. As we said, the darker economic outlook requires investors closely monitor and intensive expertise. According to the CoreInvestments' observation on market movements, many institutions are dedicated to build investment vehicles which fit to the current frame of market cycle.

PEAKS AND TROUGHS
The concept of peak and trough analysis, is simple technique but it works the best. While the theory itself has lost much of its luster in recent years, the peak and trough part of it has not. It is arguably the most important building block of technical analysis.
When you look at almost any chart, it’s fairly evident that prices or activity do not go up and down in straight lines, but move in zigzag patterns instead. During a bull trend, a rally is interrupted by a correction in which part of the advance is retraced. This is then followed by another rally, after which a subsequent correction follows, and so on.
These are the peaks and troughs. As long as a trend experiences a series of rising peaks and rising troughs, it is considered to be intact. However, when the series of rising peaks and troughs is replaced by a series of declining peaks and troughs, the prevailing trend has reversed.
Figure 1 shows a series of rising peaks and troughs. When a subsequent rally fails to make a new high for the move (A), this alerts us the trend may have changed. It is not until the price slips below the previous bottom (B), however, that the price action reveals a declining peak and trough. The trend, according to this technique, is now deemed to be bearish.

In a bear trend, prices continue their downward zigzag (Figure 2) until the latest trough fails to make a new low for the move (C). The subsequent rally takes the price above the previous high (D), and the series of declining peaks and troughs gives way to a series of rising ones. The actual signal takes place at E, when it is evident that the price has made a new high. At that point, we do not know where the next peak will occur, but we do know it is likely it will be higher than the previous one.

As you can see from the price action at point F, there is nothing to stop the price from falling below the trend reversal signal (E), but pricing will still be consistent with a subsequent rising trend.

Why are US housing prices falling when the number of houses on the market continues to decline?

2012-01-27T23:18:00.000+01:00

The Next U.S. Housing Market Bailout

Jan 27, 2012 - 07:37 AM

Why are housing prices falling when the number of houses on the market continues to decline? Usually, when supply shrinks, then prices rise, right? So, why isn’t that happening now?

The reason is that housing market never completely cleared, which is to say that the Fed’s interventions and the manipulation of inventory by the banks prevented the market from finding a bottom. So, now– a full 6 years after the peak in home sales in 2006–the real estate depression continues while prices drift lower still. And–here’s the bad part–no one knows how much farther prices will drop, because the existing inventory of homes on the market (according to the Wall Street Journal) is presently 1.89 million while the shadow inventory (according to CORELogic)… is “1.6 million units” which represents another 5 months supply, “the same level as reported in July 2011.”

So we’re back to Square 1.

Here’s more from CORElogic:

“Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.

CORElogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders.” (Calculated Risk)

So, there’s a mountain of backlog to work-off before the market touches bottom and prices stabilize. But even that doesn’t accurately describe the troubles facing the market. The biggest obstacle to any real recovery is the millions of distressed homes that are set to come onto the market in the next few years. Those numbers will swell by many orders of magnitude when the banks and the 50 Attornies General agree to a settlement on the Robosigning fiasco some time in early 2012. When an agreement is finally reached, a flood of foreclosures will pour onto the market pushing down prices, wiping out precious homeowner equity, further eroding bank balance sheets, and forcing more underwater mortgage holders to “walk away”. Here’s how CNBC’s Diane Olick sums it up:

“The biggest headwind facing the recovery unquestionably is the distress leftover from the housing crash– foreclosures and properties with delinquent loans. ….Right now, there are approximately 6.2 million properties that have delinquent mortgages or are already in foreclosure….. Now not all of the delinquent loans will go to foreclosure especially if legal settlements involve principle write down and more loan modifications….

There is however a worst case scenario …from Amherst Securities which looks at loans that have been modified but likely to default. Amherst claims there are around 10 million loans in trouble. … 4 million 60 days past due. 2.5 million modified claimed will default. and 3.6 million under water loans that they say will likely go bad.

Add all that to the current inventory of bank-owned homes, Fanny, Freddie, FHA, the banks, private label, and you get close to 3.4 million properties.” (CNBC, Diana Olick—Watch the whole video at CNBC http://video.cnbc.com/gallery/?video=3000068580.)

Did you catch that last part? The banks are going to have to get rid of another 3.4 million distressed homes even though the market is already completely saturated. That means prices have only one way to go…DOWN.

Remember, the banks find themselves in this pickle after having already been bailed out 3 times to the tune of many trillions of dollars. (The $700 billion TARP, the $1.25 trillion QE1, and the Fed’s lending facilities which provided blanket support to a cross-section of financial institutions for an estimated $12.4 trillion in loans and other commitments) And now, there’s going to be a 4th trillion dollar bailout, which many expect President Obama to announce on Tuesday in the State of the Union Speech. Here’s a little warm up for that event which appeared in the New York Times:

“President Obama will use his election-year State of the Union address on Tuesday to define an activist role for government in promoting a prosperous and equitable society, hoping to draw a stark contrast between the parties in a time of deep economic uncertainty.. ….

Advisers and other people familiar with the speech say Mr. Obama will expand again on the administration’s effort to resolve the housing crisis with both carrots and sticks to lenders dealing with homeowners behind on their mortgage payments —

(Obama’s) economic team holds that until the housing market recovers, the broader economy cannot — and that all Americans suffer…… Mr. Obama said he would call for “a return to American values of fairness for all and responsibility from all….”(“Obama to Draw an Economic Line in State of Union”, New York Times)

Okay, so Obama is going to wrap this new Banker giveaway in all kinds of populist gobbledygook. No surprise there! Still, it makes you wonder what the administration has up its sleeve? After all, “disappearing” a couple million homes is no easy task even when one’s economics team is chock-full of Wall Street insiders and banker wannabees. So, what’s the plan?

First of all, we need to recognise that–in order for Obama’s bailout to succeed–he needs to do two things at the same time. One, he must prevent the prices of financial assets (mainly mortgage-backed securities) from falling too sharply or the banks will suffer heavy losses. Second, he has to find a way to dispose of the millions of unwanted homes that will wreak havoc on prices if they are allowed to come onto the market.

As we all know by now, the way to keep “risk assets” bubbly is by firing up the printing presses and launching another round of quantitative easing (QE3) So, that’s probably a done-deal. Here’s what CNBC had to say on the topic in an article that appeared on their site just last week:

“The Federal Reserve is likely to step in with $1 trillion worth of easing that could be announced as soon as this month, according to a growing consensus of economists who see the recent uptick in economic growth as unsustainable.

With the Fed’s Open Market Committee set to meet next week, expectations are rising that the languishing housing market will drive the central bank to buy up mortgage-backed securities.

The goal of the purchases will be to drive down interest rates even further from current record-low levels, and, less obviously, to spur confidence that more monetary tools remain to stimulate the economy….

The $1 trillion price tag — Citigroup economists a few weeks ago also envisioned QE3 at that level — is significant in that it will send the Fed’s balance sheet to about $3.9 trillion and likely spark a war with Congress over the threat of inflation.” (“Fed’s Latest Easing Could Cost $1 Trillion: Economists”, CNBC

Of course, the Fed’s (proposed) purchases have nothing to do with “driving down interest rates” (which are already at historic lows) or “stimulating the economy”. That’s just more public relations hype. It’s all about inflating the prices of droopy financial assets that are eating up banks’ balance sheets. That said, Obama will still have to concoct a scheme for gobbling up all those foreclosures that are piling up on the banks’ books. How’s he going to do that?

So far, Obama hasn’t tipped his hand about the shape of the deal to come, but there are signs that the deep-pocket guys are already lining up at the trough. For example, get a load of this on Thursday’s Marketwatch:

“AG Mortgage Investment Trust, Inc…..(the “Company”) announced today that it has priced an underwritten public offering of 5,000,000 shares of common stock at a public offering price of $19.00 per share. The Company has granted the underwriters a 30-day option to purchase up to 750,000 additional shares of common stock at the public offering price to cover overallotments. The offering is expected to close on January 24, 2012 and is subject to customary closing conditions.

The Company intends to use the net proceeds of the offering to make, as market conditions warrant, additional acquisitions of agency securities, non-agency residential mortgage-backed securities and other target assets, and for general corporate purposes.

Deutsche Bank Securities Inc., BofA Merrill Lynch and Stifel Nicolaus Weisel are acting as joint book-running managers for the offering.” (“AG Mortgage Investment Trust, Inc. Announces Pricing of Public Offering of Common Stock”, Marketwatch

So, all of a sudden there’s a gold rush on “agency securities (and) non-agency residential mortgage-backed securities”? Well, fancy that. And it segues nicely with Obama’s (presumed) bailout plan, doesn’t it? Of course, it could all just be a coincidence, but how likely is that? After all, as we pointed out in an earlier article there are some pretty wealthy and well-connected people who are betting the farm that another round of QE will put MBS into the stratosphere. Here’s an excerpt from a post at Zero Hedge:

”….in December the fund (Total Return Fund or TRF) doubled down on its QE3 all in bet, by “borrowing” even more cash, or a record $78 billion, using the proceeds to buy even more MBS, as well as Treasurys, which hit a combined 31% of the TRF’s holdings. In other words, between MBS and USTs, Pimco holds a whopping 79% of total, mostly in very long duration exposure. In fact, this combination of long duration and pre-QE exposure has not been seen at PIMCO since late 2008, early 2009, meaning that as many banks have been suggesting, (Bill) Gross is convinced that the Fed will announce if not outright QE3 this January, then at least intimate it is coming.”(“Pimco Doubles Down On All In Bet Fed Will Monetize MBS”, Zero Hedge)

So what do these guys know that we don’t know?

But, then, QE3 is just part of the story. The other part is the presumed “Public-Private Investment Partnership” that will incentivize the big banks and private equity firms to buy up loads of distressed homes so they can convert them into rental units. “Why would they do that”, you ask? Because Team Obama is going to make them an offer they can’t refuse. All we need to do is to look back at the way Treasury’s Timothy Geithner cobbled together the first PPIP, and we can figure that it will be some variation of that same concept.

Here’s what you need to know about the first PPIP: Uncle Sam was supposed to stump up 94 percent of the financing (low interest, of course) for mortgage-backed securities (MBS) that no one else wanted. (This time it will be the houses themselves) The so-called “private partners” in this confidence scam, (Banks, private equity, hedge funds) would get non-recourse loans which they could get out of at any time if they felt their investment was at risk. Here’s how Paul Krugman summed it up at the time:

“The Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. This isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.”

Bingo. It’s just more corporate welfare dolled up as as way to “stabilize the housing market”.

Also, the so-called partnerships were to be conducted via off-balance sheets operations, (Enron-type structured investment vehicles or SIVs), creating another layer of opaque accounting that would allow for additional (but predictable) mischief, malfeasance, fraud, you-name-it. It’s all part and parcel of Geithner’s sordid concoction designed to take John Q. Public to the cleaners one more time.

I expect that there will be a new public-private partnership that will feature many of the same perks as the first. The government will provide unlimited, cheap funding and will back those loans with the “full faith and credit” of the UST. Meanwhile, the banks and hedgies put up mere pennies on the dollar. In return, the taxpayer will get assurances that any profit derived from the renting of said units will be shared equally among the investors. In other words, the banker who put in $.06 while taxpayers put in $.94 will still rake in 50 percent of the profits.

Nice, eh?

The bottom line: The bankers need to trim their inventory and pump a little more ether into their sagging MBS. Obama and Bernanke will do whatever it takes to get the job done.

© 2012 Copyright Mike Whitney

EUROPE: The real situation of employment (UPDATE 2Q2011)

2012-01-20T11:31:00.000+01:00

Data Updated: Employment 2Q 2011
Last update: 20-01-2012
Source: Eurostat

Spanish unemployment rate reaches a historical high at 24 percent. However the number fails to reflect the real situation in Spanish labour market. The underground economy accounts up to 4% unemployment. Furthermore, the average Spanish worker keeps a longer working hours than its European peers due to the low portion of part time job. The Spanish labour market has a sound performance, particularly after adjusted by the EA equivalent employment indicator.

The latest data published by Eurostat shows that Spanish unemployment stands at 24 percent, and there are grounds for believing that on its current path, the rate is unlikely to fall below 20 percent at any point soon. Compare Spain with France; both share similar labour market institutions (employment protection legislation, unemployment benefits, wage bargaining, etc.) and exhibited almost identical unemployment rates, around 8%, just before the crisis. But meanwhile the French unemployment rate has only risen to 10% during the slump.

However this only reflects part of the labour market. The following chart represents the rate of total employment persons to the total population up to the 2nd quarter in 2011. Spain stands at 39.66%, almost the same level as France which has 39.74%.

The above chart suggests that the Spanish labor market is not so bad, at least so disaster as its reported unemployment rate. Some argues that the Spanish unemployment rate is unrealistic, that a widespread undergroud economy doesn't incluide in the statistic data. According to CEPR, this fraction will reduce the unemployment rate by up to a maximum of 3 or 4 points. There are still a big gap between that of France.

Comparing with the composition of the employment between this two countries. One major difference is that the temporary contracts stands a very high portion in the Spanish labour market, 32% against 14.3% of France, in the Q1 2007.

The following graph shows the evolution of the percentage of temporary employment.

Referred above that both countries shares similar labor market, still there are two main difference that, Spain has a larger gap between the firing costs of workers with permanent and temporary contracts, and a much looser regulation on the use of temporary employment.

Facilitating the creation of temporary jobs leads to an ambiguous effect on unemployment since it increases both job creation and job destruction. But in reality it translates into an effect of job destruction in the recession. This is the case in Spain that, since the recession, the percentage of temporary employment falls from 32% to around 25%, meanwhile that of France remains the same level around 15% of its total employment.

A research by a group of Spanish and French economists suggest that the the unemployment rate would have increased by about 45% less than the observed rise, had Spain adopted the same legislation of France before the crisis.

Another straightforward survey compiled by Core group tells another side of the real labour market situation. The comparison of working hours by average employee suggests that the Spanish employees works more hours that most of its European peers. One of its causes is the portion of part time job is relevant lower than Countries like France and Germany.

The survey takes the average Euro Area working hour as the benchmark to obtain the EA equivalent employment rate. Surprisingly that, the rate of employment to total population in France drops to 36.4%, while that of Spain climes to 41.45%.

Conclusion

The statistically high unemployment rate is not a reliable indicator of the Spanish labour market. The facilitating of temporary employment creation accompanying with the lack of respected protection results in a big number of job destruction. Meanwhile, the unreported underground economy represents a big portion of employment. Last but not least, by the EA equivlaten employment rate, Spain actually leads its performance than its neighbour France. Overall, apart from the unemploymen rate, Spain's economic position is in many ways fundamentally sound.

Higher Saving Rate—— A Double-Edged Sword to the Economic growth

2011-11-07T10:17:00.000+01:00

The latest release from Eurostat stated that in the second quarter of 2011 the household saving rate increased in both the euro area (EA17) and the EU27. Comparing with the first quarter of 2011, the household saving rate in the euro area increased from 13.6% to 13.9% and the gross saving rate in the EU27 grow from 11.9% to 12.6%.

Meanwhile the household investment rate remained almost unchanged in both the euro area and the EU27. In the EU27, the gross investment rate of households was unchanged at 8.1% in the second quarter of 2011. In the euro area, the household investment rate was 8.7% in the second quarter of 2011, compared with 8.8% in the previous quarter.

In the euro area, the higher household saving rate was due to real gross disposable income increasing more (+0.5%) than real final consumption expenditure (+0.1%). Real income grew due to nominal income increasing at a higher pace (+1.1%) than prices (+0.6%).

From the long term aspect, economic growth requires capital investment – in infrastructure, education and technology, for example, as well as in factories, business expansion, and so forth – and the main domestic source of funds for capital investment is household savings. Consistently high savings rates over time in a particular country can translate into funds being available for this long-term growth.

In addition, higher levels of household savings allow a larger portion of a country’s overall debt to be financed internally. Analysts consider a high debt level primarily financed by domestic savings to be more easily sustained than high debt levels primarily financed by external (foreirgn) creditors. Indeed, Italy and Spain’s high debt levels in the current recession must be looked at through the lens of those countries’ higher rates of savings relative to countries such as the US and the UK, which have somewhat lower debt levels but also lower household savings rates. Japan’s very large debt burden has traditionally been financed by very strong household savings, but the country has seen a significant decline in savings rates over the past decade.

On the other hand, domestic consumption (money that could otherwise be put into savings) adds to GDP growth, which is an important factor in an economic recovery. In the wake of the financial crisis, there is some risk that the paying down of excess debt via increased savings could be a drag on consumption and banking lending in the future, with a dampening effect on economic recovery. Thus rapidly increased savings rates and lower domestic consumption could result in a larger share of future GDP growth needing to come from business investment, net exports and government spending.

All the data reflects that the economic outlook is still facing high degree of uncertainty, the financial market turmoil will curb the economic growth in the second half. Combing with the information of the market, the act of cutting rate of the new ECB president, Mario Draghi, is somehow unexpected but also reasonable. The rate cutting makes investment less costly, and the ECB tries to maintain a steady economic growth through stimulate investment. Unsurprisingly that the global stock markets were surging respectively on the release of a lower rates.

Outlook of Debt Crisis and Financial Crisis (Updated Sept. 2011)

2011-08-31T18:37:00.002+02:00

Recently, there are an increasing concern about the sovereign debt crisis in Europe. Although the leaders of European countries are trying all the methods to brake on the current crisis, the situation still seems severe. Hence it is not strange that some analysis reports hold a pessimistic view.

This morning a report, with the title¨The Next Financial Panic Banking Sector Crash Could Start Tomorrow¨ drew my full attention. As the author´s statement is that ¨The threat of a banking crisis leading to a meltdown centers on Europe¨, and this conclusion comes from the observation that ¨European banks hold huge amount of their home sovereign´s debt, as well as debt of their Eurozone neighbors¨

The data from European Central Bank shows that, the gross outstanding debt (in euro) is about 84.5% of the total GDP of the Eurozone, while the debt held by resident sectors accounts of 40.9% of its GDP. That means there are less than one half of European debt was held by EU residents.

Let´s have a look at the other major economies. The debt-to-GDP ratio of US reached 100% this year, after President Barack Obama signed into law an increase in the debt ceiling, and over two third of its debt is held by its residents. Meanwhile, Japan´s pubic debt levels now surpass 200% of GDP, which has been regarded as ¨unsustainable¨ by many analysts, and 94% of Japanese public debt is held by Japanese nationals. At the same time, the new Chinese government figures show its national debt load remains low compared with other major economies,which only accounts 18.9% of its GDP, and mostly held domestically. It is not difficult to observe that the debt held domestically rate of the other major economies are actually higher than that of Europe. Furthermore, those major economies all encounter their own debt crisis.

In U.S., the yields on the 10-year Treasury bond fell below 2% for the first time in 50 years in the wake of the U.S. credit rating downgrade. ¨That´s irrational, and more importantly, dangerous¨, as some analysts commented. The Treasury bonds carry five very dangerous risks-including negative yields, higher inflation, panic selling, an outright collapse and default.

And regarding to Japan, after the earthquake and tsunami struck, many naive analysts are commenting about how this natural disaster will be good for the Japanese economy, because of the substantial rebuilding program. That might have been true if Japan was not already on the verge of a man-made debt disaster prior to this natural disaster. The huge increase in the costs for welfare and unemployment payments, the economic disruption, the scale of the devastation, the lack of insurance and the minimum five years to rebuild the country may take Japan’s credit rating down to “junk bond” levels. The earthquake and tsunami that have devastated Japan came with quickly and violently. The debt crisis tsunami has been building for twenty years and may be much more devastating to the future of Japan.

Although China is reported with a very low debt load, China too has debt problems to contend with. The official Chinese debt tally does not include debt owed by a number of large state-owned entities, local governments and even a central government ministry. Some even argue that, were China´s hidden-debt-to-GDP ratio properly calculated, it would reveal China to be not only in the same boat as U.S., but worse off than Greece! We don't know China's true debt-to-GDP ratio, of course, and the government isn't telling. (The official number is potentially four or five times too low.) We also don't know how long the non-performing loans (NPLs) can keep getting extended or rolled over, creating a Madoff-like appearance of stability as stakes rise with each round. There is reason to be wary: Along with China's proliferation of ghost cities, empty highways and dust-ridden shopping malls, there is a multitrillion-dollar mountain of hidden debt to contend with... big enough to create an avalanche of problems that could rival those in the West.

In my opinion it is totally misleading to forecast a forthcoming crisis in Europe just upon the amount of sovereign debt held by European banks. One of the main reasons for the current sovereign crisis is that the average interest rate on outstanding government debt is too high. Once this is higher that the nominal GDP growth rate, the government finances encounter problems. As the debt-to-GDP ratio approaches 100 percent (140 percent for Greece now), the effort to reduce it by cutting government spending, raising taxes, or both actually raises the ratio because it cuts GDP growth faster than it cuts debt. Also need to note that countries like Greece, the tax-collecting system is very week.

However I think the worst time has gone for Europe, for instance, Spain has succeeded in trimming its deficit from 11.2% of GDP in 2009 to 9.2% in 2010. Furthermore it should be note that, given that an average ratio of debt-to-GDP is 84.5%, there are many countries with lower rate, such as France (81.7%), UK (80.0%) or Spain (60.1%).

While the fear of financial crisis spreads over all the world, where should the investors to find opportunities?

Warren Buffet is quoted as saying “Be fearful when others are greedy and greedy when others are fearful.” Some have been nervous about the Eurozone given the current debt crisis, but many are seeing, now is the PERFECT time to invest in Europe.

The Death of the Welfare States, We're All Greeks Now

2011-07-19T00:26:00.001+02:00

The Death of the Welfare State

Patrick J. Buchanan writes yesterday: Departing for New Hampshire in November 2010, Sen. Judd Gregg, the fiscal conservative President Obama wanted in his Cabinet, blurted an inconvenient truth: "This nation is on a course where if we don't do something about it, get ... fiscal policy (under control), we're Greece."

The remark was regarded as hyperbole. But Gregg had a point. For though Greece, measured by the size of her economy, is only 2 to 3 percent of the EU or the U.S. economy, she is a microcosm of the West.

Greece was the cradle of democracy. Alexander The Great Was the creator of the first large Empire in history, stretched from the Balkans to the Himalayas. Now the Greeks are the first to face how the welfare state disappears.

Demography and the investment of their pension, insurance and savings in a totally devalued sovereign debt, puts the Greeks in front a clear vision of their future black.

Consider the demography.

According to the most recent revision of the U.N.'s "World Population Prospects," Greece in 2010 had 11.2 million people.

More than 24 percent were 60 or above, more than 18 percent 65 or older. Three percent were 80 or above. And, every year, for every nine Greeks who are born, 10 Greeks die.

Greece is slowly passing away.

Fast forward to 2050.

Greece's population will have fallen by 300,000 to 10.8 million. The median age will have risen by eight years to 49.5. Half the population will be 50 or older. More critically, the share of Greece's population 60 or older will be 37.4 percent, with 31.3 percent over 65. One in nine Greeks will be over 80.

If Athens is breaking under the weight of early retirement and pensions for seniors today, her situation will be horrendous by mid-century.

Where, in 2010, there were four Greeks under 60 for every Greek over 60, by 2050, there will only be 1.7 Greeks under 60 for every Greek over 60.

Conclusion: The retirement age must rise, and pension benefits fall, or Greece collapses.

What of the possibility of a new baby boom? Not likely, given that the fertility rate in Greece has been below replacement levels for three decades and is today only two-thirds of that needed to replace the present population.

Indeed, by 2050, the fertility rate of Greek women will have been below zero population growth for 80 years. One wonders: How can the U.N. estimate that Greece's population will fall only 3 percent by then? Is the U.N. assuming mass immigration from the Muslim world?

But what does Greece have to do with the rest of Europe, or with us?

Only this. The median age of all of Europe is rising, and the demographic numbers for Greece look positively rosy alongside those of the east, where population declines in the tens of millions are projected for Russia and Ukraine. And outside Iceland and Albania, not one nation of Europe has a fertility rate sufficient to maintain its population. Those that are projected to grow, like Britain, have to be relying on Third World immigrants and their higher birth rate.

But while this may maintain an existing population size, immigrants from the Maghreb, Middle East, Caribbean, Latin America and South Asia, on average, lack the language, technical skills and educational levels of native-born Europeans.

The same is true in the U.S., where peoples of European descent are expected to drop to half the population by 2041. Hispanics will grow from 15 percent to near 30 percent of the U.S. population, and their absolute numbers from 50 million to 135 million by 2050.

Yet, again, Hispanics and children of Hispanic immigrants have not, as of yet, reached close to parity in educational achievement with Americans of East Asian or European ancestry.

People equate today's immigration with the immigration of 1890-1920. But another major difference is this: We erected a Great Society over 50 years that did not exist in 1920.

In Washington in the 1950s, a city of 800,000, half black and half white, food stamps had not been invented. Families fed themselves. Today, in a District of Columbia of 600,000, one in five are on food stamps. Nationally, a program that did not exist in 1964 feeds one in seven Americans, 44 million people, at a cost of $77 billion a year. And that is but a small fraction of our new Great Society.

We are entering a new "age of austerity," said British Prime Minister David Cameron in 2009.

The halcyon days are over. Government payrolls, as is happening from California to New York to Washington, D.C., will have to be slashed. Pension and health care benefits, not only for seniors, will have to be reduced. Retirement ages will have to be raised. From food stamps to foreign aid, programs are going to be capped and cut.

The left believes it can get the money from the wealthy. But the top 1 percent of Americans in income already carry 40 percent of the federal income tax load, while the bottom 50 percent of wage-earners ride free. This, too, will have to end.

We are either going to man up and radically reduce government at all levels in the United States, or the bond markets are going to do it for us, as they are doing it today for Greece, Ireland and Portugal.

We're all Greeks now.

Patrick J. Buchanan [send him mail] is co-founder and editor of The American Conservative. He is also the author of seven books, including Where the Right Went Wrong, and A Republic Not An Empire. His latest book is Churchill, Hitler, and the Unnecessary War. See his website.

Is Bankrupt the America's Future?

2011-05-29T23:50:00.001+02:00

The Greek case

Greece has a sovereign debt problem. The bonds of the Greek government have been downgraded by a major rating service. Their prices have fallen sharply in the market. This means that the risk is high that the government will default on its sovereign debt.

The interest rates that the Greek government must pay in order to borrow have risen sharply. This is worsening the government’s solvency and budget problems.

The government faces default. The government’s various spending cutbacks haven’t solved the problem.

They cannot solve the problem. It’s apparently too late. The government would have to restructure its debt by renegotiating with its multiple lenders. That’s a difficult and time-consuming process. It would have to work out repayment while simultaneously altering government policies so that the country’s private market economy could expand. This involves knotty political and economic issues that take years to resolve. The government doesn’t have this time.

Has United States time enough?

The problem traces back to the earlier fact that for some years a government was able to borrow heavily at low interest rates. This means that it was able to sell its bonds at high prices. The problem arose because these market prices were too high.

The sovereign debt of Greece became overvalued due to central bank/banking system money inflation. This inflation, it should be strongly emphasized, originated in the fiat dollar system of the United States and the Federal Reserve.

The central banks of the world and the world money supply are heavily influenced by what the Federal Reserve does through a kind of multiplier effect, because foreign central banks respond to Fed inflation with inflation of their own. Ronald I. McKinnon explained this important process in his June 1982 article in the American Economic Review. We see it happening today when foreign banks have to inflate in reaction to QE2 in order to prevent their currencies from strengthening too much against the depreciating dollar.

The high bond prices encouraged the Greek and U.S. governments to borrow too heavily and to raise governments spending. But since its spending was not productive, it didn’t produce high enough tax revenues to service the debt. In time the government faced the problem it now has, which is not enough tax cash flows or income to service the debt.

Monetary inflation, in other words, causes overvalued sovereign debt. This sets in motion larger government spending, higher debt loads, and an eventual fiscal crisis when tax revenues fall short of what is required to maintain government spending and service the debt.

This process goes on in addition to the business cycle effects, well-known in Austrian economics, that inflation produces. In keeping with the analogous finance literature on overvalued equity, I identify this process as one that involves agency costs of overvalued sovereign debt.

This process is only made worse when major lenders, such as large banks, have reason to believe that they occupy a privileged position and that their bond positions will be paid off by political means if necessary. These lenders then all the more become willing to buy overvalued sovereign debt.

This effect of inflation is important because of its broad applicability in an age of inflation. In particular, a number of other countries including the U.S. have followed the Greek path.

Michael C. Jensen was the first to analyze the agency costs of overvalued equity. Everything that he says about the dire effects on a company’s behavior from having an overpriced stock find a parallel when a government issues overpriced debt. The parallels are not perfect, of course. In fact, every bit of analysis suggests that the problem will be worse for overvalued sovereign debt.

Intuition can be a misleading guide in these matters. We are taught that a high stock price is a good thing, and it is a good thing when it accurately reflects value creation in the enterprise. But not all high stock prices arise from value creation. Central bank money inflation fosters speculation. Speculation leads to asset price bubbles. Rising prices attract naive investors.

We have twice seen in recent memory how government/central bank inflation-produced speculation leads to a breakdown in critically important internal market practices and institutions. First we had overvalued stocks break down in 2000 amid hundreds of cases of overstated earnings. Accompanying this were accounting and auditing scandals as well as law firm and investment banking misbehavior. Second, starting in 2006 and continuing to the present, we have the real estate bubble. We have seen similar scandalous behavior pervading the mortgage and real estate businesses. This has included all the major banks, all major investment bankers, the government agencies like Fannie Mae, legislatures, law firms, bond rating agencies, insurance companies, and auditors. The scandal went even more deeply into the U.S. government and the Federal Reserve through their multiple bailout activities.

This breakdown in institutions that are supposed to act as professional agents finds its root cause in government that goes way beyond its appropriate bounds.

In the case of overvalued equity, Jensen points to "earnings management" that becomes lying about earnings as one means by which management becomes corrupted in order to come through with earnings numbers that justify its overvalued equity. The analogue is for governments to lie about the beneficial effects of the programs and activities that they are promoting and funding with their excessive debts. We hear politicians today justify huge sales of overpriced government debt as worthwhile because they are fighting recession, producing jobs and green shoots, kick-starting the economy, and providing national security. Like phony accounting numbers for earnings, these are all myths and lies. We hear Federal Reserve officials peddling similar misinformation to justify their bond purchases that are helping to keep sovereign debt overpriced.

Jensen suggests that "manning the helm of an overvalued company feels great at first." Among other things, the management bonuses rise steeply. Politicians likewise score among voters and secure campaign contributions when inflation stimulates some economic activity initially. They can point to housing projects going up or a falling unemployment rate or the numbers of people who are first-time homeowners. The financial and housing industries shower money on them. The Federal Reserve can build up its image by broadcasting how it prevented the financial system from collapsing.

But, when there is overvalued equity, Jensen says "massive pain lies ahead". A company cannot produce real earnings to justify its overpriced stock. It turns to earnings manipulation and fraud. It turns to wasteful acquisitions. Nortel acquired 19 companies between 1997 and 2001.When Nortel stock fell by 95 percent, not only was its value destroyed but also that of these acquisitions. Companies seek out unworkable products and build up unusable capacity.

The same massive pain goes for governments that overextend themselves with excessive borrowing at then-low rates of interest. This is evident in Greece. It threatens to become evident elsewhere, including the U.S. When the nation does not produce enough income to service the government debt, some manner of default is bound to occur.

The U.S. is finding it extremely difficult to find a way out of the looming pain that its overvalued sovereign debt has caused. The U.S. has over-issued debt. Its "acquisitions" lie in every area of government spending, in particular, popular social spending programs and a huge military establishment. Huge numbers of Americans have been "acquired" and linked into programs like food stamps.

Huge numbers of Americans expect a future retirement safety net courtesy of Uncle Sam. This is looking less and less likely as time passes. As in the case of overvalued equity that eventually crashes and burns up phantom value, U.S. sovereign debt will crash and burn as the private market economy increasingly cannot produce sufficient revenues to pay the taxes required to service the debts.

The proximate cause of this likelihood is agency costs of overvalued sovereign debt.

That itself traces back to a faulty political system that has destroyed proper constraints on the funding of government and therefore on government size. This has three main aspects. (1) The central bank is able to enter the sovereign debt market at will and keep the price overvalued. (2) The government is able to impose a wide range of taxes in order to fund its programs and debts.(3) There are no limits to government spending and the demand for such spending is infinite.

Let’s look at each of these briefly.

The constraint on money creation has disappeared Government no longer competes with markets for privately-produced and costly money in the form of gold and silver. When government debt promised and paid gold, government had no recourse but to tax its citizens in gold. Without that constraint, government can pay off debt by issuing more debt and more promises to pay off in paper.

The debt is supported in price by government’s powers to tax. As long as the people are able to produce enough income to pay these taxes and are willing to pay them, the system of debt expansion goes on because debts are serviced. The system is dynamically unstable, however. The larger that government becomes, the lower the ability of the private sector to produce real income becomes because government spending is unproductive and prevents capital formation This undermines the ability of people to pay the required taxes. Debt grows but economic growth falls short of debt growth due to low growth in capital formation. Taxes then fall short of spending and deficits rise. The government and the country’s economy then get into an untenable position.

The third aspect is that the U.S. Constitution, as interpreted by the Supreme Court, does not limit government spending or government activities and size, and this lack of limitation is combined with an infinite demand for receipt of government funds among the population. In other words, almost everyone stands ready to rob his neighbor via government taxes and get the proceeds for himself through redistribution in government spending; and there are no limits on how large this thievery can become.

This system is dynamically unstable too. It eventually must run into a wall or limit because the parasitic activities will overwhelm the productive activities. This limit is now in view. The government’s unfunded liabilities ($70 trillion by some estimates based on GAAP standards) vastly exceed its capacity to tax at current levels. Only by outright expropriation of wealth in the form of saved assets (seizing pensions) or by high levels of taxation that sap human wealth can the promises be kept. Those routes spell massive pain.

If a society does not impose limits on its Government parasitic activities, it will eventually destroy itself. If it crushes its productive activities, it will destroy itself. If the society’s people do not impose the proper limits on their own behavior, individually and collectively, then they are setting a course for massive pain.

At this time, Greece does look like the future of America. Is it too late for America? Just about. When we see this society impose some limits on its Government parasitic behavior and encourage productive behavior, we will become more optimistic.

Excerpt of the free e-book Essays on American Empire from Michael S. Rozeff.

Regards,

J. M. Joaquim

Housing prices and household saving rates

2011-05-08T17:30:00.001+02:00

Household Saving ratios are Rising in China following the rise of Housing Prices, but at the same time Spanish's average household saving ratios also rise when housing prices are plunging.

Are housing prices and living costs the most reliable trigger to household saving ratios?

According Eurostat, in the 4Q2010, Spain achieved a household saving ratio of 19,78%, the highest in EU27.

When in April 2007, explodes the Spanish housing bubble and housing prices begin to fall, consumers quickly start to feeling that they were poorer and acted rationally and start to increase the rate of household savings, because they reaching the current exceptional value.

While other European countries with similar problems of recession or deficit, but no big housing bubbles, had a different behavior.

In Asia, China is the sole country to keep household savings ratios over 20%.

The complexity and specificity of Chinese economy can't explain by themself why consumers are not saving less when their incomes are growing fast and their government is trying to incentive the consumption.

According Friedman’s permanent income hypothesis, rational consumers should increase their consumption when the need to save is reduced because people, like Chinese people, expect to be richer in the future than they are today.

Housing and living costs explain China’s persistently high household saving rate. The down payment structure of China’s mortgage markets and the borrowing constraints imposed to avoid a bubble, plus a demographic pressure can help to understand how two economies so different as China and Spain can have similar average household saving ratios.

Best regards

The real value of paper

2011-04-25T00:52:00.001+02:00

The real value of US stocks in terms of Gold.
Comparing Japan's Economic Depression with the present US stock-markets prices

Graphs speak more eloquently than I can and they speak a brutal truth. Perhaps it is my background or perhaps I appreciate the art that can be found in price charts. In either case, I prefer the message of charts to so-called experts.

Anyone who currently has excess savings they want to invest is in the minority of the world's population. They are also likely "rich" and "evil" according to populist sentiment. In any case, these aren't the best of times for advanced/Western economies.

United States are currently in the midst of an unmistakable secular bear market for general equities. Such bear markets don't end with the current obscene valuations and they don't end because US government saves the day.

The piper waits patiently, knowing that he will be paid. Currency debasement and allowing survival of the most unfit is not the way to restore a secular bull market.

But neither Japan's QE1, QE2, and QE3 helped their stock market for the long haul, neither US's QE will avoid a long depression.

Quantitative Easing, change the value of currencies, then we need to compare the results of those QE using another unit. Which? That Gold bulls are used to such pricing strategies, the "price in Gold", which it is time for reality to intrude on the paperbug world.

When you compare Japan and US stock markets priced in Gold, you realize that United States are on a similar course to a dip depression.

Whatever monetary chaos in which we are, the Gold will outperform stocks over the next several years. And the question is of whether fiat money will retain its value over the next decade.

But notice the "phase shift" chart message between Japan and the USA shown below. The chart is a monthly log scale chart of the Nikkei stock index ($NIKK, the main Japanese stock index) divided by the price of Gold ($NIKK:$GOLD), shown in a black and red candlestick format, versus the Dow to Gold ratio ($INDU:$GOLD), shown in a black line format:

Same chart with a 10 years gap, no?

The corrections in this ratio lasted longer for Japan because they entered their secular depression when everyone else's economy was booming. We don't have that luxury, so our corrections in the Dow to Gold ratio have been shorter.

US is about to begin the biggest leg down in this ratio since the "secular bear market" in this ratio began in 1999. This is not a drill and this is not a call for the end of the world. Be careful out there if you're not in the precious metals sector.

Excerpt of Adam Brochert’s blog: http://goldversuspaper.blogspot.com/

Regards,

Joan Miquel Joaquim

European Labor Productivity (Update 4Q 2010)

2011-02-17T09:51:00.002+01:00

According Wikipedia, "Productivity is a measure of output from a production process, per unit of input. For example, labor productivity is typically measured as a ratio of output per labor-hour, an input. Productivity may be conceived of as a metric of the technical or engineering efficiency of production. As such, the emphasis is on quantitative metrics of input, and sometimes output. Productivity is distinct from metrics of allocative efficiency, which take into account both the monetary value (price) of what is produced and the cost of inputs used, and also distinct from metrics of profitability, which address the difference between the revenues obtained from output and the expense associated with consumption of inputs". More information on Productivity

Concretely "Labor productivity is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Labor productivity can be measured for a firm, a process, an industry, or a country. It was originally (and often still is) called labor productivity because it was originally studied only with respect to the work of laborers as opposed to managers or professionals.

The OECD defines it as "the ratio of a volume measure of output to a volume measure of input".Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e. adjusted for inflation. The three most commonly used measures of input are: hours worked; workforce jobs; and number of people in employment.

Measured labour productivity will vary as a function of both other input factors and the efficiency with which the factors of production are used (total factor productivity). So two countries may have equal total factor productivity (productive technologies) but because one has more capital to use, labour productivity will be higher". More information on Labor Productivity

Commercial Real Estate No Longer the Economy's Achilles Heel

2011-02-09T19:35:00.005+01:00

BY DAVID ZEILER, Associate Editor, Money Morning

While many analysts had it pegged as the next big threat to the U.S. economic recovery, the commercial real estate (CRE) market is actually on the mend.

No doubt, fallout from bad loans will continue to pose challenges to banks for the next several years. But on the whole, commercial real estate seems to have finally found a bottom in U.S.

"Balance sheets are firming up, interest rates still are near historic lows and the fundamentals of commercial real estate are improving," Susan Wachter, a finance professor at the University of Pennsylvania's Wharton School in Philadelphia, told Bloomberg News.

Commercial real estate prices plunged for some two years as the financial crisis reached its apex, putting pressure on commercial mortgage-backed securities (CMBS) - many of which are held by the same institutional investors whose balance sheets were eviscerated by the collapse of the housing market.

However, banks last year made significant headway in whittling down the bad commercial real estate loans on their books. US Banks had $126.2 billion in nonperforming CRE mortgages and construction loans in early 2010. But that number had fallen to $115.7 billion by September, helping to allay concerns that weakness in the commercial real estate market would trigger another financial meltdown.

"The large commercial property owners and major financiers are no longer fearful of a total meltdown in CMBS, so they have come out from under their beds," said Andrew Waite, publisher of the Personal Real Estate Investor.

Brightening market conditions already have helped several companies dependent upon the health of the commercial real estate market.

Jones Lang LaSalle Incorporated (NYSE: JLL), one of the world's largest real estate companies, last week reported a 62% increase in fourth-quarter profit. U.S. commercial property sales more than doubled to $134 billion, the strongest showing in three years, the company said.

Meanwhile, private equity firm Blackstone Group LP (NYSE: BX) said its real estate unit contributed to a 56% increase in its fourth-quarter earnings. For all of 2010, Blackstone said its real estate segment had revenue of $1 billion, compared to negative revenue of $13.6 million in 2009. The firm reported a fivefold increase in fourth-quarter profit, which climbed to $280.8 million.

Moody's Investors Service (NYSE: MCO) noted in its quarterly report last month that CRE markets were eitherstable or seeing modest improvements. Moody's scored 55% of U.S. markets with its middle "yellow" ranking, the same percentage as in the third quarter. But "red" markets dropped to 12% from 18%, and "green" markets rose to 33% from 27%.

"The commercial real estate markets are continuing down the road to recovery, though the fact that most markets remain yellow indicates that a comfortable point of stability has not yet been reached," said Moody's Vice President Keith Banhazl.

Even the U.S. Federal Reserve has breathed a sigh of relief.

"While we expect significant ongoing CRE-related problems, it appears that worst-case scenarios are becoming increasingly unlikely," Patrick Parkinson, director of banking supervision and regulation at the Fed, testified at a Congressional hearing Friday.

Parkinson noted that most of the banks struggling with bad commercial loans are small and medium sized with assets of $10 billion or less.

"We do not see CRE losses as a threat to systemically important financial institutions," he said.

Commercial real estate investors and developers have been encouraged by the low interest rates, a slowly healing economy and a gradual improvement in capital markets.

"Investors are seeing this as the bottom of the market, and seeing this as an opportunity to get back into commercial real estate more aggressively," said Hessam Nadji, senior vice president and managing director at Marcus & Millichap, in its most recent quarterly Real Estate Investment Outlook.

The Real Estate Investment Outlook's Investor Sentiment Index hit 152 in the fourth quarter, up from 119 in the third quarter and a low of 91 in 2009. The index measures investors' anticipated changes in property values as well as whether they expect to add to their holdings in the coming year. According to the survey, 69% of the respondents planned to add to their property portfolios in the year ahead.

The degree and speed of the recovery depends on the behavior of commercial banks, however.

"If we start to see commercial banks move back into the market and more willing to lend, that will be a big positive for commercial real estate," Nadji said.

Not all segments of the commercial real estate market are improving at an equal rate. Apartments and hotels are leading the recovery, owing their advantage to leases with far shorter terms than other property types. Apartment sales volume soared 96% year-over-year in 2010, according to Real Capital Analytics. Apartment vacancy rates have declined from 8% in 2009 to 7.1% in the third quarter of 2010.

And while vacancy rates for office space have been stuck at just under 18%, transaction volume doubled from November to December.

"Investors are beginning to anticipate a recovery in the leasing markets," Robert Bach, chief economist for national real estate brokerage services firm Grubb & Ellis, told National Real Estate Investor. "It's encouraging that we're heading in the right direction. The pickup seems to be real."

The retail segment hasn't fared as well, but could be poised for far more progress in 2011. Slightly more than half of the $52 billion worth of retail properties that were in default have completed workouts, the first CRE segment to get over 50% of its distressed properties resolved.

"The dark horse in this race could be retail," Nadji said. "U.S. Retail is actually recovering much faster than anyone anticipated."

Make no mistake, it will take financial institutions years to resolve all the nonperforming loans that piled up during the recession. But there's no question the CRE market is on the right track.

"Give a little credit to the strategy put forward by the government: keeping interest rates low and giving lenders some flexibility to hold these troubled assets on their books for a while,"Dan Fasulo, managing director at New York-based Real Capital, told Bloomberg. "Now that values are on the upswing, it's given owners and lenders more wiggle room to work out these troubled situations."

News and Related Story Links

Bloomberg:
U.S. Commercial Property Recovery Spares Economy Another Blow
Marcus & Millichap:
2011 Real Estate Investment Outlook
Reuters:
US commercial property loans a drag, not huge threat
National Real Estate Investor:
Commercial Property Transactions Soar 109% in 2010
Money Morning:
Will the Dark Cloud of Commercial Real Estate Blot Out the U.S. Recovery?
Money Morning:
Will Commercial Real Estate Pose the Next Hurdle for the Federal Reserve?
Money Morning:
Bank Failures Could Surge as Commercial Real Estate Losses Continue to Mount
Money Morning:
Ignore the Crowd ... It's Time to Invest in Commercial Real Estate
Money Morning:
Plans to Hide Commercial Real Estate Losses Won't Avert a Double-Dip Downturn

Original article:
http://moneymorning.com/2011/02/08/commercial-real-estate-no-longer-the-economys-achilles-heal/

"There is a 'tsunami' of money waiting to enter Europe" Nigel Bolton (BlackRock)

2011-02-06T10:34:00.001+01:00

Nigel Bolton, Managing Director, is responsible for the European Equity Style Diversified team investment process and business development. He has overall responsibility for all BalckRock European accounts and is directly responsible for the BGF European and European Focus portfolios.

Nigel joined BlackRock in 2008 from Scottish Widows Investment Partnership (SWIP), where he was a Director and Head of European Equities.

Prior to joining SWIP in 2004, he was with WP Stewart (Europe) Ltd, as Head of European Investments.

From 1992 to 2003, Nigel was with Citigroup Global Asset Management, where he was a Managing Director and Head of European Equities. Previously, he was with Abbey Life Investment Services from 1989 to 1992. He began his career as an investment analyst with BZW in 1985.

Nigel earned a BA degree,with honours, in economics from the University of Nottingham in 1985. Nigel is a Fellow of The Securities Institute and Associate of CFAI.

Excerpt from Expansion

Nigel Bolton is expecting double-digit increases , namely 15%, for the European stock exchange this year in the most conservative scenario.

In the most optimistic could earn up to 30%. Nigel Bolton (1963), based his optimism on the stock market in four ways:

The first focuses on corporate profits. The expert explained that the recovery in demand will drive the margins of the companies, although growth rates will not be as robust as in 2010. Bolton notes that the increased costs associated with raw materials, difficult to pass on to customers, the increase of salaries to employees in many countries for economic improvement, particularly in northern Europe and increased investment R & D by the limited economic improvement of corporate profits this year. Yet, is likely an increase of 15% in the results.
The second factor is the valuation of listed companies. On average, the projected PER (price / earnings per share) of European values this year is 11 times, when the U.S. stock market trades at a PER of 13 times and Japan, 15 times. Bolton stated that "a few times in history the PER of Europe has been so cheap." The key lies in the reluctance of investors to Europe, to the sovereign debt crisis. Bolton anticipated that "there is a tsunami of money waiting to enter the European market" once the situation is resolved, so you should buy now, before it returns the money en masse and demanding valuations.
The third factor to be optimistic in Europe is directly related to the previous. Bolton explained that the vast majority of investors currently underweight European stock exchange and is held in bonds, so the number of potential buyers is high. Finally, on the macro Bolton is neutral. Believes that the European political class has shown since the beginning of the year their commitment to ease the mood in the market for sovereign debt and, at some point in 2011, "will bring a solution that will facilitate the return of foreign investors.". In this scenario, the banking side as a favorite to stage a major rally. Peripheral bags, including Spanish, also held a resolution to the credit problem. By sector, BlackRock strategist is positive in industrial companies, the consumer discretionary, the construction and energy. On the first states that did very well in 2010 (rose 33.27% on average) and while there may be a slight correction in 2011, the sector expects good numbers. Within the consumer discretionary commitment to luxury companies and automakers. Bolton is very optimistic construction companies. "We've been negative for four years and now we see that the capex [capital invested by the companies] and activity indicators are picking up," he says. Moreover, it provides a positive environment for the sector in the North and "Central Europe and the U.S.
Finally, investment in energy companies offers two advantages: first, the expected increase in dividends, with its good cash position and, on the other hand, the expected recovery of corporate operations. Faced with these sectors, Bolton is suspicious of the utility, telecommunications and pharmaceuticals. Business notes that are very defensive and, in the face of this year, companies should be linked to the cycle to benefit from an environment of upward growth. The strategist also recommends that banks watch as they may be the surprise.

In general, indicates that companies have a strong cash position, enabling them to improve shareholder returns, increasing capex and even shopping rush.

The clouds have not yet abandoned the sky of the financial sector. Nigel Bolton notes that "there are still outstanding issues regarding capital in some European banks."
The focus of the market, and regulators who study stress test the new bank, is in the sovereign debt portfolio entities. Want to know how much they have invested and in which countries. Bolton believes that these reviews to banks, whose results are expected in summer, could be a turning point in exchange for the banks as they provide a clear x-ray of the sector. However, Bolton believes that several entities will face capital increases, but feels that after the stress test the market will be more receptive to these operations.

Ortwin Goldbeck

2011-02-01T16:02:00.001+01:00

In 2007, with 68 years, Ortwin Goldbeck let in the hands of his three sons the company the Goldbeck Group which he have been managing form its inception in 1969, creating one the biggest European group of specialized construction services for commercial and municipal buildings with regional companies in Bielefeld, faithful and Hirschberg. At 23 locations in Germany and other European countries in Birmingham, Bregenz, Bratislava, Poznan, Krakow, Prague, Salzburg, Vienna, Madrid and St. Gallen keeps the company from offices. A total of 2,000 employees and €1 billion turnover.

In a interviw in 2008, Ortwin Goldbeck explained "The succession issue has occupied me for over ten years.My sons have with their studies, all aligned so that they can take a lead role in the company. The date of my resignation, however, was determined by the training and preparation time of my youngest son. On this day the organizationwas aligned so that family members and foreign management well in the management can work together. Because the complex tasks in the direction of our company by only one team can be exercised competently, was planned from the outset a joint management team"

The company was founded in 1969 by Ortwin Goldbeck as a steel construction company in Bielefeld Ummeln- founded. In the 70s the young company, which at that time operated under the name "GOLDBECK Stahlbau KG", gathered initial experience with typical individual orders, which were invoiced in terms of the steel tonnage. In 1978 the founding of the first branch office in Langenhagen in Hannover.

The second decade in the company's history (the 80s) was characterised by its focus on three major facets. Firstly, in order to achieve optimum customer benefit, GOLDBECK extended its expertise from individual steel installations to turnkey construction. Secondly, to facilitate the viable industrial production of steel elements, the company refined the pre-production and systemisation of structural components and work processes to create mature modular building systems. And thirdly, to look after and service its customers locally, GOLDBECK set up a full network of branch offices. To reflect these changes, the company renamed itself "GOLDBECK BAU – Gebäude aus Stahl und Aluminium". In the Vogtland faithful was the beginning of the 1990s, another production of steel structures, aluminum cladding, precast concrete elements and windows built to.

The third decade (the 90's) was one of expansion with annual double-digit growth rates. Boosted by orders particularly from the new German states (formerly East Germany), GOLDBECK extended its product portfolio in particular in the services segment. Its expertise now ranges from property development and financing know-how to turnkey construction and facility management. The customer benefit achieved through the integration of the various company units is expressed in the current company name "GOLDBECK" with its slogan "Design – Build – Service". The expansion of international activities, increased in mid 90's in Eastern Europe with the acquisition of a precast concrete plant in the Czech Republic Kutna Hora and the simultaneous expansion of the service company .In August 2009, a new precast concrete plant in Hamm was put into operation. The Group's growth is no longer concentrated on Germany. GOLDBECK now supplies turnkey construction services to central Europe, UK, Austria and Switzerland. The product portfolio has been extended by SOLAR, Refurbishment, and Public Private Partnership. Today, the company offers all building services connected with commercial and municipal property.

Ortwin Glodbeck says about him as a leader of over 2,000 employees?

"Others can say better, but it was probably a special understanding of people. For business partners and employees. This includes the willingness to be a model. Authentic action was always important. Thought, speech and action have to agree...

The roles were distributed from the outset in accordance with our property and our training. That anyone could grow from us with the growing company in its role was very lucky. The fact that we havenot divided apart in difficult situations, was due to the close friendship thatbanishment to us since childhood."

They come from a family rooted in Bielefeld, a city of three hundred thousand inhabitants. The grandfather William met a blacksmith and decided that their son to learn the trade.

Until 2007 the grandson of William, Ortwin made the workshop of his fatter an empire.

This style of family owned company remains in the manual forms, and the freedom and the responsibility of an independent trade company, Ortwin says "I have actually experienced as a child. That from the creative and creative engineers with the development of our company was the contractor was not always easy, however, was by the demands of the growing family business offered. The willingness and ability to love, to havebecome tasks and time again to take on new activities with full responsibility thatrequires much self discipline."

With an eye on their competition and the market, Goldbeck had the strategy to get in as a premium provider in Germany and abroad. Limiting themselves to specific market segments. Developing building systems and products that are prefabricated largely industrial, and they let users and designers to design spaces. They decentralized sales organization, creating local markets. Other factors for success are creativity, ability to manage change, willingness to take entrepreneurial risks and confidence in the power and the motivation of the staff. Ortwin says "We do not produce building material, but customer value."

Goldbeck had benefited greatly from German unification and the opening of Eastern and Southeastern Europe. Growth imagination and vision they had from the beginning. The strategy to limit themselves to certain products based on their flexible construction systems, whose components are prefabricated industrial, and decentralized sales organization were growth drivers, allowed Ortwin Goldbeck to surge revenues from about 50 million in 1990 to 1 billion € in 2008.

About what were good opportunities to see and what betrays too great a risk, Ortwin says in his interview "Maybe is most likely the wisdom of Confucius, who said: "For a good decision to make, there are three ways. First,through long, intense thought. This is the hardest. Second, by imitation. This is the easiest. Third, through life experience. This is the bitterest. "I am an entrepreneur all the way gone, and that several times. Risks andopportunities are always together. Who wants to take advantage of opportunities, must be willing to take calculated risks".

The Man behind the New Prologis

2011-01-31T23:59:00.000+01:00

HAMID MOGHADAM

As told himself to PATRICIA R. OLSEN for a NYTimes.com article "Keep the Rejection Letters" in Jan-2008

I WAS born in Iran and attended a boarding school in Switzerland when I was 13. At 16, I enrolled in M.I.T. and graduated with bachelor’s and master’s degrees in engineering. Afterward, I went to Stanford business school. I graduated in 1980.

My plans were to return home and to work, but the revolution had started. It was clear that because I was modern, Western-educated and secular, I could not be successful there. I was not finding success here, either. The American Embassy employees had been taken hostage and Iran was in the news every day. Also, the United States was in a recession.

I sent my résumé to more than 30 companies, and got nothing but rejections. I had no money, and my family was scattered around the globe. I had a student visa and was not yet an American citizen. I went to work for one of my professors at Stanford who had started one of the early companies in real estate investment management. He trusted my ability and my commitment, and I’ve always appreciated that. But I wanted to be an entrepreneur.

My father had been in real estate in Iran, and we had been very close. As a kid, I would ride around with him when he visited developments. The smell of dirt and concrete appealed to me.

Just as I was starting college, my father passed away, which was traumatic. I had to learn to count on myself. Then the frustrating job search made me want to be independent.

In 1983, when I was 26, I started AMB with two partners, an assistant and a couple of hundred feet of office space in San Francisco. We had no capital and no business. We obtained a line of credit and slowly but surely attracted advisory clients. None of us took a salary for the first year, but we managed our expenses and were profitable from Day 1. We worked like crazy.

We now have 26 offices around the world. When I visit them in Europe or Asia or Latin America, I’m probably the staff’s worst nightmare. It’s a whirlwind couple of weeks. I have a lot of energy. Often I’m the first one down to the hotel lobby in the morning. Occasionally I’ve had to call a colleague who has overslept.

In 1997, we consolidated several investment funds we were managing into a private company and took the business public. That move set the stage for our global expansion. If I had it to do over, I would have gone global more quickly. I also would have taken more risk along the way.

In 2006, we developed a distribution center in Osaka, Japan, that is about a million square feet and leased it before completing construction. Our tenant pulled out days before the building was to open. We had to scramble to get new tenants for this massive building in a short time, but we did it. In the end we did well on the investment.

I kept the rejection letters I got when I was applying for jobs as a recent graduate. One investment bank that had turned me down was our lead underwriter when we went public. The company was host for a party to celebrate the closing. Everyone was toasting one another and giving speeches.

When my turn came, I told everyone to read what was under their plates. They found a laminated copy of the rejection letter their bank had sent me 17 years earlier. We had a good laugh.

If you visit our headquarters in San Francisco, you’ll find me sitting in a cubicle at the same kind of desk everyone else has; it’s a statement about our culture.

I’ve also kept all the equity I’ve ever had in AMB. Even when I’ve exercised options, I’ve bought stock with the proceeds. I’m a big believer in being aligned with shareholders.

I own a vineyard where we grow olives and grapes as a hobby. My son named the olive oil Olive Creek after the creek on the property. We give it away as gifts, which my friends appreciate. They’d be upset if I ever sold the property.

What to buy in 2011 ?

2011-01-29T16:23:00.001+01:00

2011 Investment Strategies
(excerpted from the January 2011 edition of A. Gary Shilling's INSIGHT)

The post-recession inventory bounce is over. Consumers are probably more interested in saving and repaying debt than in spending. State and local government spending and payrolls are falling. Excess capacity will retard capital equipment spending while low rents curtail commercial real estate construction.

Only a moderate shock will initiate a recession

Economic growth abroad is unlikely to kindle a major export boom. Housing is overburdened with excess inventories. The second wave of Quantitative Easing, in US and Europe, will be no more effective than QE1 in spurring lending and economic growth.

With slow growth, only a moderate shock will initiate a recession. Candidates include the deepening Eurozone crisis, a hard landing in China, and a further drop in house prices. That would push underwater mortgages to 40% and hype strategic defaults while severely damaging consumer spending and the economy.

In this environment, here are some of our investment strategies for 2011.

Buy Selected Income-Producing Securities. This includes the high-quality corporate bonds although their spreads vs. Treasurys narrowed to 1.7 percentage points in 2010 through November from 2.1 in 2009 and 6.3 in 2008. We also favor stocks of utilities, consumer product companies, health care firms, and others that pay meaningful dividends that are safe and likely to rise. Master limited partnerships are also possibilities, but only if their underlying businesses are secure enough to continue significant income payouts. ay attractive dividends.

Dividends Are Back

After a long hiatus, companies that pay substantial, predictable, and meaningful dividends may be coming back into style for two distinct reasons. First, in a post-Enron/Arthur Andersen world and after gigantic write-downs have made reported earnings for many companies questionable, a company paying meaningful dividends is, in essence, assuring investors that it is generating the real earnings and real cash flow needed to finance those dividend checks.

Furthermore, a significant dividend payer will almost certainly continue to be run in a prudent and stable manner. Dividend cuts forced by the down phases of volatile earnings patterns are not loved by investors, as was shown when many financial institutions slashed or eliminated their dividend in 2008. Second, dividends may provide the lion's share of earnings for many companies in future years.

Another reason that dividend-paying stocks are likely to be popular in coming years is a change in attitude by institutional investors, especially endowments and pension funds. In 2008, virtually all of the 40 investment classes fell. That included U.S. and European stocks, emerging market stocks and bonds, junk and even investment-grade bonds, commercial and residential real estate, commodities, and foreign currencies against the dollar. In fact, Treasurys, gold, and the dollar against foreign currencies except the yen were about the only things that rose in price in 2008 -- classic safe havens.

Buy Selected Health Care Providers and Medical Office Buildings.

Health care is a huge sector, accounting for 16% of U.S. GDP and growing rapidly. Two major features of the current system almost guarantee explosive growth. First, most Americans don't pay directly for their health care, which is financed by employer-sponsored insurance or the government through Medicare and Medicaid. That plus the fact that it's "my life" that's involved means that, except for deductibles and co-pays, there's no restraint on usage. Many participate in what we call "recreational medicine" -- take a day off from work at full pay to visit a physician, at employer expense, because of a minor ailment. Second, in paying for service plans, medical providers have many incentives to perform extra procedures because more office visits enhance their incomes. Defensive medicine with more procedures is also encouraged to avoid litigation over mistakes.

In addition, the demand for medical services in the U.S. and Europe will mushroom over coming decades due to several factors:

• Aging Population. Those over 65 have three times as many office visits per year as people under 45, and the oldest of the 78 million postwar babies will reach 65 this year and the youngest in 2029. The government estimates that Medicare and Medicaid expenses will leap from 6.4% of GDP this year to 10.7% in 2029.

• Technological advances are driving patient demand for more medical services.

• 32 million more Americans will be covered by health insurance under the new health care law, an 11% net addition by 2019. The Administration estimates that national health care expenses will rise from $2,632 billion in 2010 to $4,717 billion by 2019, only $46 billion, or 1% higher, than without the new law. But history suggests that the government is underestimating the growth in health care outlays. In 1967, the year after Medicare commenced, the House Ways and Means Committee forecast its cost at $12 billion in 1990. It turned out to be $110 billion -- nine times as much.

• More Jobs. Increased demand for medical services in the years ahead will create jobs, but not enough to absorb all the unemployed in an era of slow economic growth. So Washington may readily accept the creation of more health care jobs than anticipated by the new health care law, ranging from nursing home attendants to brain surgeons. And slow growth and high unemployment will, as usual, encourage the uninsured to join government health programs.

• Little Supply Increase. The new health care law does little to increase the supply of medical personnel and facilities, but booming demand will result in the rapid growth of both, with the latter largely financed by private investments.

• Cost control pressures from government and employers will work to the advantage of big, profitable hospital systems with large campuses and expanding satellite facilities. Renewed growth in cheaper out-patient surgical and other facilities will also be a result of emphasis on cost containment.

• Hospital-employed physicians will increasingly dominate as medical recordkeeping requirements, cost containment pressures from government and insurers, constraints on government reimbursements, expensive new technology, the lack of economies of scale and high practice management costs, and lower incomes relative to hospital-employed physicians weigh on small private practices. Hospitals will also be better able to establish Accountable Care Organizations, authorized by the new law, which allows medical providers to share in cost savings.

• Undocumented immigrants are excluded from health insurance under the new law, so the newly-covered urban poor and the facilities needed to serve them will be most economically efficient in the cities that have fewer undocumented immigrants.

Medical Office Buildings

Investments in medical office buildings (MOBs) that these increases and shifts in demand will require, including related outpatient facilities such as ambulatory care facilities, surgery centers, ambulatory surgical centers, and outpatient cancer and wellness centers. MOB demand is forecast to expand 19% by 2019, 11% of it due to the new law and the rest from population growth. The 64 million square feet are required to meet the demand of the new law and compares with a 2010 build of 7 million square feet. MOBs are much less volatile than other commercial and residential real estate, as shown by more stable vacancy and cap rates. They will not be plagued in future years by persistent excess capacity, which hinders new construction, as is the case with residential real estate, malls and office buildings.

Buy Rental Apartments.

Rental apartments will benefit from the separation that Americans are beginning to make between their abodes and their investments. The two used to be combined in owner-occupied houses back when owners believed house prices never fall. So they bought the biggest homes they could finance. The collapse in house prices has shown them otherwise. Further weakness in the prices of single-family houses and condos due to the depressing effects of excess inventories (Chart 3) will add fat to the fire.

So, too, will further house price weakness even after excess inventories are eliminated due to general deflation. As shown in Chart 4, corrected for the size of houses and inflation/ deflation, single-family house prices have been flat for over a century.

It will take a surprisingly small shift in housing patterns to make a big difference in the demand for and construction of rental apartments. Today, there are 130 million housing units in the United States, of which 36 million are rented. If only 1% of total households decided to move to rentals, the demand for apartments would increase by over one million, most of which would need to be newly built, after current vacancies are absorbed. This is a big number compared to new apartment starts of 333,000 on average over the past 10 years. Rental apartments will also appeal to the growing number of postwar babies as they retire, downsize, and want less responsibility and more leisure time.

Sell Medium and Smaller Banks.

Smaller bank stocks rose even more than large ones last year but may reverse that performance this year. Ironically, in the go-go days, many of them were unwilling to virtually abandon their underwriting standards to compete with nonbank residential mortgage lenders. So they lent to the commercial real estate market instead, often residential construction-related firms.

Due to bad commercial as well as direct residential real estate loans, American smaller banks have been dropping like flies. In 2008, 322 banks with $633.7 billion in total assets failed ($2.0 billion per bank), in 2009, 140 banks with $169.7 billion failed ($1.2 billion per bank) and another 157 with $92.1 billion failed in 2010 ($0.6 billion per bank). So those that have failed have gotten progressively smaller.

As of last September 30, the FDIC had 860 banks on its "problem list" with an average of $440 million in assets, so more small bank failures lie ahead. Furthermore, many of the 600 banks that still have TARP money are small, weak institutions that have little access to alternative capital. And most of the 98 banks that got TARP money and are troubled are small ones with bad commercial real estate loans.

The declines in loan charge-offs are slower at small than large banks and many of them continue to add to loan loss reserves while large banks reduce them. Of the nation's 7,830 banks, 91% had assets under $100 million. Not surprisingly, small banks complain that bank examiners are overly conservative, especially in assessing their commercial real estate loans. Individually, they aren't too big to fail, but collectively they are since smaller banks are the primary financers of smaller businesses. Those businesses don't have access to commercial paper and other credit market vehicles and must rely on their local banks for loans -- or on the personal credit cards of their owners.

Commercial banks hold about $1.5 trillion in commercial and multifamily housing debt. They also have around $500 billion in land and construction loans that are especially toxic since raw land and unfinished buildings provide no revenue but incur outlays for taxes, completion of the structures, guarding against vandalism, etc.

From June 2007 through 2008, banks with less than $10 billion in assets bought more than $4 billion in private-label mortgage bonds that are not issued or guaranteed by government agencies. Many of them were downgraded to junk status as homeowner defaults surged. Some of those banks believe the bonds will eventually pay off, but regulators forced them to reserve extra capital against likely losses.

The Achilles heel for U.S. and European medium and small banks is their troubled commercial real estate loans. Many more are likely to fail as those loans mature in the next several years.

INSIGHT Newsletter

About Gary Shilling and INSIGHT newsletter. Each month I really look forward to getting Gary's latest thoughts on the economy and investing. In 2009 in his forecast issue he suggested 13 investment ideas, all of which were profitable by the end of the year. Last year he gave us 16 which the large majority hit the mark. Gary was among the first to point out the problems with the subprime market and predict the housing and credit crises.

The Best Time in History to Buy a House

2011-01-29T13:28:00.002+01:00

Jan 28, 2011 - 10:32 AM
By: DailyWealth

Dr. Steve Sjuggerud writes:

Right now, is the best time in history to buy a house in America.

Today, You'll see why… based on a few cold, hard facts

First off, mortgage rates are lower than they've ever been in American history…

Most investors have only seen a couple decades of mortgages rates on a chart. Global Financial Data have databases – including real estate data – that literally go back centuries.

Global Financial Data have a "Winans International" real estate indexes, with housing prices back to the 1800s and mortgage rates going back over a century.

Take a look at this chart of mortgage interest rates since 1900:

As you can see, current mortgage rates are the lowest in U.S. history.

When were mortgage rates even close to this low in the past? Just after World War II…

And what happened, just after World War II, when mortgage rates were this low? The greatest postwar boom in housing prices – by far.

Take a look. Mortgage rates bottomed in the mid-1950s, and house prices bottomed about the same time. Then the greatest boom in home prices in our lifetimes started.

Today we have record-low mortgage rates. And we have another thing in our favor…

Homes are more affordable than ever.

Based on the 40-year history of the Housing Affordability Index… houses are more affordable than they've ever been. Take a look…

"Affordability" takes three factors into account: home prices, your income, and mortgage rates.

Home prices have crashed. And mortgage rates are at record lows. But incomes (nationwide) haven't fallen nearly as much… So homes are now more affordable than ever.

"Most people" out there will only tell you the bad news about housing… That's the way it goes in a bear market. People drive looking in the rearview mirror.

Meanwhile, we have some darn compelling facts out there…

Home prices have fallen by a third… and mortgage rates are the lowest in history. Therefore, U.S. homes are more affordable than they've ever been.

You can listen to "most people." Or you can choose to ignore them and stick to these facts.

Based on these facts alone, now may be one of the best times in American history – even the very best time – to buy a house.

Good investing,

Steve

You can find long-term data as showed in the charts above at www.globalfinancialdata.com.

Euro Area financial account recorded on November net inflows of EUR 38 billion

2011-01-19T18:09:00.002+01:00

Source: ECB

19 January 2011 - Euro area balance of payments in November 2010 and international investment position at the end of the third quarter of 2010

In November 2010 the seasonally adjusted current account of the euro area recorded a deficit of EUR 11.2 billion. In the financial account, combined direct and portfolio investment recorded net inflows of EUR 38 billion (non-seasonally adjusted).

At the end of the third quarter of 2010, the international investment position of the euro area recorded net liabilities of EUR 1.2 trillion vis-à-vis the rest of the world (about 13% of euro area GDP). This represented a rise of EUR 147 billion in comparison with the revised data at the end of the second quarter of 2010.

Balance of payments in November 2010

The seasonally adjusted current account of the euro area recorded a deficit of EUR 11.2 billion in November 2010 (see Table 1). This reflected deficits in current transfers (EUR 6.5 billion), income (EUR 4.3 billion) and goods (EUR 4.0 billion), which were partly offset by a surplus in services (EUR 3.5 billion).

The 12-month cumulated seasonally adjusted current account recorded a deficit of EUR 44.4 billion in November 2010 (around 0.5% of euro area GDP – see Chart 1), compared with a deficit of EUR 62.4 billion a year earlier. The reduction of the current account deficit was accounted for by a decrease in the deficit in income (from EUR 30.3 billion to EUR 8.1 billion) and an increase in the surplus in services (from EUR 31.6 billion to EUR 37.6 billion), which were to a limited extent counterbalanced by a decline in the surplus in goods (from EUR 30.8 billion to EUR 25.4 billion) and a rise in the deficit in current transfers (from EUR 94.6 billion to EUR 99.3 billion).

In the financial account (see Table 2), combined direct and portfolio investment recorded net inflows in November 2010 (EUR 38 billion), which were accounted for by net inflows both in direct investment (EUR 25 billion) and in portfolio investment(EUR 13 billion).

The net inflows in direct investment resulted from net inflows both in equity capital and reinvested earnings (EUR 10 billion) and inother capital (mostly inter-company loans) (EUR 15 billion).

The net inflows in portfolio investment were mainly accounted for by net inflows in debt instruments (EUR 26 billion), which were partly offset by net outflows in equity (EUR 13 billion). The net inflows in debt instruments resulted both from net purchases of euro area securities by non-residents and from net sales of foreign securities by euro area residents.

Financial derivatives recorded net inflows of EUR 1 billion.

The other investment account recorded net outflows (EUR 24 billion) reflecting net outflows in MFIs (excluding the Eurosystem) andother sectors (EUR 20 billion in both cases), which were partly offset by net inflows in general government (EUR 11 billion) and theEurosystem (EUR 5 billion).

The Eurosystem’s stock of reserve assets increased from EUR 556 billion to EUR 597 billion in November 2010, mainly on account of valuation effects (transactions were balanced in November 2010).

In the 12-month period to November 2010, combined direct and portfolio investment recorded cumulated net inflows of EUR 78 billion, compared with net inflows of EUR 175 billion a year earlier. This decrease was the result of lower net inflows inportfolio investment (down from EUR 261 billion to EUR 172 billion) and higher net outflows in direct investment (up from EUR 86 billion to EUR 94 billion).

International investment position at the end of the third quarter of 2010

At the end of the third quarter of 2010, the international investment position of the euro area recorded net liabilities of EUR 1.2 trillion vis-à-vis the rest of the world (about 13% of euro area GDP – see Chart 2). This represented a rise of EUR 147 billion in comparison with the revised data at the end of the second quarter of 2010 (see Table 3).

The change in the net international investment position was mainly due to a higher net liability position in portfolio investment (from EUR 2 462 billion to EUR 2 579 billion) and, to a lesser extent, to a lower position in reserve assets (down from EUR 583 billion to EUR 552 billion). The changes in the net positions were primarily driven by “other changes” (predominantly revaluations on account of exchange rate and asset price changes).

At the end of the third quarter of 2010, the gross external debt of the euro area amounted to EUR 11.0 trillion (about 121% of euro area GDP), which represented a decline of EUR 174 billion in relation to the revised data at the end of the previous quarter.

Data revisions

This press release incorporates revisions to the balance of payments for the period from April 2010 to October 2010, and to the international investment position at the end of the second quarter of 2010.

The revisions to the balance of payments in October 2010 did not significantly change the previously published data for the current and capital accounts. The financial account was mainly revised on account of revisions to net inflows in portfolio investment (up from EUR 14 billion to EUR 21 billion).

The current account deficit in the second and third quarters of 2010 was revised downwards (from EUR 23.1 billion to EUR 20.4 billion, and from EUR 15.7 billion to EUR 8.3 billion), mainly on account of revisions to income. In the financial account, revisions mainly affected other investment in the second quarter of 2010, and direct investment and portfolio investment in the third quarter of 2010. The revisions to the international investment position at the end of the second quarter of 2010 led to lower net liability positions in portfolio investment and in other investment.

Additional information on the euro area balance of payments and international investment position

In this press release, the seasonally adjusted current account refers to working day and seasonally adjusted data. Data for the financial account are non-working day and non-seasonally adjusted.

In line with the agreed allocation of responsibilities, the European Central Bank compiles and disseminates monthly and quarterly balance of payments statistics for the euro area, whereas the European Commission (Eurostat; see “Euro-indicators” new releases) focuses on quarterly and annual aggregates for the European Union. These data comply with international standards, particularly those set out in the IMF’s Balance of Payments Manual (fifth edition). The aggregates for the euro area and the European Union are compiled consistently on the basis of transactions and positions with residents of countries outside the euro area and the European Union respectively.

A complete set of updated euro area balance of payments and international investment position statistics (including a geographical breakdown by main counterparts and data on debt securities by currency of denomination), as well as historical euro area balance of payments time series, can be downloaded from the ECB’s Statistical Data Warehouse (SDW) and is available in the “Statistics” section of the ECB’s website under the headings “Data services”/“Latest monetary, financial markets and balance of payments statistics” . Data up to November 2010 will also be published in the February 2011 issues of the ECB’s Monthly Bulletin and Statistics Pocket Book. Detailed methodological notes are available on the ECB’s website. The next press release on the euro area monthly balance of payments will be published on 17 February 2011. The next press release including the quarterly international investment position will be published on 19 April 2011.

Annexes
Table 1: Current account of the euro area
Table 2: Monthly balance of payments of the euro area
Table 3: Quarterly international investment position of the euro area

Euro Area financial account recorded o November net inflows of EUR 38 billion

2011-01-19T18:08:00.000+01:00

Source: ECB

19 January 2011 - Euro area balance of payments in November 2010 and international investment position at the end of the third quarter of 2010

Balance of payments in November 2010

The net inflows in direct investment resulted from net inflows both in equity capital and reinvested earnings (EUR 10 billion) and inother capital (mostly inter-company loans) (EUR 15 billion).

Financial derivatives recorded net inflows of EUR 1 billion.

The Eurosystem’s stock of reserve assets increased from EUR 556 billion to EUR 597 billion in November 2010, mainly on account of valuation effects (transactions were balanced in November 2010).

International investment position at the end of the third quarter of 2010

At the end of the third quarter of 2010, the international investment position of the euro area recorded net liabilities of EUR 1.2 trillion vis-à-vis the rest of the world (about 13% of euro area GDP – see Chart 2). This represented a rise of EUR 147 billion in comparison with the revised data at the end of the second quarter of 2010 (see Table 3).

Data revisions

Additional information on the euro area balance of payments and international investment position

In this press release, the seasonally adjusted current account refers to working day and seasonally adjusted data. Data for the financial account are non-working day and non-seasonally adjusted.

Annexes
Table 1: Current account of the euro area
Table 2: Monthly balance of payments of the euro area
Table 3: Quarterly international investment position of the euro area

China and Spain pledged to boost bilateral trade in 2011 to 40 billion euros

2011-01-12T22:44:00.005+01:00

China expects to double its exports to Spain by investing bilions of euros in energy, renewable and real estate Spanish companies.

China and Spain pledged to boost bilateral trade in 2011 to 40 billion euros ($52.6 billion), while the Chinese vice premier promised to promote tourism and investments to Spain, during a visit by Li Keqiang, who met with Spanish Prime Minister Jose Luis Rodriguez Zapatero.

The Chinese government showed its confidence in Spain’s economic recovery by signing 16 agreements valued at $7.5 billion, including deals to strengthen bilateral cooperation in the energy sector and foster collaboration on foreign investments.

The largest deal inked was the sealing of Chinese energy group Sinopec’s purchase of a stake in Spanish oil and gas company Repsol-YPF’s Brazilian subsidiary for $7.1 billion.

Among the energy accords signed with Zapatero’s administration were one to create a bilateral working group and another on renewable energies.

The Spanish Institute for Foreign Trade and the Beijing International Brand Management Center, meanwhile, will create a Center for Spanish Merchandise in the district of Chaoyang.

Spanish banking giant BBVA and the China Development Bank, for their part, signed a cooperation agreement aimed at boosting their presence in Latin America.

Li met with more than 100 business leaders and communicated his confidence that Spain will successfully navigate its way out of its economic troubles, promising that China will be a friend “in good times and bad.”

Li, whom analysts expect will become China’s prime minister in 2013, also met privately with Spanish King Juan Carlos.

According to the latest figures, Spanish exports to China between January and October 2010 exceeded 2.14 billion euros ($2.8 billion), up 33.6 percent from the same period the previous year. However, Spanish imports from China were still much higher, totaling 15.6 billion euros ($20.5 billion) in that same period.

Spanish companies should internationalize to attract capital from China.

Top 40 European Banks

2010-12-26T11:29:00.005+01:00

The picture is changing!

During the next week, 22 Spanish saving banks ("cajas") will be transformed in Retail banks, some directly other trough mergers.

The two biggest Spanish saving banks will be involved in these movements, and this will change the initial picture of Forbes for the 40 Top European Banks by asset volume:

With this transformation already done in Italy, Spain will surpass this country in Top Banking power by asset volume:

In a Global picture, EU Countries leads the Top 20, thanks to UK Banks, and EU banks (togheter) lead the world Top 40:

Regards,

J. M. Joaquim

Merger Mania 2011: How to Profit From M&A Activity

2010-12-24T10:02:00.002+01:00

by Matthew Weinschenk,

Thursday, December 23, 2010: Issue #1414

Okay, I’m going to get right to the point here: In 2011, we’ll see a surge in mergers and acquisitions (M&A) that will drive the market higher.

If you want to profit from the merger mania, you just need one simple thing to get started: You need to think like a pro.

You see, while professionals watch the M&A market with zeal, most individual investors treat it as an afterthought, believing that it’s too hard for “outsiders” to profit.
However, that’s a long way from the truth.

There are actually multiple ways to earn your share of the M&A market – and if you’re going to pick a year to start, 2011 should be the one. Here’s why…
How and Why M&A Will Boom in 2011

Let’s take three statements from some top research and consultancy firms…

Freeman Consulting Services expects global deal activity to top $3 trillion in 2011.
PricewaterhouseCoopers predicts a “resurgence in deal-making in 2011.”

A recent study from McKinsey & Company reports that “boards of directors are less skittish in pursuing transactions.”

That bodes well, for sure… but I still think they’re underestimating.

You see, there are actually a couple of different types of acquisitions and it’s important to distinguish between them in order to see how the growth will be generated.

Hedge Fund Activists: As my colleague Marc Lichtenfeld noted last week in his 2011 outlook column, antsy, value-hungry activist investors will create some profit opportunities this year.

Strategic Acquisition/Takeover: The days of the highly leveraged, private equity buyout are gone for the foreseeable future. Instead, we’re seeing a shift to companies that are actively scouring the market for businesses that fit with their own line of work and are trading at “let’s make a deal” prices. The pieces are in place for this type of acquisition to explode in 2011, potentially jumping by 20% to 30%.

Here’s why:

Companies Hold the Most Cash in 51 Years: Non-financial U.S. companies are currently sitting on $1.93 trillion in cash – the most since 1959 and more than enough to pay off the 2010 federal deficit at once. The reason for this explosion is a move to fatten up balance sheets during the credit crunch. But even accounting for a “new normal” of cash-padding, company coffers need to go to fat camp and purge some of the cash. Especially since…

Cash Returns Are Pathetic: With bond yields and interest rates driven down to the basement, holding cash drains a company’s overall return. Executive boards will need to find a way to invest it for better returns, or give it back to shareholders.

Profits Are at An All-Time High: According to the Commerce Department, corporate profits totaled an annualized figure of $1.659 trillion during the third quarter. It was the highest amount on record – and again, this could cover the annual national deficit with billions to spare. Corporate margins are also approaching peak levels, with total profits reaching 11.2% of GDP. (It’s worth noting, though, that while corporate earnings have rallied out of the recession, cost-cutting and productivity/efficiency gains are responsible for a decent chunk of it.)

Valuations Are Tempting: In 2010, the average acquisition sold for 1.24 times sales. That’s why deals look so attractive. If you can cough up a $1.24 one-time payment, add $1 per share in annual sales to your company and convince your shareholders that you can grow those sales in the future, it’s a good deal for all involved. In addition, during the M&A boom of 2007, the average deal was completed at 27 times earnings. Last year, the average M&A deal was done at 20 times free cash flow. Right now, the S&P 500 is priced at only 12 times free cash flow, meaning there are plenty of enticing deals waiting to be done.

There’s another crucial aspect to the M&A equation, too…

A New Deal-Maker on the M&A Block
In 2011, the buyout cash won’t just come from America. Asian companies now have the cash and the desire to diversify their operations. For example…

Deals involving Asia-Pacific companies through November this year jumped 25% over last year, passing Europe for the first time.

More than 8,700 deals involved Asian companies and almost 70% of them were all cash.

Asian companies completed 421 acquisitions of North American companies.

And as far as targets go, European companies are getting snatched up left and right – Sanofi-Aventis and Alcon, Inc., for instance.

Sure, it takes a cast-iron stomach to buy into nations like Greece and Spain, but the guys with the big money apparently see a “blood in the streets” opportunity and a chance to strike a cheap deal amid crisis.

The point here is that if a company is considering a takeover, it will need to accelerate its process to compete with Asian buyers.

And as for profiting from all this…

Claim Your Share of the M&A Boom With These Three Investment Banks

When it comes to correlation and cause, it’s a bit like figuring out whether the chicken or the egg came first. Does M&A make the market go up? Or do rising stocks encourage more deals?
Historically speaking, high M&A activity is tied to a stock market uptrend. A rising market fuels more deals, as buyers need to complete them before shares rise too much. At the same time, takeover premiums cause adjustments in valuations, which also pull the market up.

And the common denominator is that each deal requires an investment-banking firm to facilitate the transaction. So you could benefit from the enormous fees that these banks command.

The biggest players are Morgan Stanley, Goldman Sachs and JP Morgan. Collectively, they capture 47% of the global M&A market.

The thing is, though, their enormous size means that an uptick in M&A might not move the needle enough to boost their share prices.

Instead, look to smaller, boutique firms like these in order to benefit more substantially…
Lazard Ltd (NYSE: LAZ)
Piper Jaffray Companies (NYSE: PJC)
KBW Inc. (NYSE: KBW)
Together, these guys derive 59%, 50% and 49% of their revenue from investment banking, respectively (as opposed to an average of 11% for the big boys).
Aside from that, the most exciting way to profit from acquisitions is to successfully pick out the takeover targets.

...
When a big company buys a smaller firm, they generally pay a premium of anywhere between 10% and 50%, with the shares of the target company often jumping by that much in a single day.

--

Whether you want to sit back and watch the market rise, or speculate on some takeovers, 2011 promises to be a big year for M&A deals. You should make a few moves to profit from the action, too.

Good investing,

Matthew Weinschenk

EUROPE: Non-Residential Construction Activity. UPDATE Dec 5, 2010

2010-12-05T23:13:00.001+01:00

A few days ago I published in Linkedin an update about Construction activity in Spain, today I want to extend this update to EU and compare what's happening in Spain with what happen in the main European countries.

Using data of building permits on sqm published by the Spanish Statistical Office (INE) and available from 1990, we can see how the cyclical character of Construction activity has been extremely intensive in this country:

You can found in this blog a monthly update about the Spanish housing market. This post intends to analyze the Non-Residential construction activity.

And comparing Spanish activity series of 1991 and 2007, in Industrial and Warehousing construction , from peak to trough, we can see differences between both crisis.

With values published by INE we saw how from April (month 40 from the last peak) the current crisis is worse than previous crisis.

And we forecast for the next months a volume of Industrial and Logistic construction activity in Spain bellow 25% of the volume achieved on 2007 peak.

Clearly, Spain is experiencing a very sharp fall in construction activity for both residential and nonresidential, this affects significantly the country's economic growth and causes high job losses, but it is essential to adjust stock levels to meet actual demand and recover prices.

Using Eurostat data, we can see how European countries are experiencing a general decline in the activity of non-residential construction, but not as intense as Spain. Even some like Germany or the Nordic Countries initially seemed immunes to the crisis.

But Spain, in each cycle, has got falls and recoveries much verticals than in other countries. In fact, despite the current collapse, is the only major European countries where the volume of Non Residential construction activity in September remains higher than the start of the recovery on 90's crisis.

You can check data and graphs HERE

SPAIN: Construction activity UPDATE- November 30,2010

2010-11-30T10:10:00.007+01:00

Yesterday, the Ministry of Development (Ministerio de Fomento) concluded come data about the construction permits issued by municipalities (in sqm) according to June (42 months from the peak). These permits reflect a significant drop in non-residential construction activity in Spain.

Despite a promising May, June data reflects the failing in recovery of construction activities due to unprecedented drop of new building permits in the retail sector.

With the skeptical recovery in the following months, the drop in Spanish non-residential construction activity from January 2007 to December 2010 could be devastating for the sector.

Even though the data remains pretty stable in the Industrial sector, the in inner annual date of construction activity has gone from the peak value, 32.89%, in May to 28.51% in June.

The information confirms that the 2007 Industrial and Logistic activity cycle is tougher than 1991’s and going faster than 16 years ago.

The previous point in the Industrial construction activity occurred 28 months ago, a trough of 29.8%. It recovered by 30 points during next months, and now the present comparable value, the weighted average of Industrial and Logistic sector, is equal to 27.8%.

Can Industrial and Logistic construction activity drop by over 70% in Spain?

We should recall France in 1991. Although its first trough cycle stopped at 30 points with a massive drop of 70% in activity, lately it came down to 26.6%.

According to the projection of Spanish data from June to December, the fall in Industrial and Logistic construction activities is exceeding the data from the peak of 2007 by 80%!

The theory of peaks and troughs is on its final cycle phase and it seems like the trough still isn't over!

Review complete data an graphs HERE.

Keeping an Eye on Spain Stock Market

2010-11-20T12:52:00.002+01:00

Currently, our fundamental concerns primarily center on the possibility Portugal will become the market’s next target soon after some bailout is finalized in Ireland.

Eventually, market participants will come after Ireland and Portugal bailouts to the Spanish stock market; the question is how much time will the Ireland bailout buy the markets. We will need to keep an eye on Europe for the foreseeable future.

The bond markets are properly the primary focus in Ireland, Spain, and Portugal. However, their stock markets can also help us better understand the acceptance of, or aversion to, risk in those local markets. The bond markets tell us Portugal is weaker than Spain. The fact the stock markets are painting a slightly different picture is a development worth monitoring. As long as Spain line in the chart below are rising, then risk aversion is not high in those markets relative to the S&P 500. During the next few weeks we have to expect Spain line below in lower lows, but after the Ireland and Portugal bailouts, the risk aversion to Spain could return to previous levels relative to S&P500.

Stocks in Spain have bounced at a logical point, and recently found some buyers at this point on the chart. Spanish stocks have some signs of increasing strength in the short-term.

Back in the U.S. on Thursday, jobless claims came in better than expected, leading economic indicators increased by 0.5%, and the surveys came in way above expectations. Spain stock market could follow this trend.

EU 27 Gross debt data for 2009 - Second notification (15/11/2010)

2010-11-16T01:36:00.005+01:00

Published yesterday by Eurostat

At the end of 2009, twelve Member States had government debt ratios higher than 60% of GDP:
Greece (126.8%)
Italy (116.0%)
Belgium (96.2%)
Hungary (78.4%)
France (78.1%)
Portugal (76.1%)
Germany (73.4%)
Malta (68.6%)
United Kingdom (68.2%)
Austria (67.5%)
Ireland (65.5%)
Netherland (60.8%)

Where's Spain?
Spain had a government debt of 53.2% of GDP!

Really is Spain the next country that could need help?

Don't listen manipulated information, invest in Barcelona!

And trust in the Euro!

Debt refinancing problems in Hungary, Greece, Ireland or Greece, had a very insignificant weight in the Euro 27 region:

SPAIN UPDATE: Home sales

2010-11-12T10:46:00.006+01:00

As expected, Spain closed the third quarter, leaving behind the peak of unsold new homes stock, with a significantly stock reduction. While, in Catalonia the stock fall is accelerating.

Data source: INE

According our forecast (please, see link at the bottom), in less than one year Catalonia region will achieve a "natural" availability rate. Barcelona much soon.

When residential availability rate in the central main European cities is moving in direction to a certain level that seems likely to be crossed, other market indicators change its trends. This level can be seen as a pivotal measure for the residential market, is that we call "natural" rate.

Our own studies define this level in a 2%. But, we usually suggest a louder alarm bell should sound when this 2% level is crossed by more than 10 base points either way, making availability rates of between 1,9% and 2,1%. This range could be a realistic and acceptable range for the "natural rate".

Availability rate is the best indicator to protect your investment from the worst effects of over and under supply while maintaining the momentum given to the market by the classic property cycle.

No discussion about the inverse relationship between the availability rate and prime prices in the case of central in the main European Cities, like Paris, London or Milan, and the 2% level as a trigger for rising or falling prices.

The implication of the current availability rate in Barcelona and its future short-term trend is that the balance of supply and demand is moving to the product shortage.

In fact, prices in Barcelona city have started to growth and in the next quarters will accelerate its rise, following Germany and French trends.

Now is the time to invest in residential in Barcelona!

Some reasons to choose Barcelona (2 min. video)

Please find the complete tables and graphs HERE.

J. Miquel Joaquim

PD: See related posts in the archive

“The recovery has been more rapid than anybody expected” (Bloomberg article)

2010-11-08T11:42:00.004+01:00

U.S. Commercial Property `Substantially' Off Bottom

U.S. commercial property prices are rising in desirable investment markets like New York and Washington while office vacancies are beginning to fall more broadly, according to top real estate executives.

Values are “substantially” off the bottom after more than a year of decline, said Steven Roth, chairman of Vornado Realty Trust. Hotels and multifamily properties are leading the rebound, with South American investors purchasing condominiums in Miami, according to Barry Sternlicht, chairman of Starwood Capital Group LLC in Greenwich, Connecticut.

“The recovery has been more rapid than anybody expected,” Roth, 68, said during a panel discussion at the Bloomberg Link Real Estate Briefing today in New York. His New York-based company hasn’t purchased as many properties as it would like. “We’ve been trying, but apparently not hard enough,” Roth said.

U.S. property deals probably will double next year and may account for almost a quarter of global transactions, according to a forecast by New York-based research firm Real Capital Analytics Inc. Although high-quality buildings will be in demand, they will be leased at lower rental rates than the 2007 peak, according to billionaire investor Sam Zell.

“Over the next 18 months I think we’re going to see little or no new construction and we’re going to see all the institutional-quality assets be full,” Zell, 69, chairman of Chicago-based Equity Residential, said on a separate panel. “The bad news is they’re going to be full at 20 or 30 percent rates less than the peak.”

Little Construction

The U.S. economy expanded at a 2 percent rate in the three months ended in September, the fifth consecutive quarterly increase. The growth followed 12 months of contraction as the economy weathered the worst financial crisis since the Great Depression.

As the recovery builds, rents are poised to rise in 2011 after reaching a low this year, Bruce Mosler, 53, co-chairman of broker Cushman & Wakefield Inc., said at the conference.

Office vacancies in U.S. central business districts declined for the second straight time in the third quarter as tenants signed leases for additional space, according to Cushman & Wakefield. The average vacancy rate fell to 14.7 percent from 14.8 percent in the second quarter, the broker said Oct. 14. Vacancies dropped in half of the 30 cities tracked by Cushman.

‘World Cities’

International investors seek real estate in “world cities” such as New York, Washington and San Francisco, Roth said. Rising office rents in New York and Washington helped Vornado’s third-quarter revenue climb 5 percent from a year earlier, the company said this week.

Those cities are “desperately important to investors” outside the U.S., according to Roth. Foreign institutions would rather invest in New York properties, with a 4 percent capitalization rate, than in Cleveland buildings, where the cap rate may be 8 percent, Sternlicht said. The cap rate, a measure of a property’s investment yield, is calculated by dividing net operating income by purchase price.
For fully occupied buildings, demand from investors is similar to what it was at the peak of the market, with bidding competitive for those properties, Zell said.

Prime streets

“Capital feels safest investing in New York and D.C.,” Jonathan L. Mechanic, a partner at Fried, Frank, Harris, Shriver & Jacobson LLP in New York, said during his panel with Mosler.
Investor capital available to purchase real estate in the Americas rose by 54 percent since December, London-based broker DTZ Group Plc said.
Charles S. Cohen, chief executive of Cohen Brothers Realty Corp., said the pace of leasing has increased in the last six month from “five miles an hour” to “15 to 20 miles” an hour.
Cohen’s New York-based firm signed a lease with publisher Meredith Corp. for nine floors comprising 212,594 square feet of space for its new corporate headquarters at 805 Third Ave. in Manhattan, he said today without disclosing terms.

Residential

Miami condominiums acquired in Starwood’s purchase of Corus Bankshares Inc. are “selling like hotcakes,” Sternlicht, 49, said. Starwood in October 2009 led a group including TPG, Perry Capital and WLR Lefrak that paid 60 cents on the dollar for the failed Chicago-based lender. “The whole country is being driven by a search for yield,” Sternlicht said. “Real estate is a proxy for the bond market.”

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.

Europe: Household saving rate grows

2010-10-31T10:40:00.002+01:00

28 October 2010

The quarterly news releases are published four months after each quarter. The next release will take place on 28 January 2011. The complete year 2010 not will be available until end of April 2011.

The whole time series, including yearly data, are revised every quarter. Quarterly data are not seasonally adjusted.

The gross saving rate of households is defined as gross saving divided by gross disposable income, with the latter being adjusted for the change in the net equity of households in pension funds reserves. Gross saving is the part of the gross disposable income which is not spent as final consumption expenditure. Therefore, saving rate increases when gross disposable income grows at a higher rate than final consumption expenditure but also increases when households reduce their consumption expenditure.

The European Union (EU27) consists of 27 Member States: Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom plus the European Central Bank and the EU institutions.

Household saving rate on second quarter 2010 grow to 15,78% in the EU27

A impressive increase on France, Netherlands, Sweden and Finland household saving boosted the EU27 rate.

In seasonally adjusted values, household saving rate down provisionally to 12.1% in the EU27, but Eurostat not provides detailed information and we are interested in a country contribution analysis.

Belgium with Spain and Germany leaded the household saving rates ranking on 2009, but with 2010 data, Germany and Spain see their rates surpassed by the above mentioned countries which have had an impressive increase on their ratios, probably due a suddenly high reductions on consumption expenditure. Reductions anticipated already by Germany and Spain.

UPDATE: Spain-Industrial and Logistic construction activity

2010-10-29T10:32:00.013+02:00

The official data for building permits in sq.m., published on 28 October by INE (National Statistics Institute), confirm the continued downturn in the Industrial and Logistics construction activity in Spain.

In absolute values, volume figures of construction activity in the last five years, until May 2010, are:

According last monthly data of building permits issued by municipalities, the activity level was in last 12 months until May 2010 a 30,68% compared with last annual high peak (January 2007).

From September 2009 the present Spanish cycle becomes worse than 90's cycle, and has been worsening. Now, in the 41 month after the last peak, the weighted percentage of Industrial and Logistic activity is 2.21 points lower than the same month after the 1991 peak.

Spain and France reached the 1991 cycle trough in the 48 month, with values of 29,80% and 30,40%, respectively.

Will the present cycle reach its trough 6 month before than previous one? or
Will this cycle have a lower trough than previous cycle?

From a technical point of view (see bellow details of analysis based on "peaks and troughs" analysis). The intense zigzag in the last months of downward, reflecting several fails to make the final low for the move, could signify a near low trough, with a subsequent rising trend.

This stabilization in annualized activity curves are a reflection of an improvement in the values of square meters of building permits on the last months.

My personal opinion: this cycle will be 6 months shorter than previous one and we will see the low trough in the next 1 or 2 months.

Here you have the DATA.

PEAKS AND TROUGHS
The concept of peak and trough analysis, is simple technique but it works the best. While the theory itself has lost much of its luster in recent years, the peak and trough part of it has not. It is arguably the most important building block of technical analysis.
When you look at almost any chart, it’s fairly evident that prices or activity do not go up and down in straight lines, but move in zigzag patterns instead. During a bull trend, a rally is interrupted by a correction in which part of the advance is retraced. This is then followed by another rally, after which a subsequent correction follows, and so on.
These are the peaks and troughs. As long as a trend experiences a series of rising peaks and rising troughs, it is considered to be intact. However, when the series of rising peaks and troughs is replaced by a series of declining peaks and troughs, the prevailing trend has reversed.
Figure 1 shows a series of rising peaks and troughs. When a subsequent rally fails to make a new high for the move (A), this alerts us the trend may have changed. It is not until the price slips below the previous bottom (B), however, that the price action reveals a declining peak and trough. The trend, according to this technique, is now deemed to be bearish.

Developers Get Creative to Boost Profits

2010-10-27T13:07:00.000+02:00

Amid a prolonged economic downturn, developers are exploring new ways to generate more revenue. For example, forming a new division to manage properties for other owners. In a twist, this affiliate will take less than the typical 3% to 5% property management fee, but will share in any future increase in property valuations.

If a property owner is looking for a caretaker manager, then there are not deal to do. This idea is interested for working with facilities where there is a real opportunity to improve performance.

Properties that are prime candidates for the service include those with low occupancies or other operating problems where the owner wants to sell or refinance the property within the next few years. “We are looking at situations where we only make money off our management services if our client makes money off those services,” says a developer entered in this business.

“We are always changing our systems and coming up with innovative ideas," explains. The company has been asked over the years to act as a third-party property manager, but never aimed to be only a fee-for-service operator.
Lately, a lot of building owners and lenders have been seeking help, so the executives of this development company figured it was an opportune time for a new approach to property management. “This is a way to expand our revenue without diluting the value of our management team,”.

The property management fee will be based on the actual costs. The share of increased building valuations to be paid will be negotiated with each property owner. A liquidity event, such as a refinance or property sale, will more than likely trigger the payment to the developer.

Alternative profit generators

Another strategy to boost revenues is to sell more services to customers, including accepting full-service but short-term stay contracts.

Meanwhile, some developers evolute to operators for their own building and for third-part properties.

Today some American developers have about 30% of the operators division’s business comes from non-owned properties. It’s a way to expand their mission,

The program helps heighten recognition of the developer name in the broader community, which in turn helps boost building occupancies.

In-home services

Other developers are trying a different business expansion strategy. They plan to build condominium projects, delivering a full range of services.

Those developers allows customers to buy and stay in their own facilities.

The concept is to provide any type of service a customer may want on an a la carte basis. The property will be similar to a continuing park because customers will be able to obtain from this park the services they need.

But instead of paying an rent, customers will buy their units outright. The concept of the "homeownership" in coming back because some customers wants to keep the feeling of control.

Existing U.S. Homes Sales Advance, But Inventories Remain Problematic

2010-10-27T12:32:00.000+02:00

Oct 26, 2010 - 02:59 AM

By: Asha_Bangalore

Sales of all existing homes rose 10% in September to a seasonally adjusted annual rate of 4.53 million units following a 7.3% increase in the prior month. Sales of existing single-family homes increased 10.0% to an annual rate of 3.97 million units during September vs. a 7.1% gain in August. On a regional basis, sales of all existing homes rose in all four regions of the nation, with the gains in the Midwest leading the group.

The median price of an existing single-family home declined 3.1% from August to $172,600 during September. From a year ago, the median price of an existing single-family home is down 1.9%. Elevated level of unsold homes and distressed properties are the reasons for declining home prices. According to the National Association Realtors, 39% of all home sales in September were distressed homes, up from 34% in August 2010 and 29% in September 2009 (see chart 3).

In addition to foreclosed homes, the inventory of unsold homes holds at an elevated level (see chart 4). There was a 10.95-month seasonally adjusted supply of unsold homes in the marketplace in September 2010, putting third quarter average at an 11.2-month mark. The back-to-back monthly gains in sales of existing homes are encouraging but more is necessary for housing market stability.

"Austerity" Overlooked in the United States

There is a great deal of chatter about "austerity" in Europe and the resolve of these nations to tighten government spending. The nearly 500,000 government jobs lost from the "austerity" program in the United Kingdom has made many headlines. "Austerity" in the United States has received scant attention. State and local government employment has dropped 416,000 between August 2008 and September of 2010 (see chart 5). Federal government employment has moved up only slightly after adjusting for the spike from temporary Census-related employment. In sum, overall government employment has dropped during the current recession. Employment at state and local governments is at the level seen in early-2007. Austerity in the United States would have more severe if the stimulus package did not include support for state and local governments.

Asha Bangalore — Senior Vice President and Economist at The Northern Trust Company, Chicago.

India- Real Estate Emerging as a Good Asset Class

2010-10-17T16:44:00.000+02:00

While stocks and bonds have held their position as traditional investment instruments, investors are increasingly looking for alternate investments such real estate, hedge funds, private equity and exchange-traded funds (ETFs) to engineer an overall enhanced performance of their portfolios.

Improving construction quality, enhanced market transparency, and availability of suitable options have made real estate a good asset class to invest in. It provides a stable and predictable income yield along with a possibility of capital appreciation. While residential markets in India have already witnessed a rapid bounce back, commercial markets had touched a cyclical low and are expected to recover.

The market value of investment-grade real estate in India under construction has increased from USD 69.4 billion at end-2006 to USD 101.3 billion by end-June 2010, which is 8.2 percent of India’s nominal GDP for 2009. A significant portion of this market value is costs of construction and development of these real estate assets. The costs have been assessed to be USD 48.5 billion over a period of 2-3 years.

The market value of commercial (office and retail) real estate under construction is USD 34.8 billion. Commercial office space under development contributes 74 percent of the estimated market value being developed in the commercial sector. As of the second quarter of 2010, Tier I cities of Bangalore , Mumbai , and NCR-Delhi contribute to 70 percent of the market value of commercial office space under construction , while Tier II cities of Chennai, Pune, Hyderabad and Kolkata contribute to 21 percent of the pie. Other investment-grade developments in Tier III cities contribute to a mere nine percent of the pan-India market value being developed in India today.

However, with infrastructural developments and lower real estate costs, the share of Tier III cities is likely to grow in future. While the Tier I cities contribute to 62 percent of the commercial retail space under development, 27 percent is supplied by the Tier II cities. The residential sector has been the most resilient one in the recent downturn, aided by the high demand for housing in India. While residential property prices slumped in the first half of 2009, their rapid recovery in the second half of 2009 and first half of 2010 was accompanied by a slew of launches across India.

As of the second quarter of 2010, the market value of residential properties under construction is USD 66.5 billion , contributing 66 percent of the value of total real estate under construction in India. While the premium segment comprises only four percent of the saleable area being developed, it contributes to 24 percent of market value. While NCR-Delhi leads in terms of volume of residential properties being developed, Mumbai contributes a larger share to the market value. Foreign direct investment (FDI) in housing and real estate in India increased steadily from USD 0.04 billion in 2005-06 to USD 2.18 billion in 2007-08 . Since 2007-08 , a total FDI of USD 7.82 billion has been put into housing and real estate in India. Considering an average construction period of three years for properties, this comes to 7.7 percent of the market value of investment-grade real estate under construction as of the second quarter of 2010.

news.indianpropertyreview.com

Getting Real about U.S. Real Estate

2010-10-15T15:13:00.002+02:00

Interview to Andy Miller extracted from Casey Research

In 1990, following the real estate debacle of the 1980s, Andy Miller co-founded SevoMiller, Inc. The company provided workout services for major financial institutions throughout the country and also began buying and developing apartments, retail and office properties. From its founding to the present, the company’s acquisitions totaled over 30,000 apartment units, several million square feet of retail space, and numerous office projects throughout the country, including the states of Colorado, Arizona, California, Nevada, Illinois, Texas, Louisiana, Indiana, Oklahoma, Georgia, and Florida.
Employing over 500 people, SevoMiller also built, managed, marketed, leased, and sold commercial real estate for many institutions and third-party owners across the country. Clients included General Electric Credit, SunAmerica, and Huntington Bank, as well as many defunct banks, savings and loans, and private equity groups. In 1994, Andy and Dave Frishman co-founded Realty Funding Group, a mortgage and finance company that has acted as a mortgage broker and mortgage banker for numerous commercial real estate projects across the U.S. RFG has provided financing for over $1 billion of commercial real estate. In 1998, Andy founded Rapid Funding, a commercial and residential hard-money lender that has loaned in excess of $200 million for land developments, shopping centers, office buildings, and construction loans on condominium buildings. In addition to sourcing and servicing real estate loans, Rapid Funding also handled its own workouts and sales.
Each of these companies founded or co-founded by Andy now operates as part of the Miller Frishman Group.

The following interview with Andy Miller was conducted on Monday, October 11, 2010.

Given the importance of real estate to the economy, it’s not surprising that we get a lot of questions about the sector. There's a growing awareness of the problems with mortgage-backed securities and foreclosures, so let’s start there. What's the buzz in the industry?

Andy Miller: Talking about single family, as opposed to commercial, the most visible news story is what happens with the "robo signing" scandal and the foreclosure moratorium.
The short answer is that we don’t know the full implications yet. A lot will depend on how inclusive this becomes in terms of which lenders will also adopt this moratorium, in how many states, and for how long? All those questions have yet to be answered, but as a generic comment, I'll say this; if what happens results in a concerted effort to impede or stop or delay foreclosures throughout the country, it's going to have a very, very big impact. It's going to have an impact in some ways that are obvious, and some ways that aren’t so obvious.

We believe there are roughly 8 million loans now in some stage of default or foreclosure. If those 8 million loans are impeded, if the time that it takes to foreclose is extended, or if state attorney generals won't let lenders start foreclosures, that will have serious repercussions.
Paradoxically, because it will reduce the number of foreclosures and short-sales coming to market, one of the things you may see is the home market improve slightly over the next three to five months. That may seem like a blessing to the politicians as it will certainly staunch some of the negative news headlines out there around foreclosures, but it doesn’t do you any good because ultimately the price paid for the short-term abatement in the news cycle could be high.

Okay, so that’s a plus for the political optics of the situation, but what about the flipside?

Well, for starters you have to ask what impact this will have in the mid to long term on the ability to sell mortgage-backed securities into the marketplace? If you're an investor or institution that's already loaded up on a bunch of mortgage-backed securities and your master servicers or your special servicers are saying, "We're really stuck in this mire right now where we can't foreclose or address our defaults," how much more of this paper are you going to want to buy? I don’t think very much.
Now, the truth is that the Fed is buying a lot of these things, but at some point in time, it is going to need to divest itself of the trillions of dollars of mortgage-backed securities, and who's going to want to buy those, and at what yields? I mean, if you know that with the swipe of a pen, an attorney general can impose a moratorium or somehow prohibit you from doing foreclosures, that has to have dire implications for the future of mortgage-backed securities.

Then there’s the moral hazard.

Absolutely. If you're a hard-working person who has stayed current on your mortgage even at some hardship to yourself, and your neighbor who's been living in his home for 12 or 15 months without making payments comes over to the barbecue on Saturday afternoon and tells you, "Oh by the way, my foreclosure has been blocked. It looks like I get to live here another 12 or 18 months scot-free," does that encourage anybody else to do the same? It's very hard to know, David, but it doesn’t do the market any good.
As you know, it's my contention that the only thing that's going to fix this situation is to let the free market deal with the issues so that prices can settle at their own level. All these machinations to manipulate foreclosures and/or prices and/or interest rates are only exacerbating the already bad consequences for the home market.

What should concern investors in all of this?

Frankly, we can’t know yet. There are too many variables still unsettled. What I would advise is that everybody should be acutely aware of what's happening right now, and once we really know how much time this is going to take and what lenders are most involved, only then will we be able to interpret how bad this is going to be and what the risks are. But right now it's unknown. It just doesn’t look very good.

What about commercial real estate?

In contrast with the residential housing market, on the commercial side everybody has the giggles. I've never seen anything like it. It's a real paradox, because there’s a very active commercial market right now with all kinds of money entering the market and paying ridiculously high prices for assets, and it is almost as if the crisis never happened. In some cases, meaning some states and some product types, we are actually seeing commercial real estate prices at about what they were in '07.

These are people looking to deploy their cash into tangible, productive assets?

Yes. There's a lot of institutional money on the sidelines earning no yield that is increasingly being deployed. A lot of this hot money has found its way into commercial real estate. There are very few individual buyers out there that are actually laying out their own money to buy product – this is mostly institutional money, which means the buyers are using other people's money to chase product, and we see that acutely.

You’ve discussed this point in the past interviews we’ve done in The Casey Report – that these institutional money managers are often given time limits during which they have to deploy the money they are entrusted with, or return it to the investors. And so the buying can become fairly indiscriminate. Do these chickens come home to roost at some point?

Yes, absolutely. David, the commercial business is a mess. The fundamentals are not improving. We've talked about this before, but just to reiterate, you have to start by asking, what constitutes a recovery in commercial real estate?

Everybody is very convinced right now that we're seeing a recovery. In commercial real estate, we can be specific in defining what that actually means. Recovery means one or more of three things are happening: either your rents are going up, your expenses are going down, or your vacancies are going down. That's it.

In order for commercial real estate to be in recovery, one or more of those factors have to be present. That is a recovery. If you measure each section of the United States, if you look at all the various product types within those states, those fundamental factors are not improving, meaning there is no recovery happening. In fact, I would argue that they’re eroding.

What about the banks? We recently ran a link to an interview with money manager Chris Whalen, who makes the case that despite being given essentially free money by the Fed, and lots of it, the big banks are still in deep trouble over their mortgage portfolios.

The banks have been very fortunate because they’ve managed to squirrel away a lot of money into their reserves, at least those institutions that focus on the commercial side. This is not true on residential. On the commercial side, I think they are very heavily reserved for a lot of what they see as their problems. Most of the banks that I come into contact with feel very comfortable that they have adequate reserves, so that no matter what happens to commercial real estate, they believe they’re covered.

I guess we'll find out in time if they are.

Yes, we will. Even so, I don’t think commercial is the big Achilles heel for these institutions right now because of the manipulations the federal government has undertaken. I think the real Achilles heel for all these banks, and for bond markets, is going to be the residential markets. Not to be overly dramatic, but this is a huge ticking time bomb. Things are getting worse, not better.

In fact, what we see now is that the distress is moving up the scale. The single-family home markets under $350,000 in a lot of the country are fairly sound. There is a pick-up in sales activity and lending. But when you get to the mid and the upper ends of the marketplace, there's no upward mobility. In other words, people aren’t selling less expensive houses in order to trade up, which was very much going on in the housing bubble. In fact, people are having a very difficult time in the mid and upper ranges selling their homes.

For one reason: it is now very difficult to finance these homes without a large down payment. We've watched that situation closely and think that’s going to really exacerbate the problems in the market.

There is a lot of discussion about the problems in loan origination documents. How serious a problem do you think this is? One reader wrote in that they know somebody who didn’t even have a mortgage on his house, but a lender tried to foreclose on it anyway. Are things really that screwy at this point?

It's certainly problematic, and there was a lot of sloppiness when these loans were securitized and sold off. Who knows where the original documents are or what shape they are in? I can tell you, however, that if you lose an original note and you have to file a foreclosure, it's not the end of the world. You can have that addressed by a title company, but it's expensive and it's time consuming. But at this point we don’t know the extent to which documents are lost, poorly executed, or don’t exist.

For the time being, Bank of America has put a national moratorium on foreclosures. In order to understand how big a problem this really is, I think we have to wait and see who else follows suit, and how long this will last. If you take this to its nth degree and you assume that the worst case unfolds, it's bad. It's going to look good in the short run, but it's really bad for the market, and it's really bad for homeowners going forward.

Obama's refusal to sign the bill regarding electronic notarizations strikes me as being based as much on politics as anything. After all, ahead of an election, it wouldn’t do to be seen signing something considered supportive of foreclosures. So the administration has just kicked the can down the road, past the election.

At this point I would judge every event and every news story that you see by just one criterion, and that is that the government is doing everything it can to slow down or impede the foreclosure process.
So whether the president signs something or doesn’t sign something, or says something or doesn’t say something, the intent is to do whatever it takes to impede or slow down this crisis. If there are losses to mortgage holders and investors, the politicians will try to turn this to their advantage by framing it as being that the banks and mortgage lenders deserve the losses because they’re the cause of this problem. That's what you're going to see, that's what you're going to hear, and it's all intended to be a feel-good solution that makes everybody believe that our government is really looking out for us. Meanwhile, the SOBs that originated all these mortgages are going to get what they deserve.

But ultimately this has to be resolved, that is unless the government is willing to give a bunch of people free houses.

Years ago I said to you that what was happening in real estate was going to culminate in a big crisis, but that if it were to happen in a measured way that let the free market do what it does best, then the crisis would be less intense. But the latest developments are going to create a lot of intensity and only make things worse.

What about Fannie and Freddie? They were right in the middle of creating the mortgage mess, and they are at this point de facto government institutions? Not letting them foreclose would seem to be setting the stage for another huge loss to taxpayers.

The nice thing about being the federal government is that you can throw Fannie and Freddie under the bus and suffer no real consequences, at least not in the short term. For most people, that will look good.

The important thing for your readers to remember is that these aren’t solutions that do anything. These are solutions that have optics, that's all. There's an election coming up. The government wants people to feel good. They want everybody to feel like our government is really addressing these problems. They want it to seem to the public like the government cares. And that's what this is, that's what this is all about, in my opinion, and I think you're going to see some really very, very undesirable, unintended consequences.

Thank you very much for your time. Very interesting, as always.

Time for invest in residential in Barcelona, among other Spanish big cities

2010-10-14T09:06:00.013+02:00

In last August 46.8% of the dwellings sold in Spain were existing and 53.2% were new, as used to be in the lasts decades, except when in the 2007 peak new homes high asking prices moved buyers to existing homes.

The number of transactions on new dwellings increased 26.0%, while that of used dwellings increased 33.9%, as compared with August 2009.

The actual volume of annualized new home sales in Spain achieves 230,776 units, similar level at one year ago.

Catalonia, with new home sales annualized of 27,848 units, represents a 12% of Spanish total market.

In last August, the Barcelona metro area (province) with 1.460 new home sales (representing approximately 60% of Catalonian market), was the second Spanish market after Madrid with 2.748 units sold, and before Málaga (1.369 units) and Valencia (1.245).

Madrid, Barcelona and Valencia are the three main markets of urban residential investment in Spain, representing approximately 50% of the Spanish urban market and 25% of the total Spanish residential market.
Catalonian with a impressive reduction on construction activity (see last update on building permits and finished homes) and a limited rate of availability, is evolving better than other Spanish markets in terms of sqm prices of new homes:

According Global Property Guide, the average price per square meter (sq. m.) of a existing 120-sq. m. apartment located in the center of Madrid, in excellent condition, with good facilities, and have been refurbished or redecorated within the last five years is much lower than same apartment in other European main cities.

Newly-built and pre-sale property prices are not included in this analysis. Buyers should expect the prices of new properties to be higher than house prices published by the Global Property Guide.

As in Paris prices goes up while in France goes down, in Barcelona will increase significantly despite a general situation of excessive accumulation on unsold new homes in Spain.

To understand this affirmation, just compare the differences between Spain and Catalonia in terms of residential stock measured in years of sale (considering present annualized volumes). And note that Barcelona has lower levels of unsold new homes that whole Catalonia, where some unsold touristic developments inflate the stock:

This combination between urban, peripheral and touristic homes, makes of Catalonia a big market with more than 3.5 millions residential units. And if you compare the present unsold stock with the total inventory, you can see very low rates of availability and a projection for a big compression of this rate, bellow natural rates of availability (to cover population growth and obsolescence of stock):

With moderate transaction costs on properties and without any restriction on foreigners buying property in Spain, now is the time to global investors for buying in Barcelona residential market.

J. M. Joaquim

Access data HERE

The Commercial Real Estate Collapse in US

2010-10-13T11:33:00.000+02:00

Consumer Debt Deleveraging Equals Commercial Real Estate Market Collapse in U.S.

Housing-Market / US Housing Oct 07, 2010

By: James_Quinn

American consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can't get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts:

There are 105,000 shopping centers in the U.S. In comparison, all of Europe has only 5,700 shopping centers.

There are 1.2 million retail establishments in the U.S. per the Census Bureau.

There is 14.2 BILLION square feet of retail space in the U.S. This is 46 square feet per person in the U.S., compared to 2 square feet per capita in India, 1.5 square feet per capita in Mexico, 23 square feet per capita in the United Kingdom, 13 square feet per capita in Canada, and 6.5 square feet per capita in Australia.

Despite the ongoing recession and the fact that consumers must reduce their spending over the next decade, irrationally exuberant retail CEOs continue their death march of store openings. Below are announced expansion plans for some major retailers:

GameStop - 400 new stores
Walgreens - 350 new stores
Dollar General - 315 new stores
Ashley Furniture - 300 new stores
Target - 128 new stores
Starbucks - 100 new stores
Best Buy - 55 new stores
Kohl's - 50 new stores
Lowes - 45 new stores

Retailers expanding into an oversaturated retail market in the midst of a Depression, when anyone without rose colored glasses can see that Americans must dramatically cut back, are committing a fatal mistake. The hubris of these CEOs will lead to the destruction of their companies and the loss of millions of jobs. They will receive their fat bonuses and stock options right up until the day they are shown the door.

All of the happy talk from the Wall Street Journal, CNBC and the other mainstream media about commercial real estate bottoming out is a load of bull. It seems these highly paid "financial journalists" are incapable of doing anything but parroting each other and looking in the rearview mirror. Sound analysis requires you to look at the facts, make reasonable assumptions about the future and report the likely outcome. Based on this criteria, there is absolutely no chance that American commercial real estate has bottomed. There are years of pain, write-offs and bankruptcies to go.

Let's look at some facts about the commercial real estate market and then assess the future:

The value of all commercial real estate in the U.S. was approximately $6 trillion in 2007 (book value, not market value).
There is approximately $3.5 trillion of debt financing these commercial properties.
Approximately $1.4 trillion of this debt comes due between now and 2014.
The delinquency rate for all commercial backed securities exceeded 9% for the 1st time in history last month and has more than doubled in the last 12 months.
Non-performing loans are close to 16%, up from below 1% in 2007.

Do these facts lead you to believe that the commercial real estate sector has bottomed, as stated in the Wall Street Journal? The Federal Reserve realized the danger of a commercial real estate collapse to the banking system over a year ago. They have encouraged banks to extend and pretend. The website www.MyBudget360.com describes in detail what has occurred:

What has happened is the Fed has allowed this shadow monetization of the debt and banks let borrowers roll over CRE debt without even making payments in many cases! Think of an empty shopping mall. There is no buyer for this in the current market. So why would a bank want to foreclose on the borrower? Instead, they pretend the asset is worth $10 million while the borrower makes no payment and the Fed keeps funneling money into the banking system. In the end, the value of the dollar gets crushed and you end up bailing out the banking system. Commercial real estate has collapsed in U.S. even harder than residential real estate.

This market is enormous in terms of actual debt. There is no official bailout on the books but it is occurring through a slow and deliberate process. Banks know that they are essentially insolvent and they are dumping this junk onto the taxpayer.

This grim story began between 2004 and 2007. The horrifying ending will be written between 2011 and 2014. Commercial real estate loans for office buildings, malls, apartment buildings and hotels usually have 5 to 7 year terms. If you thought the debt induced bubble in real estate only affected residential real estate, you are badly mistaken. Before the boom, a normal year would see $100 billion in commercial real estate transactions.

Between 2004 and 2007 there were $1.4 trillion of deals done, with 2007 reaching a peak of $522 billion of commercial real estate deals. Shockingly, the Wall Street banks, run by MBA geniuses, loaned developers a half trillion dollars at the very peak in the market. Sounds familiar. Thank God the taxpayer has bailed these Einsteins out so they could live to make more bad loans and collect big fat bonuses.

Commercial real estate prices rose 90% between 2001 and 2007, driven by the loose monetary policies of the Fed and complete lack of risk management on the part of the banks making the loans. Knuckle dragging mouth breather developers built malls, apartments, offices and hotels with abandon as billions of dollars rained down on them from Wall Street. The consumer delusion of debt financed wealth led to the developer delusion that 100% occupancy and increasing rents for all eternity were guaranteed.

Commercial real estate prices have dropped in U.S. 42% in just over a year. This means that the $6 trillion value of all the commercial real estate in the country has dropped to $3.5 trillion. The debt remained in place. The billions in debt issued in 2003 - 2005 is coming due between 2010 and 2012. The underlying assets are worth billions less than the debt that must be refinanced. Commercial loan payments by owners can only be made from cash flow generated by rental income. A key requirement in generating rental income is tenants.

Let's examine the current state of vacancy rates for American offices, shopping malls and rental properties. The current office vacancy rate of 17.5% is the highest since 1993 and is just below the all-time high 18.7% in 1992. The WSJ has concluded, with no data or analysis, that the vacancy rate has bottomed. As the employment data proves, companies are not hiring employees. New companies are not being formed. Government mandates and regulations regarding healthcare and uncertainty about taxes will keep the formation of new small companies at a minimum. Conglomerates continue to ship jobs overseas. Part 2 of this Depression will drive more companies out of business. Office vacancies will remain at record levels for the next five years.

Mall vacancies between 9% and 11% are at record levels. There is absolutely no chance that these vacancy rates decline in U.S. over the next few years. With consumers deleveraging, wages stagnant, unemployment high, and retail oversaturation, there are thousands of retail stores destined to close up shop. Ghost malls are in our future. They will come in handy as homeless shelters and soup kitchens. Mall developers will be defaulting in record numbers.

Apartment vacancy rates peaked at 11% in 2009, the highest level in history. With millions of vacant homes and millions of available rental units, rental rates will stay low for years. The cash flow of apartment developers will under stress and will lead to more loan defaults.

Based upon the current rising delinquency rates of 15.7% for commercial real estate loans and 9.05% for CMBS, there is no bottom in sight. Only raging mindless optimists like Larry Kudlow could ignore the facts and conclude that all is well in commercial real estate world. Banks pretending that the loans on their books aren't worth 40% to 50% less, while also pretending that borrowers with negative cash flow can make loan payments, is not a solution. It is a Federal Reserve encourage fraud, allowing loans to be rolled over with no hope of ever being repaid will only prolong the pain and delay the inevitable.

The facts are that hundreds of billions in commercial loans are coming due, with a peak not being reached until 2013. If banks were to properly account for the true value of these loans, hundreds of regional banks would be forced to fail. This is unacceptable to government authorities. They will insist that the fantasy continue. Banks and real estate developers will pretend to be solvent, hoping the economy will miraculously repair itself and eventually make them whole. I understand these bank CEOs and delusional developers also believe in Santa Claus, the Easter Bunny, and the Efficient Market theory. It seems our entire financial system is based upon debt, fantasy, fraud, and delusion.

By James Quinn
James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager.

European Non-Residential Construction - Update I

2010-10-11T11:48:00.103+02:00

A few days ago I published in Linkedin an update about Construction activity in Spain, today I want to extend this update to EU27 and compare what's happening in Spain with what happen in the main European countries.

Using data of building permits on sqm published by the Spanish Statistical Office (INE) and available from 1990, we can see how the cyclical character of Construction activity has been extremely intensive in this country:

You can found in this blog a monthly update about the Spanish housing market. This post intends to analyze the Non-Residential construction activity.

And comparing Spanish activity series of 1991 and 2007, in Industrial and Warehousing construction , from peak to trough, we can see differences between both crisis.

With values published by INE we saw how from April (month 40 from the last peak) the current crisis is worse than previous crisis.

And we forecast for the next months a volume of Industrial and Logistic construction activity in Spain not exceeding 25% of the volume achieved on 2007 peak.

Clearly, Spain is experiencing a very sharp fall in construction activity for both residential and nonresidential, this affects significantly the country's economic growth and causes high job losses, but it is essential to adjust stock levels to meet actual demand and recover prices.

Using Eurostat data, we can see how European countries are experiencing a general decline in the activity of non-residential construction, but not as intense as Spain. Even some like Germany or the Nordic Countries initially seemed immunes to the crisis.

But Spain, in each cycle, has got falls and recoveries much verticals than in other countries. In fact, despite the current collapse, is the only major European countries where the volume of Non Residential construction activity in June was higher than the start of the recovery on 90's crisis.

Spain, like Sweeden, have an expensive system of social protection combined with high flexibility in the labour market (in Spain the flexibility comes from the seasonal contracts), which increases the construction activity elasticity.
Sweeden have started their recovery on Non-Residential construction activity, Spain soon.

You can check data and graphs HERE

El fin de la crisis inmobiliaria en Cataluña (II)

2010-10-02T14:43:00.000+02:00

El pasado 30 de septiembre, el Instituto Nacional de Estadística de España publicaba la información sobre viviendas terminadas e iniciadas en junio y julio.

En el post anterior estábamos a la espera de estos datos para confirmar que los dos primeros trimestres de 2010 se cerraban en Cataluña con una destrucción neta de stock de obra de nueva.

Como decíamos el cálculo se basa en la diferencia entre viviendas terminadas y viviendas nuevas vendidas, cuyo análisis trimestral permite ver si se aumenta o se reduce el stock de casas nuevas sin vender.

En 2010, la variación de stock ha sido la siguiente:

Como vemos las realidades del conjunto de España y de Cataluña son distintas y por primera vez, en Cataluña tenemos dos trimestres consecutivos de reducción de stock de vivienda nueva.

Aunque se puede pensar que los datos del segundo trimestre puedan estar en parte condicionados por el efecto de anticipación ante el incremento del ITP, conocemos los datos de julio que reflejan una tendencia incluso a la mejora, con una reducción de stock de 648 viviendas en Cataluña y un incremento de únicamente 1843 viviendas en el conjunto de España.

Efectivamente los datos generales de España, muestran desde junio una mejora en las ventas y una tendencia a una mejora en la evolución a nivel de stock, a pesar de la importante ponderación que significa el exceso de construcción de vivienda de segunda residencia y por la existencia de muchos mercados con limitadas capacidades de absorción.

El gráfico histórico y las previsiones para el conjunto de España es el siguiente:

En todo caso, creemos que es necesario estudiar por separado los principales mercados, Madrid, Cataluña y Valencia e intentar determinar una curva prevista de evolución de stock.

¿Porqué? Porque después de muchos análisis los equipos de investigación de mercado de LogisPark World se han sumado a las tesís sostenidas por reputados analistas, en el sentido de que el Real Estate es un sector autocorrelacionado, es decir, que las correlaciones de los precios inmobiliarios con la evolución de indicadores externos como PIB, IPC, Renta disponible o tasa de esfuerzo, son mucho menos determinantes que la evolución de la disponibilidad de producto nuevo.

Con los datos actualizados de viviendas iniciadas, hemos actualizado nuestras previsiones de evolución del stock de vivienda nueva sin vender en España:

y en Cataluña:

Esta evolución prevista del stock se basa en la comparación de dos escenarios de ventas, uno que mantiene la tendencia de los datos del último semestre y otro que prevé unas ventas un 25% inferiores al último semestre (tal y como explicamos en el post anterior), con los datos estadísticos de viviendas iniciadas.

Las proyecciones de vivienda terminada, resultan a partir de la comparación de esta serie con la de viviendas iniciadas hasta encontrar un periodo con un plazo equivalente a la diferencia entre las fechas de inicio y de final, que alcanza actualmente los 22 meses y en el que se producen correlaciones mensuales suficientemente significativas y se igualan los valores totales:

En cuanto a las viviendas iniciadas, Cataluña vivía en junio su mínimo anualizado con respecto al peak, al caer hasta un mínimo del 8,23%. Es decir, la construcción de nueva vivienda ha llegado a retroceder en términos anuales hasta un 91,77% del ritmo anual máximo alcanzado en enero de 2007. A nivel de España, también se alcanzaba el mínimo en junio, pero con un valor ligeramente superior al de Cataluña, un 10,32%:

Nos encontramos ante valores de obra iniciada en mínimos históricos, que en algunas provincias como Gerona, no se producían desde el período posterior a la guerra civil.

El impacto de esta caída de la actividad de construcción residencial, sumado al impacto de la caída de la construcción no residencial y a la caída de la contratación de obra civil, tienen un efecto muy negativo a nivel de empleo y de crecimiento, pero tienen como contrapartida la reducción de la oferta disponible de vivienda, naves logísticas o infraestructuras nuevas en un momento de alta creación de capital fijo a nivel global (ver post).

Estamos convencidos de que la reacción del mercado catalán, más intensa y rápida que la del conjunto de España, limitando la oferta de vivienda nueva, se traducirá en un acelerado interés por la inversión en vivienda nueva en Cataluña, que ya está conseguiendo atraer a inversores internacionales, especialmente comprando en Barcelona ciudad y que se suma a la demanda orgánica de la región.

En éste sentido, sólo hace falta ver la tasa de disponibilidad de vivienda nueva, esto es, el porcentaje de vivienda nueva disponible sobre el parque total de viviendas.

Tay como comentábamos, en el sector terciario se considera que el "stock disponible natural", aquél por debajo del cual los precios suben y por encima del cual los precios bajan, está entre el 5 y el 6% y a falta de encontrar otros analistas que coincidan con nuestras conclusiones, estimamos como "stock disponible de obra nueva" un 2%.

Tomando como válido el valor del 2% de stock natural y a la vista del gráfico anterior, podríamos anticipar como los precios de la vivienda nueva en Cataluña iniciarán una subida sostenible a partir de inicios de 2012. Inicio en la subida de precios que la especulación puede adelantar fácilmente un año.

Dejamos para otro post las curvas previstas de evolución de los precios.

Como conclusión, completados dos trimestres consecutivos de crecimiento negativo del stock de vivienda nueva y manteniéndose en mínimos histórico el inicio de nuevas viviendas, nos permitimos hablar del fin de la crisis inmobiliaria en Cataluña.

Los datos y todos los gráficos se pueden consultar AQUI.

Saludos y buen fin de semana!!

A impressive recovery on 2Q Gross Capital Formation will push investors to put cash to work

2010-09-19T20:26:00.000+02:00

With final data published last week by Eurostat for 2Q2010 Gross Fixed Capital Formation (GFC) for world major economies and data from the National Bureau of Statistics of China accumulated to June, and we can see a complete landscape of second quarter of 2010:

Gross Fixed Capital Formation exceeds for first time in the history an amazing figure of 2,000 billion euro per quarter!

And this figure not includes Russia, Brazil, India, Canada and other world economies,

The investment picture is changing dramatically. While mainstream investor sentiment shifts to gold, institutional investors see as uncertainty in gold prices seems to increase in tandem.

We started the year with long-term investors staying in cash and waiting for attractive buying opportunities to come along.

Now, with price-earnings ratios again becoming attractive and real estate showing an unexpected shortage on good products, investors would be wise to begin putting cash to work.

We have over-passed the bottom, and few investors are ready in the event a buying opportunity comes along.

Analyzing actualized historical data from Eurostat for the major economies plus new data from China of Gross Fixed Capital Formation (GCF), we can confirm a strong trend on capital markets recovery,

Based on our theoretical interpretation and taking into account the GCF, we will analyze quarterly Gross Capital Formation to see the general trend in the evolution of quarterly flows of capital market from the time of the peak and in this way taking pulse to the recovery of the investment market.

In 2007, major emerging economies, known as BRIC, excluding China, represented only 5% of overall Capital Formation, which allows the Eurostat and China data should be a representative figure.

With these figures, we can confirm that the crash of 2007 has been much less worse than the 2001 crisis, in terms of Capital volumes. And that the recovery is here!

Now is the moment to see the reaction of wise investors.

Best Regards
J. M. Joaquim

Note: See complete data on Google Apps, HERE

THEORETICAL BASE

According to basic macroeconomic theory, we could conclude that the development of capital markets is equal to the Fixed Capital Formation (Capital Formation-CF).

Assuming that in long series of inventories changes tend to compensate, we can take the Gross Fixed Capital Formation generated by the major economies measured on nominal euros to analyze capital market trends.

Macroeconomic justification for this assertion is (in Spanish):

Hopeful news from the US Logistics Market (欣喜的消息从美国物流市场)

2010-09-12T00:13:00.000+02:00

In the coming days, the research team of LogisPark will post to the LinkedIn group "ONE World" a complete report of the behavior of the investments markets for logistics real estate in New York (NY) and Los Angeles (LA), in "Big boxs" products (over 10,000 m2) .

Let me advance some key points of this research report:

Analysis US:

First quarter with positive absorption since 2007.
Delay of a semester from the economic recovery start
Increase in the new supply, breaking the downward trend since 2006
Decrease in stocks of the market compared with the previous quarter.
Vacancy Rate Decreased, breaking the upward trend started in 2008
Yields have started to fall, for first time since 2008
Nevertheless, rents continue to decline

Analysis Los Angeles

The absorption in LA has been Positive, with worse figures at Central (obsolete stock).
From last quarter of 2009, inventory of available m2 has been stabilized with a very slight growth since then.
Since the fourth quarter of 2009 begins a significant decline in Vacancy Rate, which remains constant during the following quarters.
The Availability has been steadily increasing, despite having experienced a significant decline in the first quarter of 2010 was followed by a large increase in the second quarter, but not reaching previous levels.
The LA market activity has progressively increased, experiencing a slight fall in the last quarter of 2010.
For the first time since a long time, the absorption of the market has been positive during the second quarter of 2010, indicating a improvement on logistic and industry market. Let's wait to see the trend of the following semesters to see if it holds and we can confirm this recovery.
Income levels continue to fall semester to semester, despite the improvement in other indicators.
Closely linked to income levels, selling prices have also continued to decline over the past year.

Analysis NY (New Jersey)

For the first time in a long time, and following the trend across the country, the vacancy rate has slowed in the second quarter of 2010.
The absorption has been positive this last semester starting a trend that we hope will continue from now on, which would indicate we are already at the beginning of the recovery of industrial and logistics market in the USA.
If we study separately the markets of Northern NJ and Central NJ, we note that the different sub-markets follow similar trends, like in the rest of the country.

Thanks,

J. M. Joaquim

More information on ONE World Group

The crisis in the capital market, lower than we thought.

2010-08-22T03:49:00.000+02:00

According to basic macroeconomic theory, we can conclude that the development of capital markets is equal to the Fixed Capital Formation (Capital Formation-CF).

Eurostat does not publish regular data on CF, but if you publish a quarterly summary data of the major economies of the world on Gross Fixed Capital Formation (Gross Fixed Capital Formation - GCF), which add to CF, as we know, changes in inventories .

With this information, and assuming that in long series of inventories changes tend to compensate, we can analyze the Gross Fixed Capital Formation generated by the major economies measured on nominal euros.

Also take advantage of China has begun publishing monthly data on GCF.

Until now we have final data published last week by Eurostat for 1Q2010 and data from the National Bureau of Statistics of China accumulated to March (first month of publication).

Knowing the evolution of Capital Formation, we see trend on the development of capital markets. That is, the million quarterly entering into the system to be invested.

Macroeconomic justification for this assertion is (in Spanish):

Although there are different interpretations on the relationship between Gross Capital Formation (I + G *) and capital markets, the fact is that global capital transfer takes place between companies and private savings (S), and savings governments (T-TR-XN) and therefore this information is the best indicator for determining macroeconomic global and surplus capital evolves and where it is formed.

Based on our interpretation and taking into account the GCF and commented on CF, we will analyze quarterly Gross Capital Formation to see the general trend in the evolution of quarterly flows of capital market from the time of the peak and in this way taking pulse to the recovery of the investment market.

The current figure from the 2007 peak to the 1Q2010, is as follows:

The first surprise is that the fall in Gross Fixed Capital Formation in the major economies of the world did not begin until 2009 (two years after the peak), the second the reduction was not as strong as you might expect, with a beginning of recovery thanks to the contribution of U.S. growth in 1Q.

Indeed, analyzing the historical series of Eurostat we see how the 2007 crash, in terms of Gross Fixed Capital Formation in the major economies, has not affected more than 2001 crash (dot-com crisis) and also we can see how the bubble on Real Estate wasn't swelled by volume of capital market flows, as these failed to exceed the 2001 peak, when the tech bubble:

In the historical graph, also recently updated by Eurostat, we can also see the projections made by the agency for 2010 and estimates for 2011, reflecting an expected recovery.

Furthermore, according the data forwarded by China, we might expect strong growth of its Gross Fixed Capital Formation in the second quarter, the same may be happening with other emerging economies, a fact announced that it would accelerate recovery of the capital market.

In 2007, major emerging economies, known as BRIC, represented only 13% of overall Capital Formation, which allowed the Eurostat data to represent over 70% of the capital market, a sufficiently representative figure :

Nowadays, to have a figure not below of 70%, we need to incorporate data from China. In fact, combined with the estimates made at that time on China, we would be looking at more than 75% of the global market (including other EU27) and is easy to imagine that today exceeds this weight.

We therefore believe that this is a significant and valid enough sample to analyze if it is confirmed the recovery trend of capital market flows.

While, we can advance that the crash of 2007 was not worse than the 2001 generation, in terms of Capital volumes.

We hope to have in a short time of complete data from Eurostat's 2Q, and confirm the recovery of the Global Capital Markets.
Best Regards

J. M. Joaquim

PD: Seeing China weight on CF I'm starting to introduce my name in Chinese (约翰M约阿希姆)

Note: See complete data on Google Apps, HERE

La multidisciplina en una economia excesivament especialitzada

2010-08-19T15:31:00.000+02:00

ENTREVISTA
Revista de la Direcció General d'Igualtat d'Oportunitats en el Treball
Estiu 2010 / núm. 4

Ens calen formes molt més interdisciplinàries de copsar la realitat canviant del món contemporani, tal com feia la filosofia fins el segle XIX”

Jordi Pigem, nascut a Barcelona el 1964, és doctor en Filosofia per la Universitat de Barcelona. Va ser professor del Masters in Holistic Science del Schumacher College (Anglaterra) entre 1998 i 2003. És autor de Bona crisi (Ara llibres, 2009; Buena cri- sis, Kairós, 2009), El pensament de Raimon Panikkar (Institut d’Estudis Catalans, 2007) i La odisea de Occidente (Kairós, 1994). Ha obtingut el Premi de Filosofia de l’Institut d’Estudis Catalans (1999) i el Premi d’Assaig de Resurgence i la Scientific and Medical Network. Col·labora en diversos mitjans de comunicació.

Va participar com a ponent en la taula “Nous models organitzatius i de negoci en una economia global” del Congrés internacional de directives i professionals She Leader 2.0.

Es parla contínuament de manca de valors... Creu que hi ha una relació entre aquest fet i la crisi econòmica actual?

El consumisme i el materialisme s’han imposat fins el punt de fer-nos creure que la vida bona depèn de la riquesa i les possessions materials. La publicitat i bona part del món que ens envolta ens conviden a basar la nostra autoestima en el que tenim, no en el que som. Ens hauríem de valorar per la nostra integritat, la nostra generositat, la nostra saviesa i les nostres relacions, no pel que tenim o pel que podem comprar. Per aconseguir una societat sostenible caldrà desvincular la nostra identitat dels béns materials, dels quals mai no en podem tenir prou, i basar l’autoestima no en el tenir sinó en l’ésser, desenvolupant una identitat més participativa, més fluida i més conscient de la nostra interdependència amb la resta del món. Els valors que ens guiaven fins ara, com l’expansió, la competició i la cobdícia, ens feien ignorar els desequilibris generats per una economia que multiplica les desigualtats socials i xoca contra els límits ecològics del planeta.

Comenta en el seu darrer llibre que avancem cap un món postmaterialista. Com defineix aquesta nova realitat?

Des de fa quaranta anys, l’Enquesta Mundial dels Valors mostra que en les societats postindustrials, com la nostra, han anat perdent pes els valors materialistes lligats a la possessió i el consum de béns materials, mentre que guanyen preponderància els valors postmaterialistes, vincu- lats a la llibertat d’expressió, la igualtat de gènere, la consciència ecològica i social, el respecte per la diversitat, la participació política i ciutadana, la solidaritat, la tolerància, la pau, l’autorealització personal, el treball amb sentit i l’obertura a noves idees. Crec que sota el soroll de les injustícies contemporànies està emergint, silenciosament, una consciència més solidària, més madura i més evolucionada.

Creu que les crisis són una oportunitat de millora?

En el seu sentit original, una crisi era el moment crític en el curs d’una malaltia. Quan la crisi portava a la guarició del malalt en català se’n deia “bona crisi” o “happy crisis”, en anglès. En el nostre cas el malalt és el sistema: la crisi global és una oportunitat de guarir un sistema ob- solet, les patologies del qual havien quedat amagades per l’aparent bonança econòmica i pels miratges del consum. Sabem que el veritable benestar no depèn de la continua acumulació de possessions materials, sinó de desenvolupar una vida plena de sentit en un context social cooperatiu i en harmonia amb un entorn natural que mantingui la seva integritat. Ens cal adoptar valors que ens orientin cap al veritable benestar personal, social i ecològic.

Quins són els aspectes clau per superar la crisi, en la seva opinió?

Hem de ser conscients d’on som i de les possibilitats que tenim. No tenim constància de cap altre època que hagi hagut d’afrontar reptes com els nostres: tenim una crisi econòmica que afecta totes les societats del planeta, molt més global que la del 1929, i una crisi ecològica que afecta tots els ecosistemes. I totes dues són part d’una crisi sistèmica amb múltiples dimensions. Però, a la vegada, mai no hi ha hagut una generació que disposi d’oportunitats com les nostres: el coneixement que ens aporta la ciència, les possibilitats que ens dóna Internet, les perspectives que ens ofereix el contacte amb altres cultures. És un moment únic i apassionant.

Quin ha de ser el paper de la filosofia en aquest canvi?

La filosofia en sentit clàssic pot ajudar-nos a superar la fragmentació del coneixement actual, tot i que la major part de la filosofia contemporània és també un coneixement molt fragmentat, només per a especialistes. La història de la filosofia i del pensament també ens ajuda a veure com han anat evolucionant les idees clau que són a l’arrel de la nostra cultura. Moltes d’elles són idees que avui sabem que són falses, però que segueixen tenint influència, com el creure que l’home està per sobre de la dona, l’ésser humà per sobre de la natura i l’economia per sobre de la societat.

En les seves intervencions públiques parla del canvi de conceptes en física, sociologia, psicologia, política... En un món en què cada cop els estudis i les professions són més especialitzades, qui tindrà la visió de conjunt per a proposar el canvi necessari? El treball en xarxa pot ocupar satisfactòriament el paper que en altres èpoques han jugat els humanistes formats en diverses disciplines?

El coneixement sense saviesa, com ja sabia Einstein, pot ser molt perillós. Hem arribat a un món tan especialitzat que els especialistes sovint no entenen el llenguatge de les disciplines veïnes. Aquesta especialització porta a saber cada vegada més i més sobre cada vegada menys i menys. A més, part d’aquesta especialització flota en una bombolla d’abstraccions, allunyada del bategar del món real. Un bon exemple són tots els economistes de prestigi que van ser incapaços de preveure la crisi econòmica actual, i que tampoc no saben com sortir-ne. Les seves teories s’han vist completament desbordades per la realitat. Per això, la solució a la crisi econòmica no pot ser només econòmica. Ens calen formes molt més interdisciplinàries de copsar la realitat canviant del món contemporani, tal com feia la filosofia fins el segle XIX. Cal fer-ho des d’un pensament interdisciplinari, que no doni l’esquena a la ciència, que aprofiti les eines extraordinàries que tenim per comunicar i compartir coneixements, que es nodreixi de tots els àmbits del saber i que, sobretot, s’orienti per criteris ètics i de saviesa.

Wages and Prices Level in Europe

2010-08-18T16:50:00.000+02:00

Last week, Eurostat published 2009 nominal wages and salaries, excluding social contributions, from national accounting of each European country.

Comparing those values with the total active population (from 15 to 64 years) , we have a reliable value of gross wage per active person in each country.

If we compare these values with the actual level of prices, we can see the real purchase power of the salaries in each country:

As you can see, the real wages in Spain and Italy are lower than their nominal values due to impact of prices.

In countries like Slovakia, Lithuaia, Greece, Latvia, Estonia, Poland and Czech Republic, nominal wage are dramatically eroded by prices.

Romania and Bulgary are incapable to give reliable national accounts and statistics, but situation are much worse.

J. Miquel Joaquim

Find complete data on Google Apps

¿Quiere una empleada de hogar interna rumana, con estudios, por 300 euros al mes?

2010-08-16T23:32:00.000+02:00

Desde el 1 de enero de 2009, búlgaros y rumanos son ciudadanos comunitarios de pleno derecho y pueden trabajar libremente en España por cuenta ajena o por cuenta propia.
Duramente sacudida por la crisis, Rumanía está prácticamente en quiebra. Hace pocos días el presidente del país reconocía que la nación está en quiebra.
Serán despedidos nada menos que 60.000 funcionarios y al resto que tenga la suerte de "conservar" su puesto de trabajo, se le recortará el sueldo en un 25%. Los funcionarios ya han dejado de hacer huelga porque necesitan el dinero para comer.
La clase media teme perder sus ahorros antes de entrar en la eurozona, en un "corralito" de la Europa Oriental.
Un 54% de los rumanos, declaran que viven ahora bastante peor que con Ceausescu. el propio pueblo rumano reconoce que fue engañado en 1989, cuando se produjo la revolución que acabó con el derrocamiento del dictador.

"The Wall Street Journal" ha reconocido que Rumanía se haya hoy en sus peores momentos de los últimos 60 años, es decir desde 1950. Para el diario, pues, la tan criticada "pobreza" de los rumanos durante los años del Socialismo no fue para tanto. Y era hora que los capitalistas empezaran a reconocer sus propias patrañas y mentiras.

Al hilo de estas noticias, las televisiones rumanas tambien han empezado a informar de la evidente y pasmosa realidad: hoy hay mucha mas pobreza que en 1989 (lo que es una informacion parcialmente manipulada, puesto que en 1989 no habia pobreza en Rumania, todo el mundo tenia casa, comida, trabajo y las necesidades basicas cubiertas). Lo cierto es que la pobreza es un sustantivo que los rumanos han conocido con la llegada del "paraiso" capitalista, igual que otras como "desempleo", "miseria", o "hambre"

El cinismo del FMI es descorazonador, y el propio representante del FMI en Rumanía, Jeffrey Franks, ha declarado que ahora Rumanía depende totalmente del dinero del FMI para sobrevivir, y que no tiene otra opción (y se ha quedado tan pancho, mientras los rumanos ni siquiera le han apedreado).

Por otro lado, y, para aportar otro dato más a la evidencia, de acuerdo al Instituto Rumano de Investigación de la Calidad de Vida, la llamada "Revolución de diciembre de 1989" (a pesar de que con ella volvieron a tomar el poder las oligarquías parásitas), trajo de la mano una ola de pobreza sin parangón desde la SGM. El primer periodo de miseria tuvo lugar entre 1991 y 1999, cuando comenzó a aplicarse la terapia de choque neoliberal (es decir, el saqueo a gran escala de la riqueza nacional). La economía empezó a remontar el vuelo cuando a partir del año 2003-4 la inversión extranjera se multiplicó, después de que Rumanía fuera convertida en un desierto productivo y, por lo tanto, en un paraíso para los inversores multinacionales.

Sin embargo, en 2008 la crisis internacional acabo con el espejismo vivido desde 2007, cuando Rumanía se integro en la U.E., y hoy Rumanía vive una nueva ola de pobreza similar a la de los años 90, pero que esta vez afecta además a la clase media y al funcionariado, mientras una minoría de parásitos y saqueadores se enriquecen con actividades ilícitas.

Ante este escenario, este mes de agosto se multiplican las demandas de trabajo de rumaneses residentes cuyos familiares o amigos en Rumanía están dispuestos a venir a trabajar a España por salarios de miseria.

Concretamente, hoy podemos contratar a una profesora de 38 años recién despedida, de clase media, casada y con un hijo, dispuesta a trabajar como empleada del hogar, interna, cobrando 300 euros más manutención y alojamiento.

Si el régimen de empleada de hogar interna en España ya es, por si mismo, de semi-esclavitud, sólo faltaban estos salarios para dar la razón al titular de un periódico publicado hoy lunes 16 de agosto.

"A los políticos [rumanos] poco les interesa que después de terminar los estudios, los jóvenes llegan a ser parados o esclavos en otros países"

J. Miquel Joaquim

He recibido algunas críticas por hablar de la esclavización de la clase obrera en uno de mis posts anteriores (ver). No he querido cambiar el término para que quedara clara la magnitud del cambio que estamos viviendo. Ahora esta sensación ya se empieza a interiorizar en la mente de los rumanos.

Today, significant challenges but a "cautious optimism"

2010-08-13T16:18:00.000+02:00

Draft of English version and actualization of a post published on December 2009.

The economy virtualization

To know the characteristics of the new economy or business 2.0, we have to understand we're talking about the third industrial revolution and we need to review the history of the Second Industrial Revolution.

Today is clear, the Second Industrial Revolution began between 1870 and 1914 with the establishment of the Electrical Network (as a public service).

Electricity, which allowed engines run with precision, was key to the Henry Ford successfully put in place the Ford Motor Company in 1903 and develop the work that allowed chain in 1908 to launch the Ford T, after working with Edison and failed in two previous attempts. In 1908 General Motors was founded in 1925, Chrysler.

Thanks to the efficiency of the assembly line, the price of the Model T down each year and the precision machinery manufacture cars allowed simple to maintain. Soon the automobile became a mass consumer product. The massive sales of cars will entail the development of the oil business and public investment in roads and bridges.

There were no steel makers or oil on the Second Industrial Revolution, were the industries of electricity and the automobile.

Today both industries are in crisis. The generation of electricity and cars are becoming "green." But most important is that both industries are no longer strategic.

Now is becoming the third industrial revolution and the engine of this revolution is not information technology or globalization, is again a network, the Internet as a public service. The Knowledge Network.

Electricity was discovered in 1831 by Michael Faraday, Thomas Edison industrialized, it became from the Chicago Fair of 1893 and thanks to Westinghouse in a public supply system includes all media and elements useful for the generation, transmission and distribution of electricity. A group that evolved mechanisms to acquire control, security and protection.

They followed the car, the development of the aviation industry, chemical industry moderates, the pharmaceutical industry, mass production of consumer goods, mechanical refrigeration and the invention of the telephone.

These changes in the industry, led to the loss of many jobs for skilled workers who were replaced by untrained personnel, encouraging immigration, the emergence of trade unions, higher wages of the working class and the emergence of a new type of knowledge-based workers.

This period of rapid technical progress and social transformation strikes a global economic crisis began in October 1929 due to increased debt and stock market speculation in search of quick profits and easy. The First Great Depression.

In 1930 the U.S. economy fell by 8.61%, by 6.42% in 1931 and 13.00% in 1932.

Every now and then need to rationalize the economic crisis, to adjust the capacity of the system after periods in which financial economics pushed to excess production capacity of almost everything and mostly obsolete products. But the crisis to an end. He soon recovered concern for the fundamentals. And the very acceleration of the economy makes adjustments to the fundamentals are getting faster.

The Great Depression only lasted three years and progress is not stopped. In 1944, 15 years later, the U.S. economy had doubled and per capita income half of Americans had grown by 85%

The same power that allowed the development of large industries accompanied by a financial bubble which was allowed out of the crisis by way of private consumption. The staff worker layoffs result of excess production capacity and obsolete industries were developed in parallel with the expansion of a new middle class composed of knowledge workers.

An example of the new knowledge workers were employees of the newly named IBM, between 1929 and 1944, developed the punched card market that completely changed the capacity of information processing. Another example was the workers of the Bell Telephone Laboratories, founded in 1925 in the state of New Jersey by AT & T. These new workers were a thriving middle class which, from the late '30s, it was arousing the desire for consumption of appliances.

We see the second industrial revolution was born with the power that enables companies to increase production and we see how out of the Great Depression is produced by using household electricity as a public service, transformed into consumption, nightlife, social changes and the emergence of a knowledge society.

Today we are living in the Third Industrial Revolution which will lead to a new economy that comes with the production and mass distribution of knowledge in firms, as computer and communications systems. However, repeating the same mistakes of the past century and excessive debt and stock market speculation have led to a crisis.

This crisis will cause massive destruction of jobs Knowledge Revolution itself had been created during these years of growth. Business structure will be dismantled too rigid and heavy and will be superseded by more efficient (the virtualization of the economy), leaving in evidence the failure to address the knowledge revolution in business and social structures of the industrial age.

The crisis, as a paradigm shift, we do face significant challenges but a "cautious optimism" will allow us to envision the opportunities and turn them into business.

In 1940 the installed electric refrigerators in homes ended up with the natural ice industry flourished but the appliance industry. Henry Ford failed twice to understand that to succeed I had to change the corporate structure.

Today as in 1929, excessive indebtedness will not be the wick of the crisis. Will the fuel. The crisis caused by the unsuitability of many companies to the new environment. Even those that remain aligned with the new paradigm of knowledge, have failed to adapt their structures (newspapers, television, publishing, ...).

Birth of a new era of distribution of knowledge as a public service (universal, cheap, open, ..) and companies like Google, Amazon, Yahoo, .. are the new Westinghouse, General Electric and AT & T.

These companies will take our homes a public information service that, like electricity, will affect our family structure, social and labor and create a new era of consumer appliances that are permanently connected to this network of knowledge. And the consolidation of knowledge as a public service and household penetration will be the engine of consumption and investment will allow the start of the crisis exit.

We'll see how social networking, global data access and new cloud computing, will improve personal productivity and frictionless business. A reduced number of people, no more than 10.000 per industry will be enought to run the world.And their obsession will be (is) not waste time and capital on non core services,

Those ultra-efficient teams will lead a radical outsourcing of the economy, in which the company is virtualized (outsourcing extreme), the hierarchical structure disappears, small companies competing with large companies, households are radically transformed, the mass of workers are pauperized.

J. Miquel Joaquim

El fin de la crisis inmobiliaria en Cataluña (I)

2010-08-10T21:08:00.000+02:00

Hoy 10 de agosto, el Instituto Nacional de Estadística de España publicaba la nota de prensa mensual actualizando a junio los datos de Transmisiones de Derechos de la Propiedad, de los que extraigo para su análisis la siguiente tabla:

A partir de las series mensuales históricas del propio INE y del Ministerio de Fomento, podemos obtener un gráfico de la evolución de las ventas de viviendas nuevas y usadas a nivel nacional y en valores interanuales (el dato mensual se corresponde al acumulado de los doce últimos meses), que por primera vez refleja una inflexión en las tendencias desde el "peak" de diciembre 2006:

Aunque observamos como se ha frenado la importante caída en las ventas de obra nueva, la fragilidad de la recuperación podría hacer pensar que se mantendrá durante mucho tiempo la burbuja inmobiliaria española, esto es, del stock de viviendas nuevas sin vender.

Sin embargo la caída brutal de las viviendas iniciadas, permite una visión más optimista a nivel de reducción del stock y la consecuente recuperación de precios, aunque a costa de equilibrar las necesidades reales de mano de obra a una actividad de construcción sostenible.

Los datos generales de España, a pesar de mostrar ya una mejora en las ventas, sufren una importante ponderación por el exceso de construcción de vivienda de segunda residencia y por la existencia de muchos mercados con limitadas capacidades de absorción y por ello, no permiten ver con claridad la mejora de la situación de los principales mercados inmobilarios del país.

Cataluña, a pesar de sufrir sus propios desequilibrios en términos de exceso de oferta en vivienda vacacional (principalmente al sur de Tarragona) y en términos de desajuste entre producto y demanda (como está pasando con la demanda insatisfecha de pisos de 4 habitaciones en San Cugat), refleja mejor la realidad de los grandes mercados inmobiliarios del país, Madrid, Barcelona, Valencia, Bilbao,.. aquellos mercados en los que se concentra la creación de riqueza del país y cuyo consumo depende de la sensación de riqueza de sus habitantes, condicionada esencialmente por el valor estimado de su vivienda.

En este sentido, vemos que Cataluña, reaccionó algo más ràpido y con algo más de intensidad que el conjunto de España en cuanto a la contracción de la nueva oferta, de manera que podemos observar en el gráfico adjunto como la actividad en tasas interanuales ha caído en esta Comunidad más de un 90%, antes y más que en el conjunto de España, (porcentajes sobre el peak):

Esta importantísima corrección de la actividad en Cataluña, acompañada de la estabilidad en las ventas de vivienda nueva, podrían pemitir completar dos trimestres consecutivos de crecimiento negativo del stock. Lo que nos permitiría hablar del fin de la crisis inmobiliaria en Cataluña.

El terrorífico dato de crecimiento continuado del stock de vivienda nueva, las "monthly unsold homes", que convirtió a España en el ojo del huracán de la burbuja inmobiliaria global, ha cambiado de tendencia y se ha convertido en Cataluña, en valores de crecimiento negativos del stock de -831 viviendas en el primer trimestre y-480 vivienas hasta mayo.

Faltan los datos de vivienda terminada de junio, que no estarán disponibles hasta la segunda semana de septiembre, pero ya tenemos unos buenos datos de ventas de vivienda (los publicados hoy), aunque en parte estén condicionados por el efecto de anticipación ante el incremento del ITP y tenemos unas proyecciones de vivienda terminada bastante fiables por lo que estamos casi seguros de que el trimestre cerrará con una nueva reducción del stock y por ello me he permitido la licencia del título.

Las proyecciones de vivienda terminada, resultan a partir de la comparación de esta serie con la de viviendas iniciadas hasta encontrar un periodo con un plazo equivalente a la diferencia entre las fechas de inicio y de final, que resulta ser de 18 meses y en el que se producen correlaciones mensuales suficientemente significativas y se igualan los valores totales:

De esta manera, en junio esperamos unas viviendas terminadas equivalentes a las viviendas iniciadas en noviembre de 2008, lo que a nivel de Cataluña representaría 1.598 viviendas nuevas terminadas y más de 15 mil en España y y aunque existirán diferencias mensuales, sabemos que el valor total de la próxima serie de 18 meses será, muy probablemente, coincidente.

Partiendo de las proyecciones de vivienda terminada y tomando, en cuanto a viviendas vendidas, un escenario base calculado a partir del promedio de los seis meses anteriores, podremos determinar si en Cataluña se cumplen los condicionantes que permitan confirmar el fin de la crisis inmobiliaria y determinar cuando se podría producir la misma situación a nivel del conjunto de España.

Aunque este criterio para la previsión de ventas de viviendas podría ser técnicamente válido para Cataluña (reflejaría la pendiente de recuperación), muy probablemente no lo sería para el conjunto de España, lo que obliga a calcular un escenario conservador para el que hemos establecido una reducción constante del 25% de las ventas previstas según el método base.

Tomando las proyecciones de vivienda terminada y los dos escenarios de ventas, vemos como en cualquiera de los casos, se seguirá destruyendo stock y no es aventurado anunciar el fin de la crisis inmobiliaria en Cataluña:

En el resto de España, es fácil imaginar que otros mercados como Madrid o Valencia, con importantes saldos migratorios positivos en 2009, están viviendo situaciones parecidas y probablemente cerrarán los dos primeros trimestres de 2010 destruyendo stock y preparándose para la recuperación de precios.

En cuanto al conjunto del país, vemos que aún podemos tener algunos meses de aumento de stock, aunque a partir de octubre el cambio de tendencia se puede producir incluso de manera intensa.

Como sabemos, los stocks siguen siendo altos, especialmente si nos referimos al conjunto de España, pero también es cierto que cuando durante dos o más trimestres se destruye stock y siguen sin aumentar el ritmo de inicio de viviendas, el mercado anticipa la reactivación de los precios mucho antes de llegar al stock natural.

Dicho lo anterior, no puedo acabar este artículo sin poner en negro sobre blanco los datos estadísticos de stock total, por mucho que su volumen sea importante y ello pudiera condicionar negativamente la lectura de unos datos globalmente positivos:

Los datos macro a nivel nacional, incluyen múltiples situaciones atípicas que desvirtúan los valores absolutos, lo importante son las tendencias y especialmente, en los mercados de referencia.

Por ello insisto en la importancia de tomar como gráfico significativo el de stock de Cataluña y observar como la tendencia en la caída del stock hace creíble el titular de este post, a pesar de la importancia de las magnitudes absolutas.

Es cierto que las actuales 90 mil unidades de vivienda nueva sin vender pueden parecer un dato exagerado, que nos haga dudar del potencial de la tendencia, pero si pensamos que Cataluña tiene un parque total de viviendas de aproximadamente 3,5 millones (3.314.155 en la encuesta de 2001), nos encontramos con una disponibilidad de obra nueva del 2,5% sobre el parque total.

En el sector terciario se considera que el "stock disponible natural", aquél por debajo del cual los precios suben y por encima del cual los precios bajan, está entre el 5 y el 6%. En vivienda me atrevería a pronosticar que el stock natural debería estar alrededor del 2%.

Tomando como válido el valor del 2% de stock natural y a la vista del gráfico anterior, podríamos anticipar como los precios de la vivienda nueva en Cataluña iniciarán una subida sostenible a partir de inicios de 2012, para recuperar los precios del peak en 2014 y doblar los precios actuales en 2017. Hasta ahora las crisis siempre han seguido un patrón parecido y eliminamos el período de la administración Hoover en la crisis del 29, tendríamos un periodo medio de 13 años desde un peak anterior hasta que los precios nominales doblan y alcanzan un nuevo peak:

En un ejercicio de optimismo realista, podríamos decir que invirtiendo hoy en vivienda nueva en Barcelona, Madrid o Valencia, a precios actuales, en 7 años habremos doblado el valor de la inversión y que aquél que compró en el peak, dentro de 12 años tendrá una vivienda que habrá doblado su valor. En ambos caso, hablamos de valores nominales (sin descontar el efecto de la inflación) y vendiendo en concepto de obra nueva, es decir, a deducir el diferencial entre obra nueva y segunda mano y dependiendo del estado de conservación.

Pero este debate lo tendremos en septiembre una vez confirmado el dato de viviendas terminadas y con los datos de ventas de julio.

Felices vacaciones!

Joan Miquel Joaquim

SPAIN: Housing Statistics (UPDATE February 2012)

SPAIN: Building Activity (Updated February 2012)

Why are US housing prices falling when the number of houses on the market continues to decline?

EUROPE: The real situation of employment (UPDATE 2Q2011)

Higher Saving Rate—— A Double-Edged Sword to the Economic growth

Outlook of Debt Crisis and Financial Crisis (Updated Sept. 2011)

The Death of the Welfare States, We're All Greeks Now

Is Bankrupt the America's Future?

Housing prices and household saving rates

The real value of paper

European Labor Productivity (Update 4Q 2010)

Commercial Real Estate No Longer the Economy's Achilles Heel

"There is a 'tsunami' of money waiting to enter Europe" Nigel Bolton (BlackRock)

Ortwin Goldbeck

The Man behind the New Prologis

What to buy in 2011 ?

The Best Time in History to Buy a House

Euro Area financial account recorded on November net inflows of EUR 38 billion

Source: ECB

19 January 2011 - Euro area balance of payments in November 2010 and international investment position at the end of the third quarter of 2010

Balance of payments in November 2010

International investment position at the end of the third quarter of 2010

Data revisions

Additional information on the euro area balance of payments and international investment position

Annexes Table 1: Current account of the euro area Table 2: Monthly balance of payments of the euro area Table 3: Quarterly international investment position of the euro area

Annexes

Euro Area financial account recorded o November net inflows of EUR 38 billion

Source: ECB

19 January 2011 - Euro area balance of payments in November 2010 and international investment position at the end of the third quarter of 2010

Balance of payments in November 2010

International investment position at the end of the third quarter of 2010

Data revisions

Additional information on the euro area balance of payments and international investment position

Annexes Table 1: Current account of the euro area Table 2: Monthly balance of payments of the euro area Table 3: Quarterly international investment position of the euro area

Annexes

China and Spain pledged to boost bilateral trade in 2011 to 40 billion euros

Top 40 European Banks

Merger Mania 2011: How to Profit From M&A Activity

EUROPE: Non-Residential Construction Activity. UPDATE Dec 5, 2010

SPAIN: Construction activity UPDATE- November 30,2010

Keeping an Eye on Spain Stock Market

EU 27 Gross debt data for 2009 - Second notification (15/11/2010)

SPAIN UPDATE: Home sales

“The recovery has been more rapid than anybody expected” (Bloomberg article)

U.S. Commercial Property `Substantially' Off Bottom

Europe: Household saving rate grows

UPDATE: Spain-Industrial and Logistic construction activity

Developers Get Creative to Boost Profits

Existing U.S. Homes Sales Advance, But Inventories Remain Problematic

India- Real Estate Emerging as a Good Asset Class

While stocks and bonds have held their position as traditional investment instruments, investors are increasingly looking for alternate investments such real estate, hedge funds, private equity and exchange-traded funds (ETFs) to engineer an overall enhanced performance of their portfolios.

Getting Real about U.S. Real Estate

Time for invest in residential in Barcelona, among other Spanish big cities

The Commercial Real Estate Collapse in US

Consumer Debt Deleveraging Equals Commercial Real Estate Market Collapse in U.S.

European Non-Residential Construction - Update I

El fin de la crisis inmobiliaria en Cataluña (II)

A impressive recovery on 2Q Gross Capital Formation will push investors to put cash to work

Hopeful news from the US Logistics Market (欣喜的消息从美国物流市场)

The crisis in the capital market, lower than we thought.

La multidisciplina en una economia excesivament especialitzada

Wages and Prices Level in Europe

¿Quiere una empleada de hogar interna rumana, con estudios, por 300 euros al mes?

"A los políticos [rumanos] poco les interesa que después de terminar los estudios, los jóvenes llegan a ser parados o esclavos en otros países"

J. Miquel Joaquim

He recibido algunas críticas por hablar de la esclavización de la clase obrera en uno de mis posts anteriores (ver). No he querido cambiar el término para que quedara clara la magnitud del cambio que estamos viviendo. Ahora esta sensación ya se empieza a interiorizar en la mente de los rumanos.

Today, significant challenges but a "cautious optimism"

J. Miquel Joaquim

El fin de la crisis inmobiliaria en Cataluña (I)

Annexes
Table 1: Current account of the euro area
Table 2: Monthly balance of payments of the euro area
Table 3: Quarterly international investment position of the euro area

Annexes
Table 1: Current account of the euro area
Table 2: Monthly balance of payments of the euro area
Table 3: Quarterly international investment position of the euro area